TRADITIONAL TRADE UNIONS DURING TRANSITION AND ECONOMIC REFORM IN RUSSIA
by F. Hoffer
August 1997
Preface
This paper is part of a series of working papers published under the ILO's Action Programme on privatization, restructuring and economic democracy for use by governments, workers' and employers' organizations, development agencies, consultants, academics and managers. The ILO is particularly interested in the social aspects of privatization, structural adjustment and economic transformation. However, it is also concerned with helping all stakeholders to better understand and assess the economic, political and cultural conditions that lead to successful implementation of these reforms. Experience has indicated that in the areas of privatization and economic transformation, countries than can effectively involve important stakeholders in the process are more successful. Trade unions can play an important role in the privatization process. Establishing independent and effective trade unions is therefore critical for organizing and developing an efficient, equitable and democratic society.
The paper analyses how political, economic, social and cultural upheavals have influenced the development of trade unions in the Russian Federation and, in turn, the extent to which the trade unions have been able to shape the process of transition. It also reviews the prospects that trade unions have in the near future. Traditional trade unions survived the collapse of the Soviet Union and are still represented in most large companies. However, they were not able to become strong representative agencies of labour's interest during the initial reform years, in part because their reputation among workers was bad due to their former role in the discredited system. Trade unions have lost over one-quarter of their members over the past few years and are not present in new sectors of economy. Further fragmentation of the trade union structure can only be stopped if central and regional trade union organizations improve their reputation and authority at the grass-roots level and undertake serious self-renewal efforts.
Recently trade unions organized the protest against the high level of pension and wage arrears, which met with substantial support. While the essential basic decisions of the transformation (and privatization) process were implemented without recognizable trade union influence, the unions have been able to achieve a measure of legal institutionalization for a social partnership and trade union representation. Traditional trade unions are stronger in 1997 than they were four years ago. However, they remain too weak to guarantee effective representation of labour's interests in individual companies and in the macro-process of societal transition. They are faced with a long process of reconstruction and renewal, yet recent developments give cause for a cautious optimism.
Max Iacono,
Action Programme Coordinator for Privatization,
Restructuring and Economic Democracy,
International Labour Office, Geneva.
Contents
Preface iii
Summary vii
1. The political, economic and social background to trade union development 1
1.1. The Soviet legacy 1
1.1.1. The splintered society 1
1.1.2. Legal nihilism 2
1.1.3. The mono-structure approach 3
1.1.4. The shortage economy 3
1.2. Political change and the unions 4
1.2.1. New laws and new institutions 5
1.3. Economic and social development during transition 8
1.3.1. Income trends 9
1.3.2. Employment 12
1.4. Soviet enterprise, privatization and trade unions 14
1.4.1. Privatization 16
2. Internal changes within the trade unions 19
2.1. The traditional trade unions 19
2.1.1. Membership trends 20
2.1.2. Finances and assets 21
2.1.3. Personnel 23
2.1.4. Establishing democratic structures 23
2.1.5. Programming 24
2.2. Monologue: The new trade unions 24
3. Trade union practice during transition 27
3.1. Traditional functions 27
3.2. The tripartite approach 28
3.3. Industry-wide contract negotiations 30
3.4. Collective bargaining agreements 32
3.5. Ability to campaign and strike 33
4. Prospects 37
4.1. Trust 37
4.2. Halting fragmentation 37
4.3. Competence 38
4.4. Solidarity 39
4.5. Collective bargaining 39
Bibliography 40
Summary
The traditional trade unions have survived the collapse of the Soviet Union as organizations and still have a membership in most large companies. In the early years of reform, they were not able to become a strong movement representing majority labour interests because they were primarily involved in ensuring their own survival. Their stock was low among workers because of their former role as part of a discredited system. Their threats of strikes and protests often turned out to be mere empty gestures which made no impression on either the Government or employers. In their earlier capacity as an integral part of the Soviet state machinery, the trade unions had not been prepared for the demands of a market economy as far as organization, personnel or a programme of action were concerned.
In recent months, however, the trade unions organized a successful protest against the accumulated pension and wage arrears, eliciting a major response. Several million people took part in national days of protest in November 1996 and March 1997 respectively. The capacity of the trade unions to mobilize the membership has given them more credibility and authority in their discussions with the Government at the federation and regional levels. Certainly the Government made more effort to wipe out at least pension arrears in the wake of the March protests.
Official real wages have declined by over 50 per cent, and wage disparity has strongly increased during the transformation period. With production falling sharply, wages and employment figures have plummeted, especially in the branches of industry where traditionally most trade union members were to be found. Wage arrears have risen to more than 50 trillion roubles. The trade unions have not succeeded in influencing or even regulating this process in terms of social or contract bargaining policy. The situation is developing pretty much without any checks or balances and is causing extreme social hardship because of the widespread lack of solidarity within society.
In the process of privatization, workforces often became co-owners of corporate assets in theory but not in practice. De facto, so-called insider privatization gave management broad discretionary powers over corporate assets. There is no known example of labour interests controlling management through the unions during the privatization process. Many chairmen of company unions traditionally perceive themselves as part of management and not as representing labour interests vis-à-vis management. As a rule, under the former system, as members of the corporate management nomenklatura (high-level Party officials) they neither enjoyed the confidence of the workforce nor did they have a personal interest in protesting against nomenklatura-managed privatization. Moreover, the traditional hierarchical and authoritarian Soviet corporate structure would have made any challenge to the nomenklatura a risky and unpromising venture.
The trade unions have been forced to relinquish to the State their responsibility for work safety and social insurance at the national level. Price deregulation has led to a decline in the allocation of goods in short supply. Many companies have considerably dismantled their social infrastructure in the course of privatization. Hence trade unions have been forced to accept that they no longer have such a significant role at the state or company level since they have lost their essential task of organizing social services and handling social welfare distribution.
While the basic decisions of the transformation process were essentially made and implemented without any discernable influence from the unions, the latter were none the less able to ensure that their status as social partners was guaranteed together with the legal right of union representation laid down in legislation pertaining to labour and trade unions. The right to strike is established in the Constitution and lockouts are prohibited by law. Legally speaking, the unions have not yet managed to address the new opportunity to flesh out the framework provided by the law.
Tripartite agreements at the federation and regional levels offer few, specific arrangements, and tripartite commissions are frequently not recognized as bodies where a social consensus on labour and social policy is sought. The unions have difficulty in concluding supra-company collective contracts that have binding effect on companies. Most employers see no reason to join employers' associations that are bound by collective bargaining agreements. In most cases, new and former (private) employers can do as they please without let or hindrance. In many companies, empty, meaningless collective contracts are signed or there are no contracts at all. The unions are often unable or unwilling to confront management in order to negotiate collective bargaining agreements with real substance and to insist upon compliance.
In recent years, the trade unions have lost over 25 per cent of their members. The unions are not represented in the new sectors of the economy or in the comprehensive informal economy. The formal level of union organization remains high at 75 per cent. However, it is unclear just how many union members pay their dues. 90 per cent of dues remain in the companies, and higher-ranking union bodies primarily finance themselves through income earned on assets. This form of financing is not conducive to forging the necessary relationship between union leadership and the grass-roots membership or ensuring that obligations are met on both sides.
Further fragmentation of the trade union structure can only be avoided if central and regional trade union organizations enhance their standing and gain greater credibility with their own grass-roots locals. This cannot be achieved through passing resolutions to ensure that central power will once again be the order of the day. Rather the unions will have to improve their performance among locals in the enterprises. This will require improving professional competence in economic and social policy, qualified legal consultancy as well as the expansion and modernization of trade union educational work in terms of content and methodology. A transfer of international know-how would definitely be a valuable boost to efforts to upgrade qualifications.
While greater democracy has been achieved in recent years, with unions consolidating their forms of organization and their representation of political interests vis-à vis the Sate, the company level is still their weak point. The unions' ultimate demise will be slowed or halted only when workers perceive that trade unions not only exercise traditional distribution functions but that at the same time conduct successful wage negotiations and try to control management effectively. In this sense, the unions are facing a challenge: vigorously to support company union officials who want to extricate themselves from management and to organize effective supra-company solidarity when necessary. At the time of writing, the simplest requirements for this kind of action are not in place. There are no significant supra-company strike or solidarity funds in existence, and there have been no previous union-sponsored campaigns for solidarity with workforces engaged in disputes.
This paper primarily deals with the development of traditional trade unions because they exist in Russia as an area-wide union organization. The new trade unions are playing an important role in certain, specific branches and in a few enterprises. Despite low membership, they proved more capable than the old trade unions of mobilizing labour in the early 1990s, and yet it seems that recently the political initiative has shifted and now lies more with the traditional unions. The existence of new trade unions has undoubtedly had a positive impact on the development of the traditional unions. Competition from new unions has increased pressure on the FITUR for reforms. Examples of courageous trade union representative policy especially at the company level by new trade unionists were and are important challenges to the traditional status quo. The political contrast between the old and new unions is, however, tending to taper off. For the first time, both old and new unions jointly called for protest campaigns against wage arrears in March 1997.
The traditional unions are stronger in 1997 than they were four years ago. However, they are still too weak to guarantee the effective representation of labour interests in companies or in the process of society's transition. They are still faced with a long process of reconstruction, yet developments in recent months give grounds for cautious optimism that they can succeed in becoming genuine and more effective trade unions.
1. The political, economic and social background to trade union development
Macroeconomic and macro political changes bring powerful pressure for reform to bear upon existing institutions, or create the need for new ones. Whether the requisite reforms will be brought in and whether they will be successful depends, however, on the specific conditions prevailing at the outset and on the politically imaginative power of the decision-makers and actors.
