Putin’s speech was supremely intelligible. It boiled down to this. We could just as well not change the retirement age over the next ten years, but we are going to do it anyway merely because we want to do it. We are going to fuck each of you over to the tune of one million rubles at least, because we like lining our pockets with the money, and no opposition can do anything to stop it.
We are not going to raise the taxes of the oil and gas bourgeoisie, because we are the oil and gas bourgeoisie. The Pension Fund’s palaces and the palaces per se of the ruling class are beautiful, but there is no need to touch them. Let them be. Anyway, things could be a lot worse, believe you me.
The speech was an open declaration of class warfare on the majority on behalf of the ruling minority. It was a rude statement by the modern-day equivalent of Yuri Olesha’s Three Fat Men, a group of people rendered insolent by their impunity.
The tsar in his mercy granted indulgences. He took three years off the proposed new retirement age for women, and six months off the retirement age for the first cohort whom the reform will roll over, as well as promising guaranteed employment and property tax benefits for pre-pensioners, and so on.
This summer’s political upsurge has borne preliminary fruits, but they are decorative. The wave of opposition to the proposed reforms must rise higher and higher, and popular hatred must adopt really effective guises, meaning guises that frighten the regime.
A genuine mobilization of society would smash this reform, conceived by thieves, to smithereens, and maybe some other things as well—if such a mobilization occurred, of course.
If the entire country takes to the streets in September, we shall soon see a new speech by Putin, in which he says he has changed his mind. Now the authorities will be gagging, demonizing, isolating, and banning vigorous opponents of their mean-spirited reform on a daily basis. All of us, therefore, must become vigorous opponents of the reform.
Russia has the money to build stadiums like Zenit Arena, in Petersburg, the world’s most expensive football stadium, and stage incredibly expensive mega events like the 2018 FIFA World Cup and the 2014 Sochi Winter Olympics, but it cannot afford to pay its workers decent pensions without raising the retirement age beyond the current life expectancy for forty percent of Russian men. Photo by the Russian Reader
It is quite likely a draft law on raising the pension age will be tabled in the State Duma in the very near future. The authorities probably want to take advantage of the restrictions on large-scale rallies during the 2018 FIFA World Cup. Raising the retirement age is not entirely an economic issue. The Pension Fund has been running a huge deficit because 40% of wages are paid under the table. This is a colossal amount. Even the most incompetent revenue service could easily reduce this figure.
It appears there is an implicit consensus between the regime and a segment of the business world that the latter agrees not to get involved in politics, while the regime agrees not to try very hard at auditing businesses. It is a commonplace that only suckers pay taxes to the current regime. Admittedly, there are grounds for this.
Nevertheless, wage laborers are the clear losers, and it is also obvious why. If the majority of people are so easily gulled during elections, as we saw recently, what reason does the regime have to keep its campaign promises and bother about reducing poverty?
I really hope liberals will also support the campaign against raising the pension age. There are market-based means of fixing the problem, for example, reducing mandatory pension deductions while simultaneously raising the corporate profits tax. When salary deductions come to 43%, while the corporate profits tax is 20%, it makes financial sense to understate salaries even without resorting to illegal gimmicks.
The trade unions have launched the campaign, but everyone is free to join it.
The Executive Committee of the Confederation of Labor of Russia (KTR) has issued a statement concerning plans by the Russian federal government to raise the retirement age. […] To sign the statement and join the grassroots campaign in your city, write to firstname.lastname@example.org or call +7 495 737-7250 or +7 903 140-9622.
Statement by the Executive Committee of the Confederation of Labor of Russia (KTR) on Plans by the Russian Federal Government to Raise the Retirement Age
On May 8, 2018, during a plenary session of the State Duma, Dmitry Medvedev spoke of the need to make a decision about raising the retirement age. Currently, various government proposals for implementing a decision are vigorously being discussed in the media.
The Executive Committee of the Confederation of Labor of Russia (KTR) argues that plans to raise the retirement age are not based on the available official statistics and do not meet the objectives set by the Russian president for the government. The KTR does not support solutions of this sort and announces the kickoff of a broadly based grassroots campaigns to oppose their implementation.
