Working class and labour movement (Part 2)
This is the second section of David Mandel's survey of the author focuses on unemployment, income and the situation of Russian workers and the labour living standards. The survey is reprinted with the kind movement in the fourth year of "shock therapy", the permission of the British magazine Labour Focus on state-driven forced march to capitalism. In this section Eastern Europe, for which the piece was written
The number of jobs in industry shrunk on the average by eight percent between mid 1993 and mid 1994, according to the above-mentioned ILO survey. In some sectors, particularly the vast Russian defence industry, the losses over the past four years have been much heavier. The following are some illustrative figures: at the Kirov Factory in St Petersburg, which specialized in tanks and tractors, employment fell from an original 40,000 to 15,000 by the summer of 1994; at the ZIM defence plant in Samara - from 33,000 to 11,000 by the end of 1994, with 1000 more on involuntary leave; at Moscow's ZIL diesel truck plant - from 116,000 to 70,000 by the summer of 1994; at St. Petersburg's Arsenal aeropspace plant - a 40% drop; at Samara's Aviacor aircraft plant - from 25,000 to 9,000. But even the coal industry, with its political clout and government subsidies, lost 80,000 workers in 1994, close to 10 per
"Voluntary" attrition has played a major role in the elimination of jobs. Workers leave because of the drastic fall in real wages and the poor prospects for their plant. Sometimes management offers severance packages to persuade workers to leave, thus avoiding having to go through the union and a possible appeals process. But permanent layoffs have also been occurring, particularly from 1994, includng among pre-retirement-age work force. These have affected disproportionately, who constitute some 80 percent of the officially unemployed. The other major category is youth, about 40 percent of the officially unemployed Unless there is an upsurge in the labour movement, permanent layoffs can be expected to become much more frequent as privatization and the continued modify management
Russia
As desperate as the economic situation has become for most enterprises, and despite a presidential decree of the summer of 1994 that was heralded as opening the way for bankruptcies, relatively have few so far have occurred, and, according to the Financial
Times, only one in a large enterprise. This was the
Samara Aviacor aircraft plant, which subsequently underwent restructuring under a new courtappointed management, which cut employment by two thirds. But in other cases where large plants have defaulted on debts, the courts have at most allowed the seizure of the enterprise's
"social assets" (clubs, rest homes, etc.) by the creditors.
Assets directly needed for production have not touched. (Of course, they are also less attractive to banks, from the short-term point of view that current dominate economic activity.)
Bankruptcy on a large scale poses a major political problem for the Russian government because of the typically huge size of Russian enteprises, often the town's main employer and supporter of its infrastructure (public transport, housing, heating, cutural and health facilities, etc.)
This helps to explain, for example, why the Russian government, for now at least, has been cool to the World Bank plan to
"restructure" the coal industry through massive closures that would cut over half the work force.
However, one should not rule this out for the future. The head of the Federal
Employment Service predicted a sharp rise in unemployed in 1995. The government is held back only by pragmatic political
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International Viewpoint #268 July 1995
Russia considerations: how far can it go before an effective opposition finally arises? But some small provincial towns have already lost their main industrial employers.
The sectors that are now actually hiring are trade, finance, and other services used principally by the new bourgeoisie, as well as construction in some areas, this too largely serving the private and business needs of that class. Among the rapidly expanding services is private security. Not surprisingly, Moscow, the main business centre and the entry point for international firms, has the lowest unemployment rate of all Russian towns and regions.
A trend that is beginning to manifest itself is the shift toward "flexibile" employment through short-term, individual contracts. For example, auto plants, whose markets have been relatively stable, now use such contracts to fill vacancies on the assembly line with students and foreign workers. They are also being used in construction. In other industries, management is testing the ground on white-collar personnel. A strike over this issue in March 1995 at the Bolshoi Ballet halted performances there for the first time in almost two centuries.