Establishing independent and assertive trade unions is imperative for organizing an effective, socially just and democratic society. Despite considerable changes in recent years, it is still an open question whether Russian trade unions will rise to this challenge given the burden of the Soviet legacy. The conditions prevailing when an attempt was first made at successful institutional change were and are so complicated for Russian unions that one is tempted to say: "if you want to get there, you shouldn't start here".
The following questions will be treated in this paper, starting with the unions' situation in the final phase of the Soviet system:
1. How have political, economic, social and cultural transformation influenced the development of trade unions in Russia?
2. To what extent were the unions themselves able to participate in shaping the process of transformation?
3. What are the prospects for the unions in the near future?
1.1. The Soviet legacy
The Russian trade unions are the only so-called mass organizations that survived the collapse of the Soviet Union and the Soviet system in a display of remarkable organizational continuity. Hence their role in the restructuring process and the impact of social change on the unions must be seen against the backdrop of the Soviet legacy. Social institutions inevitably change or evolve over time as things develop in the longer term. The social, political, cultural and economic shaping of personalities over 70 years of an authoritarian system holds major practical significance for the process of reforming existing institutions or creating new ones.
1.1.1. The splintered society
The formal collectivism of the Soviet system left a splintered society in its wake. Political conformity in the public world resulted in a retreat into private life. In an official capacity, people paid lip service to the currently correct political line, while at the same time striving to carve out a niche for themselves, "under the much-vaunted solutions all levels of society worked according to the same principle -- self preservation and survival".(1) The double standard between official life and life as it was actually lived became a cynical, self-evident feature of the daily Soviet round.
The top-down command structure within the State and the economy did not permit public discussion of any kinds of problems. There was no way a problem-oriented environment for discussion could develop in Soviet society. Organized events or conferences were not places for exchanging opinions, but rather occasions for doling out official information. There were no independent, intermediate organizations between the State and the individual that could group together and express the interests of individuals. The countless informal contacts among individuals that found an outlet in the famous Russian "kitchen discussions" were no substitute: without the necessary information and the link to the real world where the decisions were made, problem-solving and solution-oriented debate was an impossibility.
The trade unions functioned as part of the ruling apparatus. They likewise functioned internally according to the principles of control and command structures. Discussions of trade union policy hardly ever took place within the scope of official events or publications. Hence many trade union officials failed to develop the capacity to initiate and structure open, goal-directed discussions.
Based on a deep mistrust of all institutional arrangements and guarantees, a distrust grounded in decades of experience, most people attempted to solve personally significant issues through an informal network of friends and relatives. This sort of networking combined with a lack of social trust hampered the establishment of transparent, democratic large-scale organizations.
Voluntary solidarity beyond family and friends could not evolve in a society that lacked free association. Trade unions, whose capacity to act is primarily based on solidarity among people you do not even know, are compelled to establish the spirit of trade unionism anew. This is made even more difficult by the fact that three generations of workers have experienced institutionalized trade unions as a part of the omnipotent state structure from which individuals distanced themselves as far as they could. The almost 100 per cent level of organization among trade unions was not based on conviction, rather it was guaranteed by linking continued payment of full wages during periods of sickness to trade union membership.(2)
1.1.2. Legal nihilism
Under the Soviet system, the subordination of rights to the whims of the party meant that individuals were defencelessness in the face of power and authority. The Party's representatives were the representatives of power, and they often replaced the law with personal directives.(3)
A system of bureaucracy and legal nihilism together held sway in the Soviet Union, just as it had under the tsars. The ruling class disregarded its own law with astonishing regularity whenever it suited its purposes. Citizens were thus subject to a multitude of bureaucratic arrangements. Frequently, laws were not abstract, general provisions which determined the relationship between or among independent legal entities but rather were administrative regulations and instructions on the right course of action handed down from the top.
For all remaining purposes, the volatile nature of planners, which of necessity grew out of the systemic weaknesses of the command economy, permitted the Russian tradition of legal nihilism to become axiomatic in daily life. Public surveys taken as early as 1990 showed that 51 per cent held the opinion that one could not live without breaking the law. Fifty-four preconsidered that one could not solve important issues without infringing the law.(4) The ongoing lack of material goods resulting from the logic of the "shortage economy"(5) made corruption, who-you-know in business, and black markets into the necessary operating requirements of the official economy.
Today whenever complaints are voiced about how people are failing to obey the rules by comparison with earlier times, there is more often than not a fundamental misunderstanding of the difference between authority (power) and the law. Previously, people had to follow the instructions of those in power. This power has disintegrated without the Government's having succeeded, to date, in institutionalizing the law as a new regulatory authority or establishing a clear and enforceable public power structure and decision-making authorities.
One of the most difficult challenges the unions have to face is then to overcome this traditional legal nihilism and enforce the law as a requirement for claims and the protection of employees. Only when this challenge has met successfully can new labour laws, union contracts and collective bargaining agreements become meaningful in practice, and only then will the reputation of trade unions gain ground among the rank and file. Surmounting this challenge would also help assert the rule of law, and hence confirm greater democracy in society.
1.1.3. The mono-structure approach
The Russian enterprise and industrial structures have been historically moulded by both the Soviet form of industrialization and the way the planned economy worked. In the case of forced state industrialization, initiated in the 1930s, newly emerging enterprises had to put in place large industrial complexes and at the same time establish their satellite cities. This kind of self-sufficient industrial complex which created urban areas was the basis of many new Russian industrial cities. By contrast with Eastern and Central Europe, where the planned economy was introduced on the basis of existing industrial and urban structures, in Russia, industrialization and urbanization took place extensively according to the criteria of the planned economy . The relocation of industrial cites to the Urals and Siberia, which was linked to the war and strategic military considerations, exacerbated the economically "irrational" allocation of resources. The result is not only do these strong regional mono-structures exist, but under free market conditions entire industries and cities have become superfluous.(6)
The unions are faced with the dilemma of being unable to oppose this economic logic in a sensible manner, on the one hand, and, on the other, of being forced to support keeping these industries in the short term in order to give people the time and to adapt to new conditions and the opportunity of seeking new solutions. Since neither allowing market forces a completely free rein nor retaining the existing structure are acceptable options, this situation will require a structural transformation policy or else plant closures will have to be posited in a socially acceptable fashion -- all of which makes high political and professional demands of the trade unions that for the time being they are unable to meet.
1.1.4. The shortage economy
The continuous shortages and the high transaction costs attendant on the inadequacies of the allocation mechanism under the planned economy reinforced the trend for companies to assume an increasing number of functions. They endeavoured as far as possible to become self-sufficient states within the State. Soft planning targets were the basic requirement for an "easier" life for the director and the workers.(7) Hence there often emerged a body of shared interests that joined forces within the enterprise against the plan. As many resources as possible, including manpower, were drawn into enterprises and "hoarded" there. From the mid-1970s, the rural exodus had slowed down, and approximately 90 per cent of those able to work were working. From then on, chronic labour shortages were typical for the Soviet economy, and they meant a nearly 100 per cent guarantee of job security.
Changing workplaces became a wide-spread phenomenon and a major problem for company management. Since directors no longer hold the fear of the gulag(8) or fear of unemployment over people's heads as a means of maintaining discipline, and since wage increases were severely restricted by plan requirements, at the enterprise level, payment in kind and paternalism developed into key instruments for providing worker incentives and discipline. Enterprise-linked social services were not only organized in-house because this was ideologically desirable in terms of proletarian collectivism and suited the historical form of Soviet industrialization, but rather because they were an important instrument in tying the workforce to the enterprise. This is where the core of Soviet corporate paternalism lies, and not in the ethical sense of responsibility of "red" directors. With the abolition of the shortage economy, the fundamental structural preconditions of Soviet industrial relations disappeared. A new "modus vivendi" between management and workers has yet to be established.
1.2. Political change and the unions
At the beginning of perestroika, the Soviet Union was in a deep crisis which was primarily economic but also political and cultural. At that time, hardly anyone was aware of the full extent of this crisis. In any event, the general population was not aware that their modest living standard was overtaxing the system's economic operational capability. Following the mainly peaceful collapse of the system, unrealistic hopes arose that the economic situation could be readily improved by converting to a market economy. At the same time, the fact that social services would have to be provided in a market economy and the impact that requirement would have had been underestimated. Moreover, the trade unions -- the natural advocates of strong social protection -- were without authority due to their role as an integral part of the old system.
Glasnost and perestroika had destroyed the power bases of the Soviet Union:
(a) the total loss of authority of Soviet institutions resulted in the failure of the traditional control mechanisms;
(b) the nationalistic desires for independence acted upon by individual Soviet Republics had eroded the central State;
(c) new political and social movements meant that independent interests could be given expression.
These three processes also triggered a process of change within the Central Council of the Trade Unions (AUCCTU) which was certainly one of the more conservative pillars of the Soviet system. The leading role of the Party was stricken from the statutes at the plenary meeting in September 1989. The trade union centres in separate Soviet Republics were no longer willing to recognize the authority of AUCCTU. The "Federation of Independent Trade Unions of Russia" (FITUR) was formed in the Russian Republic. At the 19th Trade Union Congress, the centralized AUCCTU was converted into a central trade union confederation which increasingly sank into political insignificance over the years following the dissolution of the USSR.
As this was happening, the wave of formal democratization resulted in the revenue from union dues being largely decentralized. Since that time, trade union centres no longer have the administrative authority of the Soviet command system nor adequate financial funds at their disposal to enable them as a powerful, centralized organization. As a rule, the central committees of branch-related unions with more than 1 million members do not have more than 30 to 40 employees.
