Earnings in Russia Are Impermissibly Low, Kasyanov Says.
MOSCOW, February 24 (Itar-Tass) - The average monthly earnings in Russia, amounting to 1,520 roubles or approximately sixty-two U.S. dollars, are impermissibly low, First Vice-Premier Mikhail Kasyanov told the Thursday meeting of the Russian government, which is discussing the state policy in this field.
Kasyanov, who is chairing the meeting in the absence of Acting President and Premier Vladimir Putin, stressed that "the government has not discussed this problem for nine years. Many problems have heaped up in this domain, and the state has, in fact, lost hold of the instruments to influence the level of earnings in the non-state sector". He said that "such a mechanism as social partnership was not used at all".
The first vice-premier also noted that "there is a huge gap between the average earnings and the subsistence minimum". He pointed out that the government "has failed to substantially improve the situation after the August 1998 crisis". The average level of earnings now equals to only 74 per cent of the figure for the pre-crisis period.
*******
Trud February 3, 2000 [translation from RIA Novosti for personal use only] WAGES OR ALMS? Despite the Record Growth of Industrial Production
Over the Years of Reform, Real Wages Dropped Almost
by One-Quarter Last Year By Vitaly GOLOVACHEV, political observer of Trud newspaper
In a confidential talk a highly informed specialist of the Labour Ministry told me that two months ago over 4 million people were paid less than 350 roubles per month.
Over a brief period of time since then the situation with the size of wages, if we don't take into account an insignificant traditional wage increase in December, has not changed radically. Today the pay of millions of Russians is less than half a US dollar per day in terms of the US currency. The calculation was made in terms of US dollars to use international criteria, according to which the level of incomes equalling one US dollar per day is considered to be the boundary of poverty. As can be seen, many of our enterprises have already overstepped this threshold. Over half a million citizens, according to the data of my interlocutor, receive (from time to time or regularly) up to 100 roubles per month. It is hard to believe this - three roubles per day! Over one million Russians earn from 100 to 200 roubles per month and another a million and a half - from 200 to 300 roubles. It would be appropriate to recall that the subsistence minimum for an able-bodied resident of the country calculated according to the old methodology constituted 1,054 roubles in the fourth quarter of last year. If we take a new and more realistic methodology (the State Statistics Committee will soon switch over to it), this figure will be 1,250 roubles. It turns out that today's monthly pay which is received by 4 million citizens can last them only several days (from 3 to 9 days). And what should be done in the remaining three-four weeks? What kind of a system is it in general, if every tenth hired worker receives a wage amounting to half the subsistence minimum?
One-quarter of the population survives through subsidiary gardening plots, unofficial additional earnings and the shadow economy. There have appeared in the country "the new poor" - able-bodied people who have a job but live poorly. One thing is clear: the system which has been formed is, in principle, wrong. This can be illustrated by the size of the minimum wage - about 85 roubles. One can frequently hear that in actual fact no one gets such a figure and that this is just "a technical instrument" which is used exclusively for calculating penalties and various benefits. However, 500,000 Russians who earn up to 100 roubles per month can testify that this is not true. Even if we take into account unofficial earnings, far from all of them manage to keep afloat.
Millions of low income families, as the surveys of households have revealed, are simply half-starving. In the first, (so-called decile) group involving 14.5 million the most underprivileged citizens, per capita consumption of meat and dairy products is 4-5.5 times lower than in the households with high incomes. On average, a poor man gets less than two packs of milk and half a kilogramme of meat products per month. This actually means one third of a glass of milk and half a piece of sausage (16 grams) per day. However, many of the poor do not have even this. Those who count every rouble are forced to cut their requirements significantly, including those for bread which until recently was their basic food product. Now low-income families eat on average half the amount of bakery products consumed by well-to-do families - just two-three pieces of bread. Undernourishment leads to weaker immunity, early aging and death. In the first eleven months of last year the number of deaths in Russia increased by 138,000 people (as compared to the similar period of 1998 and came close to two million. Deaths exceeded births by 836,000 people in Russia. In less than a year it is as if we have lost another big city.