Thus, for most workers, the de facto job security and the full employment of the Soviet era have become only fond
Whereas the old Soviet consitution included the right to a job, the • one written by the Yeltsin after he crushed the parliament in October 1993 declares only that labour is "free". The threat of losing one's job, something that three years ago few workers took seriously, is now a palpable reality. The appearance of a reserve army of labour has deprived workers of their former power to "vote with their feet". This has strengthened management and dampened labour militancy. Even in Moscow, where unemployment is relatively low, health authorities report that sick workers avoid going for treatment out of fear of losing
Female employment has suffered disproportionately from "shock therapy". Discrimination against women in hiring and layoffs is sharply on the rise. This has the government's sanction: the Minister of Labour has argued publicly that it is natural for companies to prefer men to women, the former being more reliable, as they are not distracted by family responsibilities and by having babies. The increased economic pressure on women has made them particularly vulnerable to sexual harassment on the job, which is very widespread. Job advertisements, especially in the growing private service sector, openly specify "long-legged 20
International Viewpoint #268 July 1995 blonds," "friendly girls", "good attitudes". 2. Income and Living standards a. The Wage System
Despite price liberalization and the official free-market ideology, the state continues to play a central role in regulating the price of labour in the private sector through taxation: as noted earlier, any part of the enterprise consumption fund (wage bill) in excess of six times (before Janaury 1994 - four times) the state minimum wage multiplied by the number of employees is heavily taxed as profit. Some enterprises try to get around this, for example, through life insurance schemes that allow untaxed payments to policy holders, but overall this policy has been achieving its goal of keeping wages low, while other prices reach world levels. The wages of the twenty million public service workers are directly controlled by
When the minimum wage was introduced by the present regime, it was presented as a social guarantee: the bottom rung of the wage scale for public service workers and the basis for calculation of various social allocations for the entire population as well as for judicial fines, and the like. However, in February 1995, the Minister of Labour acknowledged that the minimum wage was less than a tenth of the official subsistence minimum required by a single person. In April it could buy 1 kilogramme of sausage or 400 grammes of government has systematically flauted the law requiring quarterly revision of the minimum wage -in 1993 it was raised twice and in 1994 only once, and remained significantly below less than what the law required. In February 1995, the government vetoed a parliamentary bill that would have doubled the minimum to 54,000 rubles, a little under one fourth of the minimum susbsistance wage. It was considered inflationary and would have cut into government tax revenues from enterprises.
Another form of wage restriction is the government's regular, and illegal, practice of delaying payment of wages to public service workers. A similar effect is achieved by delaying payment of subsidies to state-owned enterprises and payment to enterprises for goods sold to the state. These delays can reach up to five months, and when they are finally made there is no compensation for inflation. Inflation in the first half of 1995 was still above ten per cent monthly, and since the start of "shock therapy", consumer prices have risen by
On March 10, 1994 Yeltsin issued a decree attaching legal responsiblity for delayed wages but, for obvious reasons, the law provided no clear enforcement mechanism. The government's real policy - which comes down to robbing the work force - is to pay its debts selectively to groups of workers whose protest potential presents the greatest political or economic threat. In passing, it should be noted that official wage figures assume that wages are paid on time.
Under the old system, sectorial wage scales were centrally fixed. Enterprise management did have a certain leeway through the bonus system and also through the often arbitrary assignment to workers of higher-than-merited skill categories. Nevertheless, the enterprise's wage bill, as well as the size of the work force, were fixed by the plan which had the force of law though plans could be, and quite often were, renegotiated).
By contrast, the new wage system is highly decentralized, based upon collective agreements concluded individually by enterprises. At the base of this system is supposed to be the national General Agreement between the national union federations, state and national employers' associations, which is to set the minimum framework for all other agreements, on the sectorial and then enterprise levels. This is the official policy of "social partnership." However, in 1994, the national agreement was signed only after the sectorial or tariff agreements, so it could hardly play its assigned role. Moreover, the national as well as branch agreements in practice are not legally binding on employers, since the law does not require membership in employers' associations capable of imposing discipline in their ranks. The role of the sectorial agreement in the coal industry is an exception, since this is still a mainly state owned and subsidized sector. But the miners have had constantly threaten strikes and repeatedly to strike to force the government to live up to the
Only the wages of public service workers are indexed by law, though, as noted, the government flaunts the law. This renders meaningless branch agreements that set the minimum branch wage as a multiple of the state's minimum wage. Generally, regular indexation is enjoyed only only by the relatively more prosperous enterprises (eg. VAZ, whose collective agreement provides for monthly indexation according to the price of a consumer basket), by politically relatively powerful groups of workers (e.g. the
coalminers, whose tariff agreement calls for quarterly indexation) or, finally, by workers in monopoly sectors, like public
The two basic determinants of relative wages are the market situation of the sector and of the individual enterprise and the political clout of the workers. The best paid industrial workers are in sectors with access to foreign markets and/or that are structured along monopolistic line. At the end of 1994, the highest industrial wages were paid in the fuel sector, especially in gas (six times the average) and oil (2.2 times). Wages in the coal sector, on the other hand, once among the highest in economy, have fallen significantly relative to the others, though they remain double the industrial average, largely thanks to the exceptional militancy of the miners. Wages in metallurgy are above-average, but significantly more so in the nonferrous sector, which has a strong export market. As a rule, the closer to extraction, the higher the wages.