Yet the greatest challenge for the unions was the miners' massive strike and the emergence of new unions. This strike visibly questioned the legitimacy of state trade unions. The unions were completely unprepared for an independent labour movement. The symbolism underlying the fact that the agreement between the striking Kusbass miners and the Government was signed by representatives of the strike committee, on the one hand, and by the Minister President, the Minister for Coal and the Chairman of the AUCCTU,(9) on the other, illustrates to what extent the state trade unions perceived themselves as part of the national leadership structure.
Following the failed coup in August 1991, the CPSU was banned and its assets seized, the Comsomol was disbanded and other pseudo-social organizations of the Soviet system disappeared or lapsed into insignificance. Only the trade unions -- although the coup leader, Genadij Yanayev, had held the post of chairman of the AUCCTU in 1990 -- remained intact and were able to keep their extensive assets. The union's practical function as part of the official and corporate social administration, and not its political strength, was probably the decisive factor in saving it from being disbanded.
The modified political landscape meant that trade unions were actually independent of the State and the Party. At the same time, at the corporate level, dependence on company directors increased. They virtually became the sole rulers within companies as real economic and political control by the Party and the Government largely ceased.
The unions' stock in society was low as was their self-confidence as organizations and indeed that of their officials. Trade unions continued to fear that their organizations would be disbanded or that at least they would lose their assets. At the state and macroeconomic levels, the unions had indeed become independent overnight without, however, having much political and economic idea of what trade union work would have to entail during the transformation phase.
1.2.1. New laws and new institutions
With the beginning of reform, the unions lost their quasi-state functions. Extensive formal rights and comprehensive administrative tasks were taken away.
They lost the right:
-- to introduce draft laws before parliament;
-- to halt production or to close companies if work safety regulations were violated;
-- to finance a trade union inspection concerning legal protection or occupational safety protection at the cost of social insurance, or to impose penalties for violations of labour law or occupational safety law;
-- to decide labour disputes;
-- to link continued payment of full wages during sickness to trade union membership;
-- to administer social insurance.(10)
Many of these rights were previously subject to the primacy of the Party and to reasoning according to the Plan, and in part they existed only as a matter of form. Using the actual circumstances of Soviet companies as a yardstick, one could say that, despite their extensive powers under the old regime, union successes in the field of occupational safety were rather modest by international standards. The right to halt production was rarely used despite production conditions that partially posed a risk to life and limb.(11)
Although one may argue over the number of representative rights which the unions actually lost, there can be no doubt that they were severely weakened in terms of organization and finances. Linking continued payment of full wages during sick leave to trade union membership had been completely abolished. At one stroke, the unions lost a simple administrative lever that ensured consistent membership and automatic recruitment. The loss of sweeping administrative functions in the field of occupational safety and social insurance caused union apparatus to shrink considerably. The unions were forced to abandon essential fields of former activity, at least above the enterprise level, and they lost access to the financial resources of social insurance which had enabled them to carry out a great many social and cultural activities, and probably to finance part of their administrative costs.
On the other hand, new arrangements under the law opened up new spheres of activity to the trade unions. Under the Law on Corporations and Corporate Activity, passed in 1990, company managers were granted all vested forms of corporate discretionary powers regarding investments, price-setting, remuneration, hiring and dismissals, etc.(12) Centralized wage-setting was abolished. Thus, at least at the company level, the unions could henceforward become partners to collective bargaining on wages and working conditions.
In the course of further reforms, the legal framework for laws and for institutions concerning labour and management in a market economy was established and continuously amended.
New arrangements under labour law during the reform phase
| Legal regulation | Date passed | Date amended |
| Ukas on the guaranteeing of trade union rights during the transition to a market economy | 10/26/1991 | |
| Ukas on social partnership and settling labour disputes | 11/15/1991 | |
| Ukas on the creation of a Russian tripartite commission for regulating social and labour relationships | 01/24/1992 | 01/21/1997 |
| Law on collective bargaining, contracts and agreements | 03/11/1992 | 11/24/1995 |
| Codex Truda | 09/25/1992 | 05/18/1995 |
| Principal law of the Russian Federation on occupational safety | 08/06/1993 | 06/18/1995 |
| Law on deciding collective labour disputes | 10/20/1995 | |
| Law on trade unions, rights and guarantee of their activity | 12/08/1995 | |
| Directive on the service of regulating collective labour disputes | 04/15/1996 |
Without going into the detail of these laws, it can be said that:
1. The right to strike was established in the Constitution.
2. The principle that strikes are only permissible after a multi-level mediation procedure, as stipulated by law, has failed.
3. The establishment of a tripartite commission created the institutional framework for tripartite consultations and agreements at the federation, regional and local levels as well as at the branch level.
4. Unions and employers have the right to conduct independent wage talks and collective bargaining negotiations
5. Employers are obliged, regardless of the number of trade union members, to enter into collective bargaining negotiations with unions, if the latter so desire.
6. The exclusion of employers from membership in trade unions and vice versa is laid down by law.(13) Employers may not represent employees in wage talks.
7. Trade union officials enjoy protection against dismissal; the companies are required to provide trade union committees with rooms, office furnishings, transport, etc. required for their work.
8. Lockouts are prohibited by law under any circumstances.
By and large, there is no doubt that a labour law framework was created which enables the establishment of social partnership structures for labour and management, and that unions were principally recognized as a positive factor in shaping social and labour relationships.(14) This is in no way obvious from the discussion on the process of economic reform which is largely dominated by neo-liberals. It is hard to judge to what extent this framework emerged from the modernizers' need to create preventive structures for channelling possible social tensions, from the success of trade union lobbying or from the impact of the powerful miners' strike.
While the overall regulatory framework for labour and management was being established, lawmakers largely gave up providing for working conditions as such. In terms of the law, only minimum standards were established and everything else was left to the bargaining process between labour and management. This is a departure from Soviet practice. While the traditional Soviet system extensively structured working relationships through central directives covering payment, leave, working hours and job classification, most of the tasks were now left with labour and management. The trade unions are now forced to monitor compliance with protective laws at the company level and to enforce compliance through court action, if necessary. Labour and management are required to use joint collective bargaining agreements to flesh out the framework provided by the law.
This is an efficient, justifiable social policy if the labour courts can implement their jurisdiction, and if capable management and labour partners are available to regulate working conditions for a majority of employees under a collective bargaining system. However, this is not the case in Russia. The unions have barely any power to assert themselves within the company, and company management does not see the need to come together to form employers' associations or to recognize inter-company collective bargaining agreements. Following the dissolution of branch-related ministries and given the increasing independence of denationalized companies, old "employer structures" are increasingly dissolving causing branch-related unions to lose their negotiating partners.
Up to now, the unions have had considerably more success in influencing labour law legislation than in converting the legal options governing workers' rights into company practice.
1.3. Economic and social development during transition
The gross national product has declined on an annual basis since 1990. Real income is approximately 30 per cent below the 1990 level. Real wages and pensions have suffered even steeper declines since their share in national income has dwindled by nearly 40 per cent in this same period. One-fourth of the population is living below the poverty line.(15) Life expectancy had dropped by 4 years and at present stands at 58 years for men.(16)
Price deregulation removed one essential pillar of the Soviet welfare state overnight, and inflation has destroyed the populations' savings. In many instances, free medical care exists only on paper. The social security pension system is on the verge of collapse given the economic crisis and the sad lack of honesty among taxpayers, so the new unemployment insurance is insolvent in many regions.
Enterprises are increasingly freeing themselves of their general functions as suppliers of social services so that enterprise-centred social assurance is likewise dwindling. Enterprise directors have been released from the political, economic and structural restraints of providing a comprehensive set of social welfare services for employees. Under the old system, the political dictate of full employment and, more importantly, the permanent demand for manpower deriving from the logic of the shortage economy gave workers, or at least those in the bigger cities, stronger individual bargaining power despite the lack of trade unions: neither of these mechanisms exist any longer.
The number of unemployed and underemployed has increased continually. Labour turnover and mobility are remarkably high despite a limited housing market. Wages and working hours are extremely flexible. There is a migration process under way from the far North and other remote regions that were developed and industrialized under the strategic aspects of Soviet industrial and security policy.
The sudden demise of decades of guaranteed full employment triggered major insecurity and a willingness among employees to over-adapt. People's estrangement from each other, which was inherent under corporate collectivism, surfaced strongly at the threat of unemployment. Collective opposition or solidarity in reaction to impending unemployment are extremely rare, as illustrated by the following table.
| How has the threat of dismissal, fear of job losses affected the behaviour of people working in your collective? | |
| People are increasingly estranged: it is "every man for himself"
Conflicts relating to job-retention have started People have begun to look for other jobs and leave not waiting for dismissal Many people have begun trying to have closer contact with managers, gain their support People have begun to treat each other more tolerably The collective's solidarity has become greater Collective actions against dismissals are being organized People began to work harder Other No impact at all Hard to say No response |
19.9
15.5 21.7 12.2 5.5 1.4 1.1 5.1 0.9 19.9 29.2 0 |
| Source: VZIOM, 2/1997, 87. |
1.3.1. Income trends(17)
While real income plummeted to 52 per cent of the previous year's level in 1992 and has risen in the meantime to about 70 per cent of the 1991 level, real wages have fallen continuously, and in 1996 amounted to only 43.9 per cent of the 1991 level.(18)
Income trends since 1990
| Year | Real income | Wages | Pensions | |||||
| As % of the previous year | Index 1990=100 | As % of the previous year | Index 1990=100 | As % of the previous year | Index 1990=100 | |||
| 1990 | 100 | 100 | 100 | |||||
| 1991 | 116 | 116 | 97 | 97 | 97 | 97 | ||
| 1992 | 52 | 60.3 | 67 | 65 | 52 | 50.4 | ||
| 1993 | 116 | 70 | 100.4 | 65.3 | 131 | 66.1 | ||
| 1994 | 113 | 79.1 | 89 | 58.1 | 94 | 62.1 | ||
| 1995 | 87 | 68.8 | 72 | 41.8 | 81 | 50.3 | ||
| 1996 | 100 | 68.8 | 105 | 43.9 | 109 | 54.8 | ||
| 1997 | 104 | 71.6 | 101 | 44.3 | 104 | 57 | ||
| Source: Goskomstat, 1995a, 1996a, 1996b, 1997a, and own computations. | ||||||||
This statistic does not take into account the continuous accumulation of wage arrears which in the meantime amount to nearly a full month's wages of the entire national economy. Hence, in real terms, the share of official wages in the national income in 1996 probably did not increase.
