Economic Crisis

Putinomics

Guest: Chris Miller on Putinomics: Power and Money in Resurgent Russia published by the University of North Carolina Press.

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Russian Labor, Class, and Conflict

Guest: Steven Crowley on the Russian labor movement.

Mapping Russian Labor Conflict

In July, the Center for Economic and Political Reform, a think tank that monitors and studies social and economic issues in Russia, released a report on labor conflict in the second quarter of 2016. In this period, TsEPR identified 263 incidents in 65 regions in Russia, 34 more than the first quarter. Fifty-six were specifically labor protests (hunger strikes, strikes, pickets, etc).

The overwhelming majority of these incidents, 171, concerned unpaid wages. The most recent examples of workers’ efforts to fight for unpaid wages are the ongoing hunger strike of 175 miners in Rostov province under the slogan “We are not slaves” and AvtoVAZagregata autoworkers, who haven’t been paid for almost a year, blocking a federal highway. This action was in response Samara’s governor Nikolai Merkushkin cutting down a worker’s question about her back pay with, “Well, I want to say that if you speak in that tone, [it will be] never! Never!”

As this TsEPR map of labor conflict throughout Russia shows these workers fighting for their rights are hardly alone.

point-red Protests connected with labor conflicts (strikes, pickets, etc)
point-yellow Reduction of work hours
point-blue3 Withholding pay (various pay)
point-orange1 Layoffs
point-green2 Reduction of pay
point-purple Protests unconnected to labor conflicts

 

There Is No Other Way

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Oleg Shein posted the following on his Facebook page:

Today, the State Duma adopted a law raising the minimum wage from 6200 to 7500 rubles. This is definitely a good move. In fact, it’s not so small for workers who earn pennies. In 2011, 2.3 million people earned less than a subsistence wage in the formal sector of the economy alone.

But there’s cause to compare this with other countries. 7500 rubles equals $116 at the current exchange rate. At a standard 40 hour work week totaling a 167 hour working month, this comes to 70 cents an hour. The Russian Federal State Statistics Bureau traditionally considers the ruble undervalued by about 40%, as is easily found on its website. If we assume that the ruble is not undervalued by 40%, but by 70%, then the hourly rate minimum wage would be $2.

Compare this with the minimum wage purchasing power parity of other countries. Honduras $2, Laos $2.10, Iraq $ 2.40, Thailand $2.86, Paraguay $3.57, and Turkey $5.89.

Who would have thought that 25 years ago Soviet citizens compared the incomes in the USSR with Norway and Sweden? And the reason is simple: to receive a decent wage under capitalism, you have to fight for it, form trade unions, go to protests, and go on strike. There is no other way.

Russian Debt Collectors’ Reign of Terror

collector

I wrote an article for OpenDemocracy on microloans and debt collector violence. I’ve been mulling the article since January when I read a gruesome story about a debt collector throwing a Molotov cocktail through the debtor’s window severely burning his two year old grandson. A Google news search revealed that though this incident was one of the most tragic, it was hardly exceptional. But the idea sat and so did the saved links.

Then two things happened.

First, was all of the reporting on Putin’s alleged connections to $2 billion in the Panama Papers. Many Western reporters were bemoaning the fact that the Russian federal media wasn’t covering the story and how the details in the Papers revealed the nature of corruption and power in Russia. As usual, Mark Galeotti provided one of the more cogent comments. But besides Mark’s intervention, most commentary read as recycled verbiage salted and peppered with new flashy metaphors.

Second, on April 5, another story sprang up in the Russian press. In the town of Iskitim in Novosibirsk oblast, four masked debt collectors broke into the home of Natalia Gorbunova, beat her husband and 17-year-old son, and then raped her in front of them. Gorbunova had taken a 5,000 ruble microloan in 2014 and now the collectors were demanding 240,000. 

It was the contrast between the global media outcry and analytical mummery about Putin’s alleged billions and the complete silence about what ordinary Russians like Gorbunova have to deal with. But this is always the case. Stories about the Gorbunova’s of the Russia are few and far between. It’s easier to obsess over Putin than to illuminate the complexities of Russian daily life.

I hope that my OpenDemocracy article is a modest contribution to the latter.

Here’s an excerpt:

Media reports of harassment and violence against debtors have become all too common. Most debtors and their relatives are subject to constant harassment —in Stavropol, debt collectors shut down a hospital’s phone system with their constant harassment of a hospital worker over the telephone. Similar incidents have happened in other towns as well. 

Threats and outright violence are increasingly frequent. In January, debt collectors in Ulyanovsk threw a Molotov cocktail through the window of a 56-year-old grandfather, severely burning his two-year-old grandson. The grandfather took a 4,000 rouble ($60) loan to buy medicine; the collectors demanded he pay them 40,000 ($598).

In Krasnodar, a debt collector broke a woman’s finger over a 300 rouble ($4.50) debt payment. In Penza, a 54-year-old woman took a microloan for 30,000 rubles ($448) to, once again, buy medicine. She put her home down as collateral. The collectors now say she owes 470,000 rubles ($7,022), and as a result, they’re to seize her home. In Rostov-on-Don a collector was sentenced to ten months in prison for threatening to blow up a kindergarten if an employee didn’t repay his loan.