Wages are also above average (1.4 times) in the transport sector, a reflection of its monopoly structure. In construction, which now serves mainly the business and private needs of the new bourgeoisie, wages are 1.3 times the industrial average.
Wages in most processing industries, especially light industry and textiles, metalworking and machine-construction (much of which was part of the defence complex), are well under the industrial average (half for light industry and 0.8 for metalworking and machine-construction), a consequence of the sharp drop in demand and the rise in costs of energy and raw materials. The passenger car and small truck industry is one of the few exceptions, thanks to the relatively stable demand of the nouveaux riches and to state protectionist measures. In Moscow alone, there was an increase of 350,000 cars in 1994. In the midst of an unprecedented peacetime economic crisis, Moscow over the past years has become the scene of immense traffic jams.
The average industrial wage in December 1994 was slightly above the overall average for the economy (1.07%). In the service sector, traditionally at the bottom end of the wage scale, public sector wages (in health, education, science, culture) are still among the lowest in the economy, from one half the national average in culture and art, to two thirds in health, to three quarters in science. On the other hand, the banking and financial sectors, which were once also at the bottom of the wage scale, are now at the top, with wages 3.6 times the national average. It is into this sector that the accumulated national wealth, as well as that wealth that is still being produced, is being transferred. Therehave been cases of doctors leaving their jobs in Moscow public health clinic to clean banks. "At least I'll earn something with which to support my family, explained one former
Thus, the combined effects of the market "reform", the economic crisis and weak worker solidarity have put an end to the relatively egalitarian wage system of the Soviet era: the ideology calls for wages to be linked to the enterprise's market situation. In April 1995, the average wage in the gas industry, the highest industrial wage, was ten times higher than the average wage in agriculture and four times the average wage for the economy. wage system has also lost its former intrasector uniformity. For example, within the metallurgical and mining sector, in the summer of 1994, workers' wages varied all the way from 70,000 to 700,000 rubles
Differentation has also increased significantly within enterprises between and workers. managerial salaries have typically become "commercial secrets", selective data show the gap to be growing, reaching up to 20 times and more. And despite the market ideology, managers' salaries are weakly correlated to profitability.
Apart from wages, workers receive various payments from the enterprise, such as material aid in case of particular need, a food and travel allowance, in some cases a housing allowance. However, these on the average correspond to only 8% of the wage and are proportionately higher in the better paid sectors (e.g. 15% in the financial sector), so that they tend to
Russia increase inequality.
Because of the growing sectorial differentation, the wage gap between regions is also growing, with wages highest in the resource-rich Siberian regions, as well as in Moscow, and lowest in central Russia, where machineconstruction and light industry predominate.
Another key dimension of wage differentation is the growing gap between women's and men's wages. Because of vertical and horizontal segregation in the Soviet period, largely the result of unequal family burdens but also a consequence of direct discrimination, women, who are on the average better educated than men, earned about 70% of men's wages. With the increased economic pressure on women today and the official rejection of gender equality, women's wages have fallen to 40% of men's and continue to fall. b. Real income
The immediate effect of price liberalization at the start of 1992 was to cut real wages by a 61.5 per cent. In the following months average real wages climbed back to about 50 per cent of their pre-shock level but have since continued to fall. In 1994, real income declined on the average by 13.6 percent, with the average income of the active population declining from 1.69 to 1.46 times the very low minimum subsistence income calculated by the state for one adult person. In 1995 the situation has continued to deteriorate - in the first quarter, the average salary was one third lower than in the same period in 1994. The percentage of people earning less than the minimal subsistence wage increased
21 International Viewpoint #268 July 1995
Russia during that period from 25 to 30 per cent
In January 1995, the wages of 90 per cent of public service workers, or 14 million people were below the minimum subsistence wage. That was two and half times more public service workers than at the start of 1994. Half of workers earning less than subsistence could not afford even the minimal consumption basket of 19 basic goods. The minimum pension is just over half the cost of that basket. UNICEF put half of the population of Russia below the poverty line; the government claims
The extent of secondary, unreported. earnings is difficult to gague, since people are obviously not eager to reveal them. Scattered evidence as well as logic indicate that the illegal labour market is quite large. This would help to explain how the unemployed and those with jobs receiving below the subsistence minimum survive. Nevertheless, cases of workers fainting from hunger have been reported in
A large part of the population now has garden plots and, in smaller towns, people may keep animals. In many cases, elderly parents are forced to share their meager pensions with their unemployed children. In larger cities, petty commerce, rental of rooms and apartments, construction, handywork, and, not least, pilfering from the enterprise, often supplement wages. Few people have any savings to fall back upon - the inflation following price liberalization wiped out savings, which the government so far has refused to compensate. Total real household wealth declined 86 per cent as result of price liberalization.