Trends in wage arrears (in trillion roubles)1
| 1 Jan. of the period | Industry | Agricul-ture | Construc-tion | Transport | Educa-tion | Culture | Health | Science | Total | Total as No. of average monthly wages (mill.) |
| 1993 | 28.8 | 1.87 | ||||||||
| 1994 | 364 | 287 | 115 | 766 | 5.71 | |||||
| 1995 | 2 170 | 1 301 | 729 | 4 200 | 13.88 | |||||
| 1996 | 7 734 | 2 571 | 1 941 | 1 134 | 13 380 | 21.08 | ||||
| 1997 | 22 149 | 5 913 | 6 284 | 4 025 | 4 467 | 482 | 2 567 | 1 081 | 47 151 | 53.75 |
| 31.3.97 | 24 941 | 6 210 | 7 163 | 3 709 | 5 384 | 583 | 3 056 | 1 204 | 52 669 | 60.95 |
| 1
The figures for each year are not fully comparable because Goskomstat only began in 1996 to report wage arrears in eight branches of the national economy.
Source: Goskomstat, 1995a, 1996a, 1996b, 1997a, 1997b, Rabochij centr ekonomicheskikh reform III,1997, and own computations. | ||||||||||
According to surveys, an ever-increasing number of people are affected by the failure to pay wages; 29 per cent of all persons asked received their wage punctually, paid in full, and 38.5 per cent did not receive any wage payment at all.(19) However, the amount of wage arrears is very different in individual branches and regions. 43 per cent of wage arrears are concentrated in ten areas of the Russian Federation:
The per capita level of wage arrears in the Novgorod area amounts to 101,000 roubles while these same per-capita levels stand at 1,070,000 in Kemerowo and 1,741,000 in the Republic of Sacha. Wage arrears are especially high among miners who have always been promised wage increases due to their militancy but who have only received a fraction of the payment due.
The strong shift in income distribution towards employers and an increased income differentiation among wage-earners testifies to the low to insignificant imaginative power of union wage policy in recent years.
Income distribution expressed as a percentage1
| Income from entrepreneurial activities and other sources | Wage income | Transfer payments | |
| 1992
1996 |
16.1
43.8 |
69.9
43.4 |
14.0
12.4 |
|
1 The trend is statistically skewed because employer income reported in statistics is a residual figure and estimated hidden revenues flow into this. On the other hand, distribution statistics permit the conclusion that a considerable amount of income is concentrated in the hands of a few. The upper fifth of the population holds over 44.7 per cent of the income, with 6.5 per cent accruing to the bottom fifth.
Source: Goskomstat 1996a, 1996b. | |||
Distribution of the total payroll among a given 20 per cent of employees arranged according to wage level
| Group 11 | Group 2 | Group 3 | Group 4 | Group 52 | |
| Sep. 1991
Apr. 1995 |
7.7
3.9 |
12.6
8.6 |
16.9
14.2 |
22.9
22.6 |
39.9
50.7 |
|
1 20 per cent of employees with the lowest incomes. 2 20 per cent of employees with the highest incomes.
Source: Goskomstat, 1996d, 43. | |||||
In terms of the country's political stability, it is undoubtedly significant to consider that major social problems are appearing in the rural areas and not in the towns. The income level in Moscow, which is far above the average, reduces the danger of a national social explosion due to the dominant role that the nation's capital plays in Russia's political life.
Moscow by comparison with the rest of the country at the end of 1996
| Moscow | Russia, including Moscow | Russia, without Moscow | |
| Average income in roubles | 3 225 300 | 821 800 | 672 307 |
| Average income as % of the respective poverty line | 580 | 196 | 180 |
| Wage arrears per resident in roubles | 94 574 | 320 750 | 334 817 |
| Population in millions | 8 637 | 147.5 | 138 863 |
| Unemployment | 42 300 | 2 459 800 | 2 417 500 |
| Number of small companies | 183 089 | 829 442 | 646 353 |
| Foreign investment (in '000 dollars) | 4 291 604 | 6 506 127 | 2 214 523 |
| Source: Goskomstat, 1996b, 1997a and own computations. | |||
The trade unions were not able to stop the decline in real wages. Hardly any attempt has been made at preventive action outside the mining branch. No large labour disputes have been conducted regarding wage levels. There have been isolated protests, going as far as hunger strikes and company strikes when wage payments completely failed to materialize. However, these were frequently spontaneous protests or desperate acts of individual workforces and not strikes organized by the unions. Indeed the old unions did call national protest days on wages and employment in 1995 and 1996. Yet they were not able or not willing to expand those protest days into actual labour disputes despite the fact that employees had been fobbed off time and time again with promises, and the Government and employers had failed in many instances to meet their elementary obligation to pay wages.
1.3.2. Employment
Registered unemployment which is reported to be 2.5 per cent(20) is low when measured against the 42 per cent decline in GNP. However, this is not an indicator of a lack of structural change. On the one hand, actual unemployment is considerably higher than the registered figure and, on the other hand, strong shifts can be observed on the de facto unregulated and extremely flexible labour market.
Goskomstat, in compliance with ILO criteria, has set the unemployment rate at 9.3 per cent.1 The low level of unemployment benefits may be one basic reason for the low number of people registered as unemployed. In 1995, the average unemployment benefit amounted to 30 per cent of the poverty level or 15 per cent of the average wage. One half of the unemployed have not even qualified for benefits. 49.2 per cent of those entitled to unemployment benefits received only the minimum support, which amounts to about 15 per cent of the poverty level.(21) Since the autumn of 1995, the employment fund has not been able to make even modest benefit payments in crisis regions because of general insolvency. Payments are at present 4-6 months in arrears. Hence the drop in official unemployment figures from 2,771 million to 2,506 million in 19961 may be attributable more to inadequate unemployment benefits than to any improvement in the labour market.
Inadequate social security means that power in the labour market tends to shift to the employers. They are broadly able without let or hindrance to determine labour market conditions. Wages in crisis branches have dropped by 70 per cent to 80 per cent. Millions of people are working short hours. The separation rate increased from 14 per cent(22) during the Soviet era to 25-27 per cent between 1992 and 1995.(23) According to surveys and expert estimates, up to 30 per cent of the population has a second job,(24) and between 30 per cent and 50 per cent improve their supply of foodstuffs from their own gardens.(25) Informal employment, in which working conditions are informally fixed between the employer and the employee, is widespread.
Large companies saw a massive 30 per cent plus reduction in personnel between 1990 and 1994.(26) According to the trade union chairman of the Novgorod "oblast", employment in the local radio and electronic industry declined from 60,000 to 9,000. Between 1992 and 1995, industrial employment declined by 19.2 per cent and employment in the sciences by 21 per cent, while employment in the trade sector increased by 16 per cent and in commercial services by 13 per cent.(27) While industrial manpower is shrinking, personnel movements are taking place within industry. Employment in crisis branches is falling, and it is stable or rising in branches which have not taken a severe economic beating. Despite this change, one may assume that overmanning continues in many companies due to the high personnel levels which existed during the Soviet period and owing to the sharp drop in production. Because real wages or working hours have been reduced, manpower costs are very often not very substantial.
Employers are not reducing staff through direct dismissals but rather through lower wages. This appears to be the easier course for them to take because of various legal provisions and because they can thus avoid open conflict with the workforce. This is especially true whenever discretionary power over operating assets is being used primarily for people to fill their own pockets and not to modernize the enterprise.
This is a dangerous personnel policy as far as the enterprises' future is concerned. Young, qualified, ambitious workers are going elsewhere, with more poorly qualified, less flexible, unmotivated or lazy employees remaining in the companies. The qualification potential of those that stay behind is an impediment to company restructuring. Bankruptcy and plant closures are increasingly probable. However, there is at least anecdotal evidence that some companies are making an effort to retain a qualified core workforce by running an in-house job market with high wage spreads. While a qualified and disciplined core of the workforce works and earns money, the less important part of the workforce receives low wages or is obliged to take unpaid leave.(28)
The major decline in the investment quota is based on the idea that the prevailing, overall levels of income and employment are being preserved at the cost of existing assets. Indeed, there is a discernable a shift of investment to new branches; however, the total volume is far too low to offer employment and income to millions of people who work in declining industries and live in remote regions.