According to the Russia Federal Statistics Service (Rosstat), the average life expectancy in sixty-two regions of the Russian Federation is less than 65 years for men, while in three regions it is less than 60 years. If overall demographic trends in Russia remain generally the same, 40% of men and 20% of women will not live till the age of 65. Enacting proposals to raise the retirement age mean a considerable number of Russians will not live to enjoy retirement.
For many years, the Russian government has pursued an economic policy that has produced a deficit of 40–45 % in the Pension Fund. The KTR believes the deficit emerged primarily because a huge number of employees work without the benefit of an employment contract. Their wages are paid off the books, and mandatory pension contributions are not deducted from their wages. The Pension Fund’s managers estimate that regular deductions are made for only 43.5 million people out of a total working-age populace of 77 million people.
Rosstat has estimated that 10 trillion rubles in wages are paid under the table annually. This means that, annually, at the current rate of 22%, the Pension Fund does not receive 2.2 trillion rubles in deductions.
So, the current rate of deductions could be maintained and the Pension Fund would not show a deficit if all employment were legal and on the books. Moreover, average pension payments could be increased.
Illegal employment is grounded in the disenfranchisement of workers due to ineffective procedures for protecting their right to employment contracts and collective bargaining. The KTR argues that positive outcomes could be generated by increasing the liability of employers who pay employees off the books and fail to make tax and pension deductions. Overcoming powerlessness, however, necessarily involves changing the laws and restoring real rights to organize and join a trade union, bargain collectively and strike, and protect trade union organizers from summary dismissal.
The fight against informal employment must be the primary solution to the Pension Fund’s deficit.
If plans to raise the retirement age are enacted, the absence of government-funded retraining programs, automation of production, and the bleeding of low-skilled jobs from the labor market will generate a millions-strong army of elderly people who have no jobs and no pensions.
As an association of independent trade unions, the KTR appeals to all forces in society, political parties, and social movements to oppose the increase of the retirement age and get involved in the grassroots protest campaign.
We propose organizing an open headquarters for running the national campaign to protect the rights of workers to pensions.
June 1, 2018, Moscow
Boris Kravchenko, president, KTR Igor Kovalchuk, chair, KTR Executive Committee Sergei Kovalyov, secretary general, KTR; president, Russian Federal Flight Controllers Union Oleg Shein, vice-president, KTR
“Life Is Very Difficult for People”
Yelizaveta Mayetnaya Radio Svoboda
November 30, 2017
The announcement first appeared on the doors of a cafe in St. Petersburg, and then on the social media networks: “Olivier salad, kharcho, vegetable ragout with chicken, compote or ale, bread. 200 rubles. Free of charge to veterans and impoverished pensioners.” The whole town learned about the charity campaign literally within a few days, and old people flocked from all ends of the city to enjoy the free lunch special.
No one asks for any letters, verifying a person’s income. Pensioner ID cards are not required, either. You just have to sit down at a table and you will be fed.
Czech Yard, the cafe that will not let pensioners go hungry, is a family business. 25-year-old Alexandra Sinyak, the cafe’s co-owner, came up with the idea for the charity campaign.
“It all started with an old man who came into eat, but had little money on him. My husband was working in the cafe that day. He felt sorry for the man and said that lunch specials in our cafe would be free to pensioners,” recounts Sinyak. “The old man came for lunch every day for three weeks or so. We thought we should be feeding all the old people in our neighborhood, and not once, but on a permanent basis. We hoped our colleagues would support us, and one or two cafes that fed old people would pop up in each district. We did not imagine, of course, that they would come from all parts of the city to our cafe, but life is clearly very difficult for people. They spend forty minutes, an hour traveling one way to come here. We feed everyone. We do not turn anyone down.”