In a study conducted between November 1993 and March 1994, only 13 percent of respondents stated that the income from their primary occupation met their basic needs. Meanwhile, the very concept of "basic needs" itself has been transformed over the past three years. Whatever the real role of income in the informal or illegal sector, there is no doubt that most workers have undergone serious relative and absolute impoverishment and that the main mode of adaptation has been to reduce needs sharply. c. The Declining Social Wage
It is estimated that for every ruble earned in wages in 1984, 69 kopeks were distributed in the form of free or subsidized goods and services from public consumption funds. Thus, the drastic cutback in the social wage has been a major factor affecting living standards. In the 1990, 35 percent of the state budget 22
International Viewpoint #268 July 1995 was earmarked for social needs, as opposed to only 14 per cent of the Russian government's budget for 1995. Already in 1994 87 percent of these expenses had been passed down to local governments that simply do not have the money to pay for them. In 1994, the government, through a presidential decree, even attempted to reduce employers' social security payments from 5.4 to 3.4 per cent of the wage bill, but it retreated under union protest. This move would have wiped out in one blow much of the remaining social wage.
Much of the social wage in the last decades of the Soviet system had been administered not by the state but by the enterprise. The last two years have seen a growing tendency of enterprises and other employers under economic pressure to shed their "social spheres" important of these is housing, the largest part of which was traditionally constructed by large enterprises. New construction for workers has almost come to a standstill over the past two years. Ten million people are on lists for housing allocation, and thirteen percent of these have been waiting ten years or more. The vast majority of young people have no hope of obtaining their own apartment, except through inheritence, since free market rental and purchase prices are well beyond their reach. At the same time, the once nominal rents paid by those who already have housing are gradually rising to cover the costs of maintenance, as enterprises can no longer pay the subsidies.
Enterprises are also attempting to transfer their daycare and health facilities to the municipalities. But the finanical situation of the cities is no better. When the local government does take over these facilities, it cannot keep them in repair. Still other factory-owned facilities, like sanatoria and prophylactic healthcare gradually commercialized and opened to the general public, limiting subsidized access to them for enterprise employees, who are being charged increasingly higher fees. Facilties commercialized, like sports arenas, are simply being destroyed through neglect.
Besides housing, daycare and health facilties, other enterprise-centred benefits that are gradually being reduced in real terms or even completely terminated are subsidies for food, transport, vacations, leisure and cultural activities, payments for burials, weddings, births, retirement
Of course, if these lost benefits were compensated by higher wages that enabled the workers to purchase the serices, or if the state were taking over their administration in full, then the changes could have the beneficial effect of reducing workers' material dependence upon the enterprise and its management. But this is not happening.
A study by UNICEF covering the period 1899-1993 found abnormally high death rates for males that "parallel or surpass those normally observed in wartime
This, according to the study is the "real cost of the collapse of communism." It would be more accurate to attribute responsibility government's "reform", about which there is nothing inevitable. In 1993 alone, male life expectancy declined by 3.6 years (to 59 years) and female by about two years (72). Among the main causes are: the breakdown of the underfunded public health system (in theory still free, but in practice increasingly based upon user payment), poverty, increased alcohol consumption (a major government revenue), the rise in crime, domestic violence and suicide, and the spread of infectious diseases. All these factors are attributable to the the economic crisis and the related loss of economic and
The economic crisis has led enterprises to cut spending on health and safety, at the same time as workers have become less demanding and observant of safety norms. A major factor contributing to the decline of health-and-safety standards enforcement was the governmen's decision in 1993 to taken over the technical inspectorate from the unions. The result is reduced state funding and an inspectorate more easily influenced by management. coalmining, according to the head of the State Technical Inspectorate, the decline in technical levels has been "catastrophic" Occupational illness have increased 2.4 times in the past four years. This tendency for traumatism and professional illnesses to rise exists in all branches, despite the sharp decline in production. According to the president of the Metal, Foundry and Mining Workers' Union:
"The crisis situation in the economic and social spheres has greatly weakened attention to health-and-safety issues... Forty out of every thousand workers work in conditions that don't correspond to health-and-safety norms. The situation has worsened in relation to the supplying of workers with individual safety equipment and clothing. Enterprises have significantly cut back in spending for health and safety." e. Declining popular access to
quality education and culture
The "reform" and the economic crisis have reduced popular access to secondary and higher education. Free and universal complete secondary education, ten years of schooling, was one of the key social reforms of the Khrushchev era. This has ended under a new "reform" that has put admission to the tenth year ona competitive basis, with the decision left to the school administration. University education is also no longer free, though a certain number of free admissions are set aside for exceptional students from poor families. But all but students with rich parents are forced to work to support themselves, since the real value of student stipends - miserly under the old regime has become almost symbolic.