In view of this development on the labour market, the trade unions are faced with major challenges. The overwhelming majority of the old unions' rank and file now work in branches and companies with dwindling employment figures and falling wages. By contrast, 8.8 million of the people employed in new companies remain largely non-unionized. The low rate of investment means that there will probably be further job losses in industry. The gradual depletion of workforces and companies makes future opportunities for the remaining workforce increasingly bleak, because modernization and rationalization very often do not come with this form of workforce reduction. Because of the high level of overmanning in companies, each employee is threatened with dismissal if he or she, for example, makes a bad impression on the management by engaging in genuine trade union activities.
Trends in the rate of investment1
| Gross investments in per cent of GNP | GNP in per cent of the previous year | Real income in per cent of the previous year | Investment in per cent of the previous year | Investment index 1991=100 | |||||
| 1990 | 38.7 | -- | -- | -- | 117.6 | ||||
| 1991 | 15.1 | 95 | 116 | 85 | 100 | ||||
| 1992 | 14.0 | 85.5 | 52 | 60 | 60 | ||||
| 1993 | 15.8 | 91.3 | 116 | 88 | 52.8 | ||||
| 1994 | 17.8 | 87.4 | 113 | 76 | 40.1 | ||||
| 1995 | 15.1 | 96 | 87 | 87 | 34.1 | ||||
| 1996 | 16.4 | 94 | 100 | 82 | 28.6 | ||||
|
1 The major slump in investment had already occurred in 1991. Relative consistency in the investment share of GNP, at a time when investments were in free fall, results from the different inflation rates for investments and consumer items, since the latter were rising much faster already in 199. In 1992, consumer prices rose by 2,600 per cent and investment prices rose by only 1,600 per cent. In the following years, however, the inflation rate for capital investment was always considerably higher than the consumer price index.
Source: Goskomstat, 1995a, 1996a, 1996b, Rabochij centr ekonomicheskikh reform III, 1996, and own computations. | |||||||||
1.4. Soviet enterprise, privatization and trade unions
Due to the specific form of Soviet urban growth, as centred around the enterprise, enterprises provided and maintained a major portion of the local municipal infrastructure. The paternalistic role of the State was implemented via the enterprise's comprehensive supply structure, especially in the rural areas. Dependence on the enterprise took on almost feudal implications especially in single-structured industrial regions. The individual was integrated into society through the enterprise. In societies modelled after the Soviet system, factories probably formed the main link between the individual and society. This meant that the factory played a decisive role in the life of the average Soviet citizen, providing material needs but also organizing leisure activities. Personal problems were discussed and people were looked after by the enterprise far more than they have ever been in the West. Housing, municipal services, holiday homes, children's day-care centres, clinics and food supplies were organized in many regions by the factories. That is why the possibility of dismissals or plant closings constitute a far greater threat to a person's survival there than in the West.
In this connection, housing was the most important and most expensive portion of payment in kind.(29) In view of a chronic shortage of living space, young families were especially willing, given the prospect of a new flat or apartment, to accept difficult working conditions which in some instances meant living in remote areas. However, once an employee received a works apartment, then it was in practice nearly impossible to dismiss him in the Soviet Union even if he left the enterprise. For this reason, the dependence of an employee was greatest as long as he was on the year-long or decades-long list for an apartment.(30) He lost his entitlement if he changed jobs. The numerous works or plant waiting lists (leave slot, car, flat or apartment) served as instruments of workers' control and as incentives for plant management and department heads since an egalitarian system mean that actual wages paid in cash were comparatively similar.
The central importance of housing supply becomes clear from the fact that by 1990 41.7 per cent(31) of housing stocks were owned by enterprises. The structural necessity of enterprises to create housing as a means of tying employees lapsed as the shortage economy came to an end with price deregulation. Many enterprises were privatized without their stocks of houses and apartments which were either turned over to municipalities or tenants. By 1996, less than 8 per cent of housing stocks were owned by enterprises.(32)
The supply function was one essential feature of Soviet enterprises that, in any general discussion, tends to lend itself to a nostalgic transmogrification of Soviet plant paternalism. The informal, natural dealings of Soviet directors with their employees was a far cry from the functional distance between labour and management in western plants. Yet the almost familiar tone and approach between comrade director and comrade worker did not change one jot or tittle in the strict, hierarchical decision-making structures or in an almost absolute concentration of power in the hands of directors general. The one-man-leadership principle laid down by Stalin meant concentration of power (downwards) and /or responsibility (upwards) in the director's hands. There developed a specific works or plant culture which was at once paternalistically familiar and contemptuously repressive. The unbridled power of directors was limited solely by top-down controlling authorities (ministries, the Party) and the Party's presence in the enterprise.
Soviet production methods were inconsiderate of people and nature. Work safety and health hazard considerations ran a bad second to plan requirements when the factory "father" was managing his "children". Despite the many rights the unions and the work collective had in theory, there was no real representation of workers' interests and any political protest was immediately suppressed.
The working relationships which were especially typical of large enterprises in single-structure cities or regions cannot be taken as representative of all working conditions throughout Russia. The structural power of plant management and trade union committees was traditionally lower in large cities and in smaller enterprises with a modest social infrastructure at their disposal.(33) Following the lapse of actual, compulsory membership, trade union organizations located in plants and administrative agencies with insignificant or no social infrastructures and no full-time union chairman often find themselves in trouble or simply cease to exist.
In the old days, the unions were part of the ruling structure both within the State and within the enterprise. They had a stated ideological function as well as a practical administrative function. Historically, trade unions were an indispensable ideological component of the worker and peasant state. Their job was to document and demonstrate both at home and abroad that people working under socialism were represented by powerful trade unions. However, their ideological importance was always subordinate to that of the Party and the Comsomol. During the period of ideological erosion that took place in the 1970s and 1980s, the ideological function (Party conveyor belt, Communist training-ground, stronghold of socialist competition) increasingly lost any real importance and the administration of social services became the union's real task at the state and company level.
In this connection, trade union management functions were part of the nomenklatura system which was controlled by the Party. This meant that trade union officials were members of the state management élite and so it was not rare to find Party, state, trade union or economic posts passing from hand to hand always among the same people. In terms of their status and their self-image, trade unionists belonged to the "Natshalniki" and not to the "Rabotshi". The prestige of trade unions among the various ruling institutions was rather low. This is borne out by the fact that the trade union apparatus was informally known as the "Party workers' graveyard".(34)
At the plant level, and especially in large enterprises, which had their own housing facilities and a comprehensive social structure (youth camps, kindergartens, sanitariums, convalescent homes, culture palaces, sports centres, etc.), the unions had a panoply of distribution and allocation functions at their disposal. The "Triugolnik", i.e., the leadership troika made up of the plant director, Party secretary and trade union chairman, was more a figment of the ideological imagination than a solid works reality. The power relationships within the leadership triangle were unevenly distributed. The trade union chairman was considerably less powerful than the director or the Party secretary. However, within the scope of a works career, it was indeed not unusual first to become a department head, then a trade union chairman and then to advance to the post of deputy director. In daily life, the plant directors and department heads were colleagues of the trade union chairman who had his meals together with them in the directors' mess.
The trade union chairman held power and influence in his own area but was subordinate to the director general. Hence the unions were viewed primarily by the workers as part of company management which one had to approach to be considered for the supply of goods and services that were in short supply. Thus collective agreements were just so much paper nobody -- directors, trade unions, not to mention employees -- attached any real significance to them.
1.4.1. Privatization
Formal privatization of extensive portions of the national economy has as yet failed to bring about more effective company management as anticipated in many cases. This is primarily owing to the fact that privatization meant denationalization. Transfer of decision-making powers to the company level had already begun during perestroika, without its having been made clear who held the ownership rights to the enterprises. So the enterprises became headless, and their fate then largely rested in the hands of company administrations. Administrators often lacked not only the management skills necessary for a market economy but also the economic resources and the economic interest to carry out corporate restructuring. What was conceived of as decentralization largely ended up meaning a loss of control.(35) The so-called nomenklatura privatization(36) had commenced before the new Government managed to introduce the new voucher privatization.
Rather than seeing new investment bring about enterprise modernization, as had been expected, it now seems that in fact operating assets were converted into financial assets. The massive outflows of capital(37) from Russia indicate that the previous form of privatization was inadequate to stimulate investment and growth. It may be, indeed, that it was totally counter-productive, i.e., that particular form of uncontrolled denationalization, given an investor-unfriendly tax policy and a background of extensive corruption, prompted the capital exodus and enterprise-raiding.
In this connection, development within individual enterprises depended on a number of separate factors, such as the strength of the regional administration, the competence and value orientation of the company management, technical equipment and the individual enterprise's market opportunities, the enterprise's significance in the local or regional economic and social structure. The directors were the most important figures in the decision-making process regarding the enterprise's response to compulsory privatization. The voucher-privatization concept took into account the power of the directors. As is well known, there were three types of privatization in larger enterprises:
1. Employees (workers and management) were given 25 per cent of non-voting shares. In addition, workers were entitled to buy for cash or vouchers another 10 per cent of voting shares in the closed subscription.
2. Workers and managers could buy 51 per cent of voting shares at 1.7 times the book value of the enterprise at 1 July, 1992.