Large-scale poverty has indeed become a serious obstacle on the path of the country's development, the conduct of market transformations and the steady revival of industry. Having grown tired of life's burdens, a substantial part of the population wants to return to the past, to the pre-reform period. In other words, in all spheres - economic, social, moral and ethical ones - low wages (and, naturally, large arrears of wage payments) are currently major concerns among Russians.
One of the most wide spread opinions consists in the fact that, first of all, Russians do not work well and labour productivity is very low and, secondly, the country is experiencing an economic crisis, hence low wages. It seems it is hard to argue with this since in terms of labour efficiency we are indeed far behind developed countries and the economic crisis is also very conspicuous. This is true, but not entirely accurate. Let's return to the most recent statistical data - the 1999 figures. In 1999 industrial output rose by 8.1 per cent and the gross domestic product by 1.5 per cent; exports exceeded imports by $28 billion. Russia has not had such good economic performance figures and such growth over all the previous seven years of reform. In many industries output rose by 15-29 per cent. Meanwhile, wages in real terms did not increase and, on the contrary, went down and quite considerably - by about one-quarter (by 23.2 per cent). One of the economists I talked to, said that when getting out of the crisis the funds received by enterprises were first of all invested in production and not used for wage payment. This would be understandable if not for one thing: the point is that Russia did not witness a large inflow of investments last year - their growth constituted only one per cent. Therefore, investments are not the only factor that matters.
Let's use as an example the situation in the oil and oil refining industry. In January-November last year oil production in the country did not decrease (as compared to the similar period of 1998). Oil refining rose by 2.5 per cent. However, the main point is that according to figures of the State Statistics Committee, over the period of ten months profits reached 77.16 billion roubles in the oil producing industry and 13.1 billion roubles in oil refining, which in both cases is many times more than in January-October 1998. Moreover, last year 133 million tonnes of oil were exported from Russia with oil proceeds amounting to as much as $15 billion. These are excellent results. Now let's see what the workers of the said industries got from all these large sums. In the oil producing industry the average wage equalled 3,318 roubles in November 1998 and 6,500 roubles in November 1999. In oil refining the wage rose over that period from 2,483 roubles to 3,878 roubles. Against the background of our overall poverty these sums may seem to be impressive but, first of all, it is necessary to take into account the hard conditions for oil employees and, secondly, this example clearly demonstrates that the wages of the bulk of workers is very weakly linked with the profits which the sector sees. It may rise, let's assume, by 6-11 times while the level of wages will go up only by 1.5-2 times. Meanwhile, directors of enterprises and top managers get a monthly pay of $10,000-$15,000 and even more (in terms of US currency). Possibly these specialists are worth this money but isn't the gap in wages too large?
It is also possible to cite many other examples when the increase of the average wage noticeable lags behind the rate of profit growth in a particular sector. For example, in machine-building and metal-working the favourable balance for the first ten months of the previous year equalled 33 billion roubles or 11 times more than in the respective period of 1998 while the wages rose over the same ten months by only 1.5 times. Incidentally, the wages failed to reach the country's average pay. On the whole, over that period profits in industry increased by 27 times while wages did so by only 1.5 times. Taking into account the fact that prices also simultaneously rose by one-third, the real wage increase will turn out to be quite insignificant.
As for the employees of the budget-financed sphere, authorities of all levels significantly owe teachers, doctors, nurses and social workers. In the spheres of education, culture and art the average pay is even below the subsistence level in general and in health care it has barely exceeded the poverty line. In these sectors the salary level is two times lower than in industry. The situation is aggravated by the multi-billion arrears of wage payments (the greatest arrears are in the education sphere).
Finally, we cannot but mention the minimum wage. Its current size is about 85 roubles, which actually makes a mockery of common sense.