Unpaid Back Wages In Russia Now Increasing Monthly At A Double Digit Pace – OpEd

In order to conceal just how much the Russian economy is hurting and keeping unemployment numbers low, the Russian government is using its leverage to force firms to keep their workers in their positions even when the firms lack the money to pay them their wages and salaries.

A month ago, Rosstat, the state statistical service, reported that wage arrests rose by 16.4 percent in November alone to more than a billion rubles (16 million US dollars), an enormous sum in a country where the average wages are as low as they are in Russia (sibreal.org/a/dolgi-po-zarplatam-v-rossii-prevysili-milliard-rubley/32202090.html).

These wage arrears are greatest in processing industries, in major cities, and among those aged 35 to 44, workers who likely have just started families and fear what may happen if they leave their positions and search for a new one, according to a HeadHunter survey  (rbc.ru/economics/22/12/2022/63a2e5ba9a7947fd8d9dc12c?from=from_main_7).

Maksim Mironov, an economist at the IE Business School, says that market conditions should have led firms to lay off workers they can’t pay; but the government won’t allow theme to do that. As a result, they are holding on to workers but not paying them, a situation that became notorious in the 1990s.

The government is providing some funds to firms to keep them afloat, Mironov says; but how much is unclear given that a veil of secrecy has been thrown over this effort. If this source of money runs out, such firms could collapse even more rapidly because of the uneconomic approach they have been forced to adopt.