In Yekaterinburg, collectors “cut the telephone wires and filled the locks with glue” as they locked a debtor’s child in an apartment. Aleksei Selivanov, a Yekaterinburg lawyer who defends debtors against predatory lenders, was threatened by a group of collectors led by Maksim Patrakov, a former Donbas volunteer fighter. According to the jurist, Patrakov threatened to throw him in a car trunk and murder him out in the forest. The media is filled with these stories.

In some cases, the crushing debt and constant threats and harassment are just too much. The only exit many see from this vicious cycle is suicide.

Read on . . .

19 Million Russians

Over 19 million Russians live in poverty, according to a recent article in Dengi. But how is poverty determined in the Russian context?

For Rosstat to categorize you as in poverty, you need to have an income lower than the subsistence minimum. For the majority of Dengi readers, this level is mockingly low: 9,452 rubles ($139) a month (10,178 rubles, $150, for an able bodied person, 7,781 rubles ($115) for pensioners, and 9,197 rubles ($136) for children according to levels the government set in the fourth quarter of 2015). There are many such people (19.2 million, or 13.4 percent of the country), and they are increasing (by an additional 3.1 million people last year).

This is, of course, higher than the index the World Bank uses to determine the poverty. Since 2015 it’s at $1.90 a day, that is about 4,000 rubles a month at the current exchange rate. However, here the word “poverty” (bednost’) is a translation of the English word “poverty” which more corresponds to the Russian word “destitution” (nishcheta). But apparently there are still quite a few of these in Russia, though there aren’t any accurate or up to date estimates. Rosstat data provides the best possible approximation: 3.3 percent of the population had an income below 5,000 rubles a month in 2014.

Percentage of the Russian population earning less than the highest subsistence minimum

Percentage of the Russian population earning less than the highest subsistence minimum

Poverty, as the Dengi article emphasizes, is also a subjective category. A person is poor if he or she feels poor. The article cites one Dengi reader, a businessman from Moscow who, before the recession, thought that an income of $10,000 a month was poor. Now this entrepreneur’s family of four lives off of $4000 a month, a bit more than Moscow’s per capita income of 60,000 rubles ($886) a month. Not exactly poor compared to many, many Russians but certainly poorer, a condition Dengi calls the “new poor.”

Russia's regions ranked by poverty index.

Russia’s regions ranked by poverty index.

This “new poor” is arguably a bigger political problem than the 19 million Russians living under poverty. These people, after all, are the beneficiaries of Putinism—how could a guy who thought that an income less than $10,000 a month was poor not be—and having tasted the “good life”—vacations abroad, disposable income, and a decent level of conspicuous consumption—are now seeing it gradually whither under Russia’s recession. Other anecdotal evidence from Russia’s educated and skilled classes tell a similar story.

Ranking of Russia's regions by percentage of population living below the poverty level.

Ranking of Russia’s regions by percentage of population living below the poverty level.

But it’s not just “Putin’s children.” Putin’s “silent majority” are also feeling the pains of recession. The subjective sense of impoverishment is a cross class phenomenon.

Indeed, a recent Levada Center poll revealed that Russians think the three most important problems in the country are rising consumer prices (77 percent), poverty (49 percent) and growing unemployment (43 percent).

There’s also been an increase in labor and social protest. The ongoing long distance truckers’ protest is the most visible manifestation of Putin’s “silent majority” becoming more vocal. And while most of these conflicts remain small and localized, they might prove trouble for United Russia in the upcoming local and parliamentary elections.

A new project by the Center for Economic and Political Reform (TsEPR) seeks to track and map labor protests in Russia. According to their first results, there have been 132 labor conflicts in the first two months of 2016. Over half of them have been over wage arrears (as of March 1 recorded wage arrears amounted to 3.3 billion rubles or $48.7 million). Here’s a map of what the TsEPR calls the “social and economic hot spots.” The provinces with the highest number of protests include Samara, Sverdlovsk, Chelyabinsk, and Kirov regions. Interestingly, the poverty rates in these regions tend to measure below the federal average: Samara, 12.6 percent; Sverdlovsk, 8.3 percent; Chelyabinsk, 11.7 percent; and Kirov, 12.7 percent. Meaning that it’s not the impoverished who are protesting, but those trying to maintain their standard of living in rough economic times.

And this is all at a time when journalists are digging up real estate and offshore schemes linked to Vladimir Putin, his family, and circle, not to mention many others in the Russian establishment. But, sadly, Russia is no outlier here, only a symptom of a more widespread disease. It should be stressed that Putin’s people are using the very methods and institutions many of the world’s oligarchs, criminals and notables employ to secretly squirrel away their billions.

But, hey, this is all part of a Western smear campaign to discredit Russia before the elections, right?

Well, tell that to the 19 million Russians living on less than $139 a month.

 

The Economics of Putinism

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Guest:

Peter Rutland is a professor of government at Wesleyan University. He writes widely on Russian political economy and politics and is author of two books The Politics of Economic Stagnation in the Soviet Union and The Myth of the Plan: Lessons of Soviet Planning Experience. His most recent article is “Petronation? Oil, Gas and National Identity in Russia,” published in the journal Post-Soviet Affairs.

Music:

Killing Joke, “Money is Not Our God,” Extremities, Dirt, and Various Repressed Emotions, 1990.

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