Thread by @NoYardstick

A couple of recent examples of problems with salary payment in Russia, which were important enough to make the news.🧵

The State Traffic Air Management Corporation may not have funds to pay salaries in late September, due in part to the double whammy that the COVID crisis and sanctions delivered to it.
moscowtimes.eu/2022/08/30/gos…

CNII Electronica, a Rostec contractor, which plays a key role in the development strategy of the Russian radio-electronic industry (ostensibly itself a priority due to sanctions), where employees turned to Putin himself due to wage arrears.
cnews.ru/news/top/2022-…

Ural Compressor Plant, Yekaterinburg, where, after wage arrears and strikes the management apparently decided to “reorganize” (read: reduce) wages from October. The company couldn’t pay workers due to failed export contracts and frozen partner accounts.
66.ru/news/society/2…

Inskoy coal mine, Kemerovo region. The company is in a state of bankruptcy due to sanctions affecting the coal industry and currency transactions.
gazeta.a42.ru/lenta/news/143…

Gemont, a Turkish construction firm and partner of Sibur, in Nizhnekamsk, where wage arrears due to the bankruptcy of the company led to a strike in July. activatica.org/content/a47767…

Medical workers in Altai and construction workers in the Irkutsk Region.
sibreal.org/a/v-rossii-nac…

GruzovchikoF transportation company, St. Petersburg, where in July drivers mounted a protest after the company essentially cut their wages in half in an attempt to keep clients.
fontanka.ru/2022/07/18/714…

Astek housing utility firm, Tula, where employees started a strike after months of wage arrears and the Investigative Committee opened an investigation into the matter.
1tulatv.ru/novosti/180060…

Several extractive, construction, transportation and other firms in Buryatia.
regnum.ru/news/society/3…

Somewhat different, but of course there are also several examples of members of “volunteer battalions” not getting paid, or less than they were promised, e.g. this one from Chuvashia.
ridus.ru/news/386056

In total, Rosstat’s figures do not show a huge increase in wage arrears. Actually, after an initial uptick in February-May, arrears started declining and stood at 732 million rubles as of August, far from levels seen in 2020-21 (let alone the 1990s)
rosstat.gov.ru/storage/mediab…

Of course we need to add that several companies furloughed their workers, temporarily reduced their salaries or took away a part of the salary received as bonuses (as the example of the Altai hospital shows).

Even official figures show significant regional variations with Ingushetia, Kaliningrad, Leningrad, Kaluga, etc. facing rapidly increasing wage arrears as of August. Manufacturing and construction have accumulated the most arrears so far, but there will be spillovers.

It is also important to add that wage arrears are by far not a novel problem in Russia – they were a huge problem in the 90s and economic crises have traditionally led to higher arrears rather than high unemployment.

It’s worth reading this excellent recent Stephen Crowley piece on this phenomenon and why protests have stayed localized:
ridl.io/sanctions-econ…

Also, many of these companies have been struggling with problems before the February invasion.

However, this underlines the point that sanctions are hitting an already weak economy and exhausted population. What makes this crisis different is that there’s no clear way out.

What can the authorities do? For one, they can prosecute companies that don’t pay wages, as they have done in several of the above cases.

The Ministry of Industry also suggested restarting labor inspections at companies where at least 10 percent of the workforce or at least 10 people have complained of labor rights violations, e.g. wage arrears.
delprof.ru/press-center/l…

In some cases, as in the case of the Air Traffic Management Company, the federal government will try to make funds available – or already has – but this doesn’t always work like clockwork, and is not always an available option.

In many cases, regions may be asked to pick up the check (and will then try to lobby for more money from the federal budget), as it happened, for instance, in July when salaries owed to the workers of the Lotos shipyard in Astrakhan were paid.
rg.ru/2022/07/04/reg…

Regions will also be able to free up some money by not filling positions. In education and health care salaries of retiring employees can be “spread” to raise the salaries of remaining employees w/o allocating more money to wages. But these systems are already overstretched.

In the private sector, firms can be pressured to keep paying (reduced) salaries just to keep people on the payroll. During the COVID crisis, regional governments required local employers to pick up part of the bill several times, also during the 2021 summer vaccination campaign.

At some point, however, as the story of AvtoVAZ’s Izhevsk plant suggests, without a clear outlook to exit the crisis and go back to normal, companies will have to give in.
telegra.ph/Bolshe-15-tysy…

If the problem balloons (it hasn't yet), sooner or later regional budgets will run out of money, political capital or repressive force. It will not happen overnight, but every month with a lingering uncertainty of when things can get back to normal pushes them closer to this.

Especially if you consider how debts to contractors and budgets seemed to be increasing already, as of Q2 2022.

Not a crisis yet - but a space to watch as timelines shift and outlooks worsen in the autumn.
moscowtimes.ru/2022/08/30/ros…