3. A managing group (made up of workers, managers or any physical or legal person) took responsibility for fulfilling the privatization plan while ensuring the solvency and productive operation of the enterprise for at least one year, subject to the approval of the work collective. (This option applied only to medium-sized companies)(38)
The second variation was by far the most frequent form of privatization. It was chosen in 70 per cent of all cases. One of the tall tales regarding this approach is that a lot of companies had thereby become the joint insider property of workers and company management. Inaccurate. This form of privatization was merely the most suitable variation whereby the respective management could acquire discretionary powers over the enterprises.(39) There is no known enterprise where effective management control came about through its worker shareholders or through its trade union committee.(40) Going on the real distribution of power in Soviet society, it is difficult to imagine that an attractive company would not have been privatized by the old or the new élite -- especially since the work collectives did not and do not have the organizational and political clout even to question those élites' claim to power, let alone openly challenge it. In privatized enterprises, trade union chairmen are indeed sometimes represented on the board of directors of new stock companies. This is, however, no proof that worker's interests are represented in any real way. It is highly possible that the trade union chairmanship is in the hands of the de facto holder of the office of Board Member for Social Issues. Attempts by trade union committees (e.g. at the SIL automobile plant) to convince union members to assign their share voting rights to the trade union committee so as to enable a collective representation of workers' interests at the annual shareholders' meeting met with little response. Provided that enterprises were not taken over by former directors or new investors during the privatization process, it may be assumed that in the normal way of things they ended up in the workers' hands because nobody wanted the rotten junk anyway.
While traditional work relations continued during the initial period of reform in Soviet corporate paternalism, because of a lack of clarity about further developments and a cultural moment of inertia, indications are now emerging that company management are changing their conduct and priorities in particular.(41) Cheap loans from the central bank can no longer be expected, government subsidies have been reduced and manpower shortages may well be history for the foreseeable future. For this reason, companies do not have the money nor do they see the need to spend funds on maintaining the social infrastructure as they used to.(42)
Legal arrangements were made in 1994 to provide for the financing of social or welfare affairs through tax law. The incentive structure is such that the transfer of social costs would improve tax revenue for the federation budget, while the welfare burden would increasingly fall on both local authority budgets and companies if social costs were shifted to municipalities.(43) Maintaining social services, however, only makes sense for companies if they actually receive commensurate refunds from the local authority budget. Since this frequently does not happen, enterprises have handed over a quite a number of social services to cities and municipalities, often in the face of opposition from local authorities and faster than the latter were able to accommodate. If cities and municipalities were not willing to accept, then financing was reduced and many youth camps, convalescent homes and culture palaces fell into disuse and became dilapidated.
The above development means trade unions have lost a central function and therefore power within companies. In 1990, for example, the unions arranged 6,284 million spa therapy and relaxation trips and also carried them out at their own facilities. In 1995, this number had dropped to only 1,124 million. With a total number of 170,000 beds, occupancy may be something under 40 per cent. The financial share borne by social insurance for spa and leisure trips has continuously declined -- from 90 per cent in 1990 to 30 per cent in 1995. The financial share in 1996 is again considerably lower.(44) During the transformation phase, 500 children's sports schools had to be closed and another 800 children's summer camps are under threat of closure.(45)
The reform process has eroded the traditional spheres of activity of Russian trade unions, both at the government and at the corporate levels. Hence, for the unions, the question whether they will succeed in breathing new life into their restructured range of duties -- that involves independent representation of workers' interests and collective bargaining negotiations -- is more a matter of medium-term organizational and political survival than anything else.
2. Internal changes within the trade unions
During the transformation phase, the economic, political and cultural circumstances were especially unfavourable for meeting the requirements of establishing competent trade unions. The old unions have been forced to fit their structures and their cadres to meet totally new challenges and acquire a new image among labour. The alternative unions have been faced with the problem of having to set up independent new structures within an enormous country like Russia. Many of these unions have to call on their few enthusiastic supporters within companies to fight first for recognition as trade unions and as bargaining partners.(46)
While the traditional unions belonged to the camp of tried-and-true, conservative forces as the Soviet Union ended, the new labour movement, and especially the miners' labour movement, was one of the driving forces in transforming the system. The mass miners' strikes in 1989 and 1990 contributed significantly to the collapse of the Soviet system. One might say that these strikes were the "nails in the coffin" of the worker and peasant state. However, their influence on maintaining the reform momentum was minimal. The reform process overburdened them both in terms of organization and skills. Moreover, their support of the Government's reform process, which meant economic hardship for the miners, was not conducive to strengthening the authority of the NPG in coal-mining areas.
The transformation process has essentially occurred without the unions, or it has passed them by.(47) This is equally true for both the old and the new unions -- although perhaps for different reasons. The unions have failed to grasp and shape the central issues at the heart of the transformation process. The delay in some reform measures cannot be traded to any obstructionist policy on the part of the unions, but rather to the rivalries, incompetence and corruption rife within the political and economic leadership élite.
2.1. The traditional trade unions
Radical structural and political changes at once required and opened the way to decisive modifications in other aspects of the unions. The union machinery had to find a function for itself under the new conditions if it wanted to survive. This was certainly not facilitated by the fact that the unions were forced, during the August coup and the events in October 1993, to act under the imminent threat of being disbanded or having their assets confiscated.(48)
The reform-oriented union membership attempted to surmount the deep crisis in the trade unions by working for organizational stability, internal democratization, renewal of personnel and programmes as well as by developing the ability to mobilize and take action. Yet in so doing, the reform-oriented element could not base its efforts on any active support from the grass roots.
2.1.1. Membership trends
According to their own statements, the unions had over 60 million members when the reform process started.(49) In principle, all employed persons were union members -- from the cleaning lady to the director general. While it is true that there has been no mass exodus from the unions in recent years, total membership has nevertheless declined to 45 million in the interim.(50) Membership has slumped in various branches of industry and in agriculture, although membership levels among civil service employees has mostly remained stable.
Membership trends within individual trade unions
| Branch | 19931 | 19962 |
| Agriculture | 14.45 | 9.6 |
| Education | 4.7 | 4.8 |
| Health | 3.5 | 3.5 |
| Municipal enterprises and local services | 2.7 | 2.7 |
| Administration and public services | 2.3 | 2 |
| Building | 3.4 | 2 |
| Energy | 1.7 | 1.3 |
| Automobiles and farming machinery | 1.5 | 1.2 |
| Chemicals | 1.8 | 1.2 |
| Textiles | 1.7 | 1.1 |
| 1 Gelbras, 1994, 219 f. 2 FITUR, 1996a, 82 f. |
Figures given by the unions are most likely on the optimistic side. The Trade Union Federation in Leningrad, for example, which is one of the most activist regional organizations capable of mobilizing its members, lost over one third of its members.
Declining membership primarily came about because of adverse labour developments in traditional sectors and the demise of union organization in smaller companies and administrations. Management and white-collar workers also tended to drift away from the unions,(51) although this was perhaps more a matter of policy than hard figures. It is hard to assess how many people are still counted as members according to outdated file cards, since membership is not calculated according to receipts issued for dues received.(52) Rather it seems as if membership information is quite simply and partially based on data provided by trade union bodies. To illustrate: delegates to the Trade Union Congress are granted voting rights on the basis of the number of declared members and not on the basis of paid-up members. The Agricultural Trade Union, for example, received voting rights for 9.6 million members despite the fact that it contributed less than 3 per cent of the dues payable to the Congress in conformity with the statutes, which would give the ATU a real membership of something like 300,000).(53)
Despite the continuing erosion of membership, the approximately 75 per cent level of formal organization is still considerably higher than the general average in West European countries. In view of this high level of organization, the present decline in membership per se gives no cause for alarm as it can be seen as quite a normal aftereffect of quasi- compulsory membership. By contrast, the fact that the unions still give a poor showing in any attempt to mobilize their members into full-blown company labour disputes is more problematical. As long as this situation does not change, membership will almost certainly continue to decline.
2.1.2. Finances and assets
Falling membership, low official real wages and wages in arrears have resulted in a sharp decline in income from membership dues. Based on the decentralization of dues revenue, a policy introduced by the AUCCTU in 1986 and accelerated by the FITUR during its formation phase,(54) somewhere around 80 per cent -- 95 per cent of dues revenue remain, today, at the company level.(55) There the funds are used to finance the plant or works trade union officials, to provide social support payments to individual union members and cover other social needs. The regional and supra-regional structures of the branch trade unions and of FITUR rarely receive more than 10 per cent of dues revenue. Since company organizations, as a rule, pay their share of dues to the regional branch unions, there is no guarantee that the central trade union offices ultimately receive their earmarked share of paid-up dues.(56)
Dues revenue is largely insufficient to fund organization work.(57) Since dues are not being paid, the trade union apparatus finances itself by selling assets or renting office space in union buildings.(58) Despite their considerable real estate assets, the amount of income generated which actually ends up in trade union coffers(59) is still insufficient to ensure intensive regional and supra-regional trade union work.(60)
Employees on central trade union boards can only engage in limited regular travel within the region or organize regional conferences, central seminars and meetings in a small way. Out of a former total of 70 training centres, only 43 are left.(61) With few exceptions, the surviving centres have been severely down-sized, and they are only partially used for trade union educational work. 20 out of 68 trade union newspapers have discontinued publication since 1992. The total print run of union newspapers is 1 million copies.(62)
None of the trade unions have a strike fund at their disposal. Consequently, they are not able to conduct extended labour disputes because no strike support can be paid. The lack of a strike fund is especially crippling since barely any spontaneous solidarity and financial support comes from other workforces for those on strike.
Trade union management has been trying for years to attain a limited form of re-centralization for dues revenue. A resolution was adopted at the Trade Union Congress in December 1996, to transfer 35 per cent of dues revenue from company organizations to higher-ranking bodies in 1997. Pursuant to the resolution, the quota shall increase to 50 per cent by the year 2000.(63) According to reports from the regions, this is probably wishful thinking.