At first, Sinyak recalls, for some reason the old women brought their pension receipts along with them. The amounts listed on them were 6,200 rubles, 8,000 rubles, and 10,000 rubles. [That is, these women receive, at most, a pension of 143 euros a month.] They brought other receipts as well, such as the receipts for their apartment maintenance bills, which contained almost identical sums. [In fact, the amount of my latest apartment maintenance bill is 6,285 rubles and 20 kopecks. It tends to be lower by two or three thousand rubles in the summer months, when the centralized heating system is shut off—TRR.] Many of them have adult children who are employed, but they cannot help their own old folks, because they are barely making ends meet themselves.
According to Rosstat, around two million employed Russians are paid wages below the subsistence level. If we account for the fact that this money is also spent on other family members, the number of employed but impoverished Russians is over twelve million people or 16.8% of the population, according to calculations made by experts at the Russian Federal Government’s Analytical Center. Analysts at the World Bank have argued that the percentage of economically vulnerable people in Russia is over fifty percent. According to a World Bank report, the proportion of Russians with a daily income of less than $10 has risen to 53.7%, while 13.8% of Russians spend less than 5$ a day.
Sinyak has seen her share of employed poor people in hospitals and rehabilitation centers. Four years ago, she and her husband gave birthto a premature baby. Doctors told the couple the girl would not be able to walk, talk or see, and they could not even dream of sending her to school. The Sinyaks threw all their efforts into making their baby daughter well. Now she has a slight limp, but is otherwise a normal child.
“We organized charity concerts for the children, and my husband and I simply gave their parents money because we really wanted to help them,” says Sinyak. “Now we are thinking about organizing a New Year’s party for the old people.”
At first, they posted the announcement about the free lunch specials on the cafe’s front door, but only one person showed up. It was only after Sinyak posted the announcement on social media sites that the whole city discovered her and her husband’s lunches. Now they serve at least twenty-five free lunch customers daily.
The initial announcement outside the cafe: “Dear patrons! The restaurant invites needy people of pension age and veterans to enjoy free lunches daily from 10 a.m. to 1 p.m.” The post on the VK social network reads, “Czech Yard Cafe at 73 Sixteenth Line. All veterans and elderly people can eat lunch for free from noon to four p.m. […] We will support all cafes that can afford to do it. There are three of us for the time being. We are reposting this. Maybe a whole bunch of cafes in every district of the city will join us.”
One of their customers is 66-year-old Lyubov Volkova. She lives nearby, but she ordinarily does not walk on the side of the street where the cafe is located. She saw the announcement on VK. She spread the word to all her girlfriends in the neighborhood so they could lunch together.
“The lunch specials are a tremendous support to me. I worked my whole life. I have the title of veteran worker, but my monthly pension is 10,200 rubles, and the maintenance bill for my two-room flat is at least 7,000 rubles during the winter. I’m left to my own devices,” says Volkova, sighing heavily. “The electricity has been shut off for non-payment, and I have 15,000 rubles in unpaid fines, but I have not paid them, because I do not have the money to pay them. There are lots of people like me in our district. The people at the housing maintenance service and the electric company have become insolent. They constantly raise rates. They could not care less whether we can pay their bills or not. It is a good thing that Alexander appeared on the scene. Her cafe is charming and serves tasty food, and it is just nice to come here.”
Alexandra Sinyak, her husband Yevgeny, and pensior Lyubov Volkova
Volkova leads a rather active lifestyle. She is a member of the human rights public monitoring commission, inspecting pretrial detention centers and prisons, and she also volunteers at several public veterans organizatons. But all this work is unpaid.
“Most of the work in Russia is done by migrants. Our own people struggle to make ends meet, and they cannot get jobs. I have two sons, but they themselves have to squirm to feed their families. And I have lots of girlfriends: we left jobs at research institutes in the nineties to trade on the streets in order to raise our children. The situation was no better: everyone’s pensions were tiny. You know, I really love Russia, but everything that is happening makes me terribly sad. I want to go back to the Soviet Union. There was stability and calm then. Sure, we did not live high on the hog, but nor did we go begging. We had enough to pay for the essentials.”
Igor Bukharov, president of the Federation of Restaurateurs and Hoteliers of Russia, says the vast majority of restaurateurs have been feeding the needy for many years, but they do not talk about it.
