The Russia Working Class and
Labour Movement (Part One)
The ability of the Russian labour movement to organise the working class is a key element of any renaissance of the left in that country. We are happy to begin the serialization of a comprehensive study of the Russian working class by David Mandel. Over the coming months he will discuss the economic and political situation ot labour, and worker-management relations under privatization. These articles represent a survey of the situation of Russian workers and of the labour movement in the fourth year of "shock therapy" - the state-driven forced march to capitalism!. The author is currently completing this work with further sections on collective actions and labour politics and an analysis of the perspectives for the labour movement.
I. The Economic Situation of Labour 1. Employment
The vast decline in Russian GDP (in 1994 it was just over half of that of 1990) and the rapid growth of poverty would normally lead one to expect a major rise in unemployment. Yet, at the end of 1994, the officially unemployed, defined as those actively seeking work and claiming unemployment benefits, were only about 2% of the economically active population.3
These figures reflect the weak incentive for the unemployed to sign up at state labour exchanges, due to the very low benefits (about $13 U.S. a month) and the stigma attached, as well as the reluctance of exchange officials to register the unemployed. Most unemployed workers avoid labour exchanges, and many of those who go do not register.4
In addition, enterprises have been dismissing their pensioners first, many of whom under the old system continued to work in order to supplement their pensions. For example, almost all of the 4000 jobs lost in 1994 at the giant VAZ auto enterprise were pensioners, the remaining being voluntary departures. In 1995, management plans to dismiss 5000 more workers, again predominantly pensioners. These workers, who have little chance of finding other work, do not appear in official unemployment statistics.
Another factor keeping official umeployment figures artificially low is the practice of administrative leave, which became widespread in 1993. (By law, workers can take extra leave only at their own request). Sometimes this is paid at two thirds of basic pay (basic pay is ordinarily less than half of normal takehome pay, the amount prescribed by law for work stoppages that are the fault of management. If the enterprise cannot pay but can prove to the state Employment Service that it has a realistic plan to regain solvency, employees with at least one-year seniority and no other singificant familial income may receive from the state the minimum wage (far below the subsistence level) during three months 14
International Viewpoint #267 June 1995 starting from the second month of layoff; or else, the enterprise can borrow the money from the state Employment Service to allow it to pay up to four times the minimum wage (still below subsistence). 6
There are several factors involved in management's preference for administrative leave rather than permanent layoff. By keeping the enterprise's official workforce high, enterprise management can pay those actually working relatively higher wages while avoiding the heavy taxes that are applied to the part of the total wage bill exceeding an average per worker of six minimum wages. This part is not treated by the state as a cost of production but rather as profit and is taxed at 35-38%. Management may also be motivated by a desire to keep in tact as long as possible, an experienced, skilled work force in the hope that the economic situation will improve or that government policy will change.
Liberal analysts see this latter attitude as a holdover from the Soviet era that has yet to yield before market pressures - this despite the much-vaunted "success" of privatization (over 50% of the GDP in 1994 was generated by the formally private sector).? example, in the spring of 1994, when management at a Samara ball-bearing plant debated the issue of giving up its daycare facilities to the municipality, the more traditional, production-oriented managers argued that they were necessary in order to keep young workers at the plant. By contrast, the more market-oriented directors for finance and marketing pointed to mass unemployment as offering a ready supply of labour. (The Soviet system was characterized by an overall chronic shortage of labour.) But the traditionalists argued that new workers would not have the required experience or skills. The decision was postponed, but eventually economic constraints forced management to give up the daycare facilites.®
By not formally dismissing workers, management also spares itself the expense of severance pay, at least two months wages. At the same time, the government is not forcing bankruptcy proceedings or pressuring directors to layoff workers permanently, fearing the added economic burden on the state budget and, more importantly, the political threat of open mass unemployment. For the government, administrative leave is a relatively safe and cheap way for enterprises to shed excess labour. But for workers, it results in a weakening of their economic and moral link to the enterprise and to its collective, undermining class identity and the potential for solidary action. Moreover, where the opportunity exists, workers on administrative leave are forced into the shadow economy, where there is no legal protection or social rights, thus pushing down wages and conditions in the legal labour market.
According to an ILO study, one fifth of all industrial workers were on forced leave in the fall of 1994, while 35% of those officially working were in fact idle? For example, in October 1994, in the Siberian city of Omsk with a population of over a million and only 3000 officially unemployed, one third of all formally employed workers in the city's defence sector, its major employer, were not working. 10 In the Russian textile sector alone, two-thirds of the workers were not fully employed at the end of 1994. Over forty mills in the Ivanovo area were idle.!! In the lumber industry, according to one report from the fall of 1994, half of the work force was idle.!2