Russian Unemployment Figures Rapidly Rising

On Tuesday April 14, traffic on the Garden Ring Road in downtown Moscow was seriously hampered, as President Dmitry Medvedev made a high profile visit to the Institute of Contemporary Development (INSOR) -his pocket think tank, staffed with many known liberal academics. Medvedev’s formal position as Head of INSOR’s Board of Trustees is a part of his carefully nurtured "closet liberal" image. The Presidential visit to his scholars, stage-managed with all the typical Kremlin royal pomp and massive media coverage, centered on discussing the increasingly alarming problem of unemployment, badly worsened by the current Russian economic crisis (www.gazeta.ru, April 14).

Indeed, according to the Russian State Statistics Committee, among the country’s entire population of 142 million, only 75.6 million (53 percent) are economically active. By late February 2009, 6.4 million (8.5 percent) of the economically active population qualified as unemployed under the International Labor Organization (ILO) standards. Meanwhile, only 2.2 million are officially registered in Russia as unemployed, with 1.7 million of them receiving state support (www.gks.ru).

During the past year unemployment in Russia has doubled (Moskovsky Komsomolets, April 14, 2009), and it continues to grow unchecked, threatening to quickly reach what some experts consider as the critical level of 10 to 12 percent -beyond which social upheavals will become a serious possibility (www.market-pages.ru, April 14).

Hence, Medvedev visited INSOR in order to publicize his concern over the issue. The current 8.5 percent unemployment level, as well as its rapid growth, "Are not the indicators we need," Medvedev stated (www.gazeta.ru, April 14).

Two key INSOR experts responsible for briefing Medvedev on the issue were Yevgeni Gontmakher, Director of the Social Policies Center at the Institute of Economy (Russian Academy of Sciences), and Tatyana Maleva, Director of the Independent Institute of Social Policies. In their interviews with the Moscow-based Echo Moskvy radio station following the meeting, both experts praised Medvedev’s grasp of the issue and his understanding of the general need for Russia’s modernization as a remedy for unemployment among other economic and social ills. "It is not like when they talk to you in the cabinet," Maleva said pointedly in what sounded like a jibe against Prime-Minister Vladimir Putin. "There, on the contrary, the conversation goes like ‘Tell us what should be done about modernization,’ but five minutes later you realize that they are talking about crisis-management suggestions which you are supposed to submit next week." Gontmakher explained: "We did not expect that much media coverage: the entire Kremlin pool and all possible TV stations. I guess he did it to show publicly that he is personally interested in this issue, not just the cabinet who presented their crisis program to him" (www.echo.msk.ru, April 14).

According to these INSOR experts, it is not the rate of unemployment which is most dangerous (in other countries it reached 20 percent), but that it is becoming chronic. This is now the case in Russia, they maintain: "Now, when we do not have a clue, when this crisis will end and the tensions ease, of course, everyone is scared that unemployment might set in for a long period," said Maleva. "As long as new jobs are not being created, this unemployment may indeed become chronic. Then, even the current 8.5 percent level spells major trouble" (www.echo.msk.ru, April 14).

They also believe that the cabinet (indirectly referring to Putin) stubbornly supports an inefficient and obsolete economy to maintain employment. This policy might postpone a social explosion, they say, but only for a while. Neither will this policy ever allow Russia to emerge as a modern and well developed economy. Gontmakher emphasized -in another thinly veiled taunt aimed at the Putin regime- that only free private business can save the situation, but this freedom has long been badly restricted within Russia.

The INSOR experts made some striking suggestions on how to restructure the entire economy and employment system. They talked about a freeze on hiring young people by obsolete industrial giants, left over from the Soviet era. They mentioned the idea of creating social workers systems, unheard-of within Russia, and getting a lot of people, particularly unemployed women in crisis-stricken cities that have grown up around dying industries, employed as social workers. Medvedev listened favorably and nodded approvingly to such ideas as the need to retrain office personnel, most of whom have fake university diplomas, he said.

The INSOR meeting of minds is a striking example of the promotion of Medvedev’s image, which his staff recently launched: on April 16, the liberal opposition Novaya Gazeta biweekly ran his interview -the first he has given to a Russian newspaper. On the same day as his INSOR visit, April 14, Medvedev met with a group of top Russian human rights activists and NGO leaders. He conceded at the meeting that the current law on NGO’s, (passed by the Russian Duma on Putin’s orders) was unduly harsh and needed some corrections (www.24new.ru, April 14).

However, the approving nods to Novaya Gazeta and NGO’s, listening to INSOR’s ideas and showing a firm grasp of strategic issues make a great public relations campaign. However, it does not promote any meaningful changes in the political and economic scenes, which are still firmly controlled by Putin. More people are applying for the misery of state benefits, which Putin on January 12 ordered to be raised to 4,900 Rubles ($146). Yet, Maleva insists, 4,900 is the highest level. Many people in the regions are bitterly disappointed, when they come to collect the expected 4,900, only to go away with some 800 Rubles ($24) instead (www.echo.msk.ru, April 14).