“Societies for disabled people ask us for help, as do war veterans, as do veterans of military operations, as do the orphanages. Who doesn’t ask us for help?! Some ask to be fed breakfast, some ask to be fed lunch, some ask for help with charity suppers, and I have never heard of anyone being turned down,” claims Bukharov. “Generally, I think helping the needy is everyone’s personal affair, and we should not talk about it.”
For the time being, according to Alexandra Sinyak, they have been contacted by one only restaurant, in Sestroretsk, about arranging lunches on a permanent basis, rather than a one-off basis, and businessmen have turned up who are willing to supply their cafe with produce. Municipal councils in some large cities arrange free lunches for pensioners, but there are waiting lists, and the pensioners have to provide documented proof of their neediness. On the other hand, you can then eat free twenty-one times per quarter, says Lyubov Volkova.
Social organizations also provide assistance in the form of produce and groceries. For example, the Rus Food Fund has distributed 20,000 tons of produce and consumer goods to the needy during the five years it has operated. Right now, for example, the fund has been collecting “Food for the Backwoods” in time for the New Year’s holiday. The food will be delivered to the poor and lonely who live in villages in seven regions. Fifteen thousand people will receive assistance.
Anna Kirilovskaya has taken charge of so-called foodsharing in St. Petersburg. Volunteers collect food from various businesses, and distribute it for free to the needy. Originally, Kirilovskaya explains, the idea was to save edible produce from being discarded. The project now employs around 400 volunteers. The produce is collected almost daily, and thirty businesses give away their leftovers on a constant basis. According to the project’s website, over 113,000 kilos of produce have been saved in the different regions where foodsharing exists and there are teams of foodsavers.
“The volunteers decide themselves what to do with the food. They can take unsold soup from a cafe and pour it into sixty packets, freeze them, and eat them for the next two months. But I know that many of our volunteers take care of neighbors, families with lots of children, and old people. Some volunteers will take leftover meat that has been given to them, turn them into cutlets, and hand them out to the people they look after, but we get the most donations from vegetable warehouses. We mainly distribute fruits and vegetables,” says Kirilovskaya.
According to Kirilovskaya, the businesses most willing to help are owned by green-minded people who promise their customers fresh products and goods.
“Imagine how bakers at a private bakery feel when they have to throw their unsold goods into the trash in the evening?” Kirilovskaya wonders. “But everyone, employers and employees, likes giving away food to the needy. By the way, employees appreciate their employers more when they have this considerate attitude to their work.”
Alexandra Sinyak says she does not know what to do if hundreds of people come every day for their lunch specials, and whether she and her husband can continue to feed them at their own expense for very long.
“We decided we would do it as long as we were able,” she says.
In the coming days, she plans to make the rounds of the cafes in neighboring districts to personally persuade their owners to provide similar lunches to their own local pensioners. Sinyak is certain that someone will respond to her request.
Lyubov Volkova argues that Sinkyak should keep a count of the people who come for lunch, and if there are really too many of them, to refuse to serve everyone.
“I would not want these wonderful, kind folks to end up beggars themselves because of us poor pensioners,” she says.
Translated by the Russian Reader. Thanks to Comrade Preobrazhenskaya for the heads-up
“We Are Treated like Schmucks”: How and Why Volga Region Pensioners Have Rebelled against the Regime
Yeveniya Volunkova Takie Dela
April 4, 2017
Certain benefits for pensioners, disabled people, and other beneficiaries were cut in Samara at the beginning of 2017. Monthly payments for housing services and utilities were replaced by compensation for actual expenses. People now have to pay their bills first, then show the authorities the receipts, and only after that, if they have no debts, are they compensated for their expenses. The system has not been put through its paces and does not function, so there have been problems with assembling documents and getting compensation. In addition, a charge for major renovations has been added to the housing maintenance bill, a charge that many people do not pay as a matter of principle. Also, free public transportation for working pensioners has been abolished, and the number of free rides on the subsidized transport pass has been limited to fifty. This lasts many people two weeks; moreover, people complain the “rides” disappear more quickly. The frosting on the cake was the cancellation of monthly cash payments for working pensioners, who number 175,000 in Samara Region. People have lost their supplementary pensions, which ranged from 600 to 1,200 rubles. Non-working pensioners, whose pensions are over 19,500 rubles, have also been stripped of supplementary payments. The Samara administration did not give permission to hold a protest rally on the city’s central square, allowing it only in a remote neighborhood. Despite these precautions, the protesters packed the square.