Many company organizations perceive the work of central trade union boards as offering little or no benefit for them. By the same token, the boards have very little leeway for expanding their supply of advisory functions and services to members or company union officials.
2.1.3. Personnel
Quite a number of trade union officials are highly qualified and skilled professionally speaking because they were previously part of the management élite.(64) Many (older) officials, however, are not able to meet the challenges of new times and new tasks. The unions have been forced to make staff reductions, or to pay reduced salaries. This has caused qualified union officials to seek employment outside the unions. Due to the union policy crisis, there is also a lack of junior executives and little financial possibility of employing new professionals. Hence the body of union officials is outdated. As a rule, the chairmen of regional organizations and branch unions are over 50 years of age. Rejuvenating the body of union officials is a slow process.(65) New activists are seldom found in the companies or at the regional or federation level.
Thus trade unions are being forced to try and bring in new blood not only under difficult financial conditions but largely through an ageing staff.
2.1.4. Establishing democratic structures
The branch unions were traditionally nothing more than specialized operating departments of the AUCCTU. This has officially changed, and the FITUR now continues solely as an umbrella organization. Meanwhile, the elections of trade union officials have been held at all union levels.(66) There was no perceptible restriction of freedom of speech at the conferences of the branch trade unions or the FITUR.(67)
In 1990, the FITUR adopted a stringently federative structure. In keeping with this concept, trade union leadership decisions are to take the form of recommendations. Following the October 1993 events, Schmakow even wanted to transform the federation into a confederation. However, he was not able to get this proposal through.(68) An attempt was made to establish a certain amount of recentralization at the last Trade Union Congress by amending the statutes. Judging from previous experience, there seems to be some justification for doubting that this will actually happen.
While political decisions and dues revenue were being decentralized, assets remained in the hands of the FITUR and the regional federations.(69) Joint assets also proved to be an effective instrument of organizational cohesion when decentralization was at its height, and it prevented the old trade unions from being broken down into innumerable individual organizations. Most of the branch unions at the central and federation level maintain their offices in trade union buildings that belong to the federation. In practical terms, being out of the federation would have meant that branch unions waived part of these assets.
This concept was even written into the new statutes.(70) At the same time, the statutes provide for a very strong influence from the regional organizations so that any modification of the statutes in the interest of dividing up assets to the detriment of the umbrella organizations has to all intents and purposes been excluded. The branch organizations are hardly in a position to change this owing to the preponderance of regional organizations.(71)
2.1.5. Programming
The FITUR programme has clearly professed support for a socially-regulated market economy, trade union independence and political democracy. It espouses government intervention in the economic process if such intervention is required for social reasons. It principally expresses favour for forms of cooperation based on social partnership at the company and supra-company levels. As a rough synopsis, it may be said that the FITUR adopted a more social democratic platform at its last congress.
By contrast with most Eastern European countries, where fresh programmes in old trade unions went hand-in-hand with the social democratization of the communist parties concerned, there can be no talk of social democratization in the Communist Party in Russia. A ragbag of nostalgic, communist, national-patriotic and authoritarian ideas prevails within the CPRF. While the CPFR has failed to hammer out a coherent programme image, at the last Congress the leadership of the FITUR used its lead motion to set the unions on the way towards pragmatic reform within the transformation process.
However, attempts by trade unions to position themselves in the political centre between neo-liberal reformers and communists have failed. The Union of Labour received 1.3 per cent of the vote during the Duma election in 1995. That union had entered into an election alliance with the Union of Industrial and Goods Producers following its failed attempt to initiate a broad opposition alliance. This closing of ranks between the unions and former Soviet directors may conceivably have coincided with the interests of many managerial and company union officials, however, it contrasted starkly with the programming efforts of wanting to be an independent representation of workers' interests, not only separate from the State but also independent of employers. The unions had more success in some regions in terms of voter turn-out. According to information from the regional union chairman, the trade union list in Murmansk 8 won 17 seats in the regional Duma.
2.2. Monologue: The new trade unions
In the final years of the Soviet Union, the old trade unions were very discomfited and challenged by an autonomous labour movement and the new trade unions. An independent labour movement had arisen in the Soviet Union for the first time since the early 1920s.(72) The miners' mass strikes struck at the core of the system especially since the rule of the nomenklatura was ideologically legitimized as dictatorship of the proletariat. These strikes especially questioned the legitimacy of the traditional trade unions as organizations of the working masses.
The new unions developed out of a wave of mass strikes and discontent over political conditions in the country. The miners and a few specialized occupational groups (pilots, air traffic controllers, seamen, dock workers) succeeded in organizing new unions capable of taking action. In other companies, new unions arose as opposition groups to the traditional trade unions. According to expert opinion, the most effective amalgamation of these company groups emerged in 1989 with the formation of the "Sozprof" umbrella association.
The old trade unions were willing to recognize that the new unions were politically significant despite their low membership. Igor Klochkov, then FITUR chairman, proposed at the fourth plenary meeting of FITUR that "the leaders of the labour movement should be represented in all higher ranking structures of the FITUR up to the office of the trade union board".(73) In March 1991, 41 million roubles in support payments from the Russian Government were paid to the workers' committee of the striking miners in Workuta through FITUR bank accounts.(74) The political influence of the new unions also had an impact on the distribution of seats on the newly-formed tripartite commission. Five of the fourteen employee seats on the commission were assigned to the new trade unions although they had less than 1 per cent of union members. In the following years, the FITUR made a come-back in the argument over the allocation of representative votes, and the new unions found themselves with only two seats on the commission.
The new occupation-based trade unions were able to consolidate within their immediate organizational area, and were partially successful in carrying through substantial contract and collective bargaining agreements. These unions failed to become the nucleus of an alternative trade union movement, however, because of their comparatively privileged occupations and their very specific scope of interests. The NPG did not organize the majority of miners despite its moral authority in the early 1990s.(75) However, the traditional miners' union (PRUP) had reformed itself to a much greater extent than other branch unions owing to the strike movement and to competitive pressure from NPG. This has caused a narrowing of the differences between the two unions. Recently both unions partly joined forces on a local basis to fight for the punctual payment of wages.
The approximately 1,000 trade union groups pooled under Sozprof have only in exceptional cases succeeded in emerging as the strongest trade union within a company. These union groups often have to battle against the resistance of company management and old trade unions in order to gain any recognition whatsoever as a partner in discussions and negotiations. Sozprof is attempting in many instances to force this recognition through the courts or through high-profile actions such as hunger strikes. Filing a law suit against a powerful director general, which is an extremely unusual step especially in Russian provincial towns, is proof positive that the new unions are emerging as pioneers in achieving settlement mechanisms under the rule of law.
The activists in these kinds of unions will win the esteem of many colleagues because of their courage and commitment -- if they avoid manoeuvring themselves into the position of troublemakers through petty, over-zealous litigation at every turn. Yet in spite of all, most people remain in the old trade unions. This can be explained by practical considerations and not merely in terms of a moment of inertia or paternalistic childishness. The new unions are indeed enthusiastic supporters of the rights and dignity of employees at the workplace: however the disputes are in no way always successful, and they are associated with adversity, fears and risks during the conflict stage. By contrast, social service issues can be settled through the traditional unions (provision of allotments, i.e.,vegetable gardens, allocation of heating fuel for residential accommodation, etc.).(76) Anyone who is in open opposition will forfeit these options.(77)
Given the fact that the new unions failed to organize themselves as a broad-based mass organization during the phase of political euphoria, it will be more difficult and rather less probable that they will succeed in this as the initial optimism seeps away. In 1995, the amalgamation of new trade unions under two alternative umbrella organization (transportation workers union for KTR and NPG, Sozprof and some regional unions for WKT, clearly shows that relationships among the trade unions are by no means devoid of conflict.
The ability of the new unions to mobilize workers has undoubtedly weakened, and traditional unions have taken the initiative and gained a strong lead in terms of trade union policy. While there are still recurring reports about individual company conflicts or strikes, the new unions have not recently succeeded in organizing larger demonstrations or nationwide or branchwide strike action.
The influence of the new unions should not be measured solely by how many members they have or whether they can mobilize labour, but also in terms of what pressure for change that they can exert on the old unions by the very fact of their existence. Examples of committed and courageous representation of workers' interests at the company level primarily show that another type of trade union practice is possible in Russia.
3. Trade union practice during transition
The decisive factor for trade unions is whether they will succeed in improving their standing among workers through achieving specific performance levels that stabilize their membership base and the financial situation, and whether new people will be willing to work in the unions. Only then will programme renewal or reprogramming be worth more than the paper it is written on.
In this respect, trade union practice is very divergent on a company and regional basis. Undoubtedly, there are worlds of difference between the political and the trade union policy situation in Workuta, Tatarstan, Ulyanowsk, St. Petersburg or Moscow. Trade unions are continuing to discharge their traditional tasks only in part. This becomes clear from the workers' perception of the unions.
Where do you see the specific results of the work of your trade union organization (multiple choice)?1
| March 1995 | June 1995 | |
| Represents employees' interests vis-à-vis the administration | 21.8 | 21.8 |
| Organizes foodstuffs and consumer goods supply | 8.1 | 28.3 |
| Fights for adequate pay | 13.9 | 17.1 |
| Deals with issues concerning stabilization of work discipline | 10.2 | 14.8 |
| Provides material aid | 14.7 | 21.5 |
| Concerns itself with working conditions | 13.3 | 17.0 |
| Helps in solving accommodation problems | 11.4 | 22.2 |
| Other | 19.6 | 27.5 |
|
1 Survey of the Ministry of Labour conducted among 9,720 employees with various qualifications and from differed regions and branches.