Even the strongly pro-"reform" Financial Times has lamented the decline in popular access to quality culture. It belatedly acknowledged that under the old regime, despite political controls, high quality cultural services and goods were accessible to the general population. "free market" and curtailment of state subsidies have put an end to this. The little that remains, primarily through television and cheap publications, is often the worst of what the capitalist, especally Amercian, world has to offer. Russianmade films have practically disappeared from cinemas, whose main fare has become action and sex films. Centres for popular culture and sports are being closed and rented to businesses, and those that maintain their former functions are being priced out of reach of many citizens.
The precipitous decline of Russian science, while not directly affecting workers, is an indication of the type of economic structure and jobs that will emerge if "shock therapy" runs its course. Between 1990 and 1993 alone, 1.2 million scientists, almost a third of the total, left science, mostly for the business sector or to emigrate. Spending on scientific research and development as a percentage of GNP is a quarter of what it was in 1985, while the GNP itself is about half of what it was in 1985. f. An increasingly unequal society
While diffentiation among workers grows apace, inequality has increased much more rapidly between the mass of the wage-earning population and the "new Russians" or bourgeoisie. The latter are often indistinguishable from the criminal elements inside and outside the state apparatus. Even Yeltsin's Minister of
Labour has been moved to describe this level of inequality as economically and socially unjustified."
In the first three years of "shock therapy", according to official statistics, the income gap between the best-off ten per cent and the poorest ten per cent grew from 4.5 to 16 times. In 1994, the earnings of the first group were equal to the earnings the entire lower two thirds of the population. And according to the Ministry of Labour, the gap in reality is much greater. The growing differentiation has occurred on the background of a major decline in total national income during the same years. The effect of the relatively more stable distribution of non-monetary benefits, such as housing subsidies, medicine subsides, food from plots, has only slightly moderated the gap.
According to the government, the incomes of the top 20 per cent grew by over 30 per cent in 1994, while those of the bottom 20 grew by only five per cent. "Behind the overall increase in incomes hides the rapid growth of the well-being of some and the impoverishment of others." Yet this is hailed by a World Bank publication as bringing Russia into line with market standards, as if this were in itself proof that the change is for the better.
As noted, regional differentation is also growing, with the highest average incomes in Moscow at 2.9-3.4 times the subsistence minimum, followed by the resource-rich areas east of the Urals, especially the Tyumen' region, at 2.4-2.9. At the other end of the scale are the central and southern European regions, the Urals (all dominated by machine-construction), Southern Siberia and the Far East, where average wages are only 0.7-1.2 times the minimum subistence income. However, the regions with the highest average wages are also those with the greatest wage inequality, so that they too have a large proportion of poor population.
Russia
It is impossible precisely to assess the changes in the distribution of wealth over the past few years, since almost everything but consumption goods were national property under the Soviet system, though managed by the state-party bureaucracy in its own interests, and there is no reliable data on the value or real ownership of the vast part of this economy that has been officially privatized. This will probably not become clear until the transitional periods ends and some level of economic and political stability is reached.
What is already clear, however, is that despite the distribution of vouchers to the population for the purchase of stocks, as well as the widespread opting by work collectives for the second form of privatization, which gives them (including management) up to 51% of the enterprise's shares, privatization in practice has been one of the biggest, if not the biggest, swindles in human history. Without any pretense of democratic consultation, it was forced upon a population that consistently opposed privatization of large enterprises. Moreover, even by the state's own legal norms, the process has been rampant with corruption and widespread violence.
Despite the broad stock ownership, workers, and the population as a whole, today have less say in running their enterprises and the economy than was the case before privatization. Moreover, because of the widespread poverty, the original dispersion of shares is proving short-lived, as domestic and foreign capitalists buy up those that represent any value for a song.
23 International Viewpoint #268 July 1995
Sixth Anniversary of Tiananmin Square massacre