Source: Mintrud, 1996, 110. | ||
The unions' future depends on to what extent they can be of actual benefit to their members in a more forceful manner than in the past. The central areas of responsibility in this respect are as follows:
-- maintaining traditional spheres of activity;
-- influencing social policy on the tripartite commissions at the municipal, regional and federation levels;
-- securing supra-company standards through collective contract negotiations;
-- representing interest in the company through effective collective bargaining agreements;
-- bolstering ability to carry out strikes and campaigns.
3.1. Traditional functions
For generations of workers, the trade unions discharged a social supply function within the old system. Even if company organized leisure trips, child recreation camps and new year's parties have become less extensive, they have not entirely disappeared. Rather it appears as if they have levelled off in the past two years after dropping sharply during the initial reform years. Many company trade union officials continue to perceive this as an important task, and for them it is the real field of activity, the sphere that matters. Many city authorities and parents are still interested in having child recreation camps continue to operate, especially in view of the difficult material and ecological conditions in many of the congested industrial centres. The City of Moscow, for example, has intermittently taken over a considerable portion of the financing required to provide child recreation programmes organized by company trade union committees. By handling these matters, the unions retain a practical function and improve their negotiating position vis-à-vis local authorities.
Holding on to these functions, which are atypical for unions in a market economy, is a double-edged sword. On the one hand, this work ties up energy and capacity within trade unions which are already suffering from limited manpower, and it conceals the danger of incorporating unions into the new municipal social policy as a non-governmental welfare organization -- a role which many traditional trade union officials in particular would certainly be happy to accept. On the other hand, it seems more than doubtful whether acquiring new skills for fresh fields of endeavour would move along faster if the unions were relieved of the "ballast" of such social supply functions. They would possibly be deprived of a significant reason for their existence in the eyes of many members, unless they were able to show some success in their new fields of responsibility so as to be taken seriously not only by their own members but also by employers and state agencies.
However, the unions can keep the social services that are used by workers and their families or children only so long as financing is guaranteed by the social insurance system. The Government's current plans to reduce the social security contribution rate by one percentage point to the benefit of the national pension insurance contribution would mean closure for many of these facilities.(78)
3.2. The tripartite approach
The Russian tripartite commission on regulating working and social conditions, comprised of employers, government and trade unions, has been working at the federation level since 1992. In the meantime, tripartite commissions have been set up in nearly all federation subdivisions and in many large cites. In the past year, 77 regional and 1,149 local tripartite agreements have been concluded to regulate social and working conditions.(79)
Comprehensive minimum social standards and the obligations of the State, employers and trade unions in the areas of work and social relationships are to be laid down in the agreements. The commission is to give guidance on all relevant issues in the field of social and labour legislation. This very ambitious, discerning assignment is however open to criticism from many trade unionists because of their disappointment at the results of the commission's work. Their attitude is based partly on an overestimation of the options open to the central Government's regulatory powers in a market economy principally designed along decentralized lines.
The wide regional and branch-related differences of the Russian Federation also increase the difficulty of reaching specific agreements at a federation or comprehensive branch level. Even at the level of the individual "Oblasti", many of them larger, say, than Belgium and with a population of over a million inhabitants, there are limited possibilities for substantial, tripartite agreements. The tripartite process is impeded nearly everywhere by the lack of employer representation. Many private companies or privatized companies choose not to become members of an employers' association which is authorized to conclude binding agreements on their behalf. Employers see no cause for allowing any restriction of their autonomy in decision- making or corporate power. There is no attraction for them in a supra-company command and regulatory framework as long as they can do pretty much anything they like with their company workforces and trade union committees. In the first phase following privatization, many directors and entrepreneurs held the opinion that collective contract negotiations and legal labour safety regulations would not apply to private companies. After privatization, many of them thought that the property rights of the private company owner were not subject to any legal restrictions whatsoever, and the boss had absolute freedom to make decisions about working hours, working conditions, work safety and remuneration, etc.
Bilateral agreements were closed between trade unions and area representatives in some regions because insufficient powers of attorney had been issued to employer representatives. The tripartite commission is more a forum for presenting social policy concepts to government representatives than a body in which the State participates, as a neutral third party, for settling labour relations between labour and management. Within the commission framework, the unions primarily find institutional recognition as representatives of the public's social interests. Trade unions in many parts of the world would certainly be happy if they had this kind of institutionalized dialogue with their governments. The unions in Russia have had the institutionalized framework given them almost on a silver platter. The body was established from above as a means of social and technological modernization. No one fought for it. Local and regional governments are particularly willing to talk to the unions because they have traditionally provided services in the social sector, and they possess organizational and administrative competence in this area.
Trades unions are now forced to prove within these bodies that they are not just a social policy rubber-stamp to lend legitimacy to government decisions. They will have to develop their own competence in the field of social policy and at least be able to lay down some minimum social policy standards on the tripartite commission and in annual agreements. As a rule this was neither achieved at the federal or regional levels. The tripartite agreements are mainly collections of general statements of intent and a list of social policy issues which the tripartite commissions are to discuss over the course of the year. The Government has even frequently ignored the feeble right to a hearing in various instances; amendments to laws relevant to social policy have been introduced before the Duma without prior consultation with the tripartite commission. In some cases, the tripartite commission did not have a quorum because a sufficient number of government representatives failed to appear.
One of the few specific agreements pushed through at the insistence of the trade unions was that designed to close the gap between the minimum wage and the minimum poverty level. In all general tripartite agreements since 1993, the social partners undertook "to work out and begin implementing measures to reduce the gap between the minimum level for subsistence and the minimum wage".(80) However, prevailing circumstances in Russia allow grounds for doubt as to the value of such agreements.
Other declarations of intent, such as compensation for savers, are repeated year after year without any specific action being taken. This is certainly not calculated to enhance the reputation of the tripartite commission among the public.
Agreements made at the regional level also primarily contain declarations of intent or reiterations and confirmations of arrangements that have been previously established by law. The unions are making some attempt finally to establish at least a social policy settlement. The following issues, among others, have been successfully addressed in St. Petersburg:
-- rents cannot be increased above 40 per cent of real costs;
-- heat and electricity in company apartments cannot be turned off if the company has failed to meet its wage payment obligations;
-- child recreation camps will be financed by the city;
-- public transport subsidies will be maintained for school children, students, retirees and large families;
-- employees are obliged to release trade union members from work on full wages for trade union schooling.(81)
Relationship between minimum wage and the poverty level
|
Minimum wage
in roubles |
Poverty level
in roubles |
Minimum wage as
per cent of poverty level | |
| 1992 | 714 | 1 900 | 37.5 |
| 1993 | 5 962 | 20 578 | 29.0 |
| 1994 | 18 050 | 86 564 | 20.8 |
| 1995 | 42 621 | 264 100 | 16.1 |
| July 1996 | 75 900 | 385 100 | 19.7 |
| Source: Rabochij centre ekonomicheskikh reform 1996 II, 91, et seq. and own computations. | |||
Ultimately, the effectiveness of tripartite commissions cannot be judged primarily on the basis of annual agreements. They are useful institutions -- independent of the annual agreements -- if they can create a climate of trust and cooperation among responsible decision-making bodies that actually guarantee consideration of trade union ideas in the decision-making process. However, they may aggravate workers' traditional mistrust of the unions as a pseudo-lobby for workers' interests if commission meetings only become ritualized, bureaucratic events for the purposes of issuing bombastic statements.
The trade unions will have to modernize their work if they want to make use of the influential field of supra-company social policy, and avoid being tied into the social administration merely as organizers of children's camps. Establishing their competence in social policy will be the deciding factor. Currently, the most pressing task would be to exert an influence on the restructuring of the housing economy. This is urgently required both on grounds of social efficiency and in terms of social justice. Yet in the light of past experience, many people are still apprehensive that the final choice they will face as they emerge from the reform process will be between unaffordable rents and homelessness. The unions could make an important contribution towards avoiding social tensions and improving their own image by offering competent and practical ideas for socially palatable reform on the housing issue.
3.3. Industry-wide contract negotiations
Pursuant to the Labour Code, working conditions and pay levels above the legal minimum standards are determined by negotiation, collective agreements and individual employment contracts. Trade unions have been experiencing greater difficulty in finding partners for industry-wide contract negotiations as economic structures were denationalized and democratized. In 1996, there were only 15 regional branch wage settlements in the City of Moscow although there are over 40 branch organizations.(82) 58 industry-wide branch collective contracts were in effect in the whole of Russia in 1996,(83) but only 20 per cent of those settlements were entered into with employers' associations. All other settlements were concluded with ministries or ministerial departments or other offices which simply do not have sufficient economic, financial or executive powers of attorney at their disposal.(84) Hence, it is not at all clear whether an industry-wide collective contract has any validity whatsoever in many privatized companies.
The contractual pay under an industry-wide collective agreement is often low. The settlements are couched in very general terms or restate minimum standards, already established by law, which fail to justify any specific claims. The issue of remuneration has broadly speaking shifted to the company level,(85) and industry-wide collective contracts only provide for minimum standards which in general fail to secure any substantial real income.(86) These settlements are indeed higher than the minimum income provided for under law, and they are meaningful for employees who the company places on compulsory leave. These employees have a claim to two thirds of the agreed minimum wage.
Contract minimum wages compared with the poverty level and the average wage in roubles
| Branch | Legal minimum wage | Contract minimum wage | Poverty line | Average wage |
| Gas production | 280 000 | 3 016 000 | ||
| Oil production | 280 000 |