The fourth large-scale protest by pensioners took place in Samara on April 2. The old folks first rebelled against Samara Region Governor Nikolai Merkushin in early February, when around 300 people attended a protest rally. The number of protesters has grown each time, and yesterday, according to unofficial statistics, around 4,000 people gathered on the square near the Athletics Palace. The protesters told our correspondent Yevegniya Volunkova what they were protesting and how they had succeeded in coming together when the rallies have not been mentioned on television at all.
Nina Dmitrievna and Tamara Petrovna
Both women are seventy-nine years old. They heard about the rally from flyers and the internet. Their main complaints are Mordovian produce in the city and a fountain during the plague.
We’re upset about our poverty, the judicial system, and very many other things. But first of all, we want to see Merkushkin replaced. He squanders money and imports everything from Mordovia, including crushed stone, paving tile, and cement. Whatever shop you go to, the produce is all Mordovian. It’s no wonder his nickname is the Mordvin Pasha. During these hard times for the region, he wants to build the best fountain in Europe on the river embankment. Is now the time for it? Replace the pavement and benches, sure, but why the heck do we need a fountain right now? My friends and two children live in poverty, and it’s hard to buy bread. But this stadium [Samara is one of the host cities for the 2018 World Cup — TD], good God, how much money they’ve embezzled, and it’s not clear whether they’ll finish it or not. They took their kickbacks, but there’s no money left to build the thing. If we could see that everything was being done on behalf of the people, we would put up with it, but they have been stealing. Merkhushkin pumped three million into the wall on Samara Square [the Wall of Honor on Glory Square, which cut off a beautiful view of the Volga and Zhiguli Mountains, popularly known as the Wailing Wall — TD). It’s in terribly bad taste! And so much money was spent.
Seventy years old, he heard about the rally from friends. His main complaint: how can he survive on his pension?
How the mean regime deals with veterans! Yesterday, villagers told me their family had a monthly pension of 8,000 rubles [approx. 133 euros] or so. What is that? How can a person survive? Today, I went to get milk and bread. I also bought some biscuits and something to put in a soup. 600 rubles [approx. 10 euros] was gone just like that. Is the governor here? He didn’t show up? Shame on him! He stole kopecks from pensioners. Down with our government! They have not made a single effective move to improve the well-being of veterans.
Sixty years old, she heard about the rally from a girlfriend. Her main complaint is that she has been forced to work to survive.
My monthly pension is 7,700 rubles, and I used to get a veteran’s bonus. I worked as an educator my whole life. Merkushkin took way the 621 rubles I got as a veteran’s bonus. I have no husband and no support. I’m forced to work to survive, but I have a whole passle of ailments. Should I approve his policies? He can go back to his native Mordovia. Besides, he lies and lies and lies. He shamelessly lies that he gives us a pension. I wrote a letter to him asking him to help me find work. Do you think he helped me? He didn’t do a damn thing for me.
Sixty-three years old, she found out about the rally from the internet. Her main complaint is shamefully low pensions.
I came out of a sense of solidarity. I don’t receive any discount benefits: my length of service was too short. There should other slogans here: “Decent pensions!” Give us a decent pension and we wouldn’t need discounts. We’ll pay for public transport passes, for apartment maintenance costs, and so on. But it’s impossible to live on our miserly pensions.
Twenty-two years old, he found out about the rally from the internet. His main complaint is bad roads.
I came to the rally to voice my dissatisfaction with Nikolai Merkushkin’s social policies. It’s a pity our pensioners have to stand in the cold, demanding a few miserable kopecks. I’m sick of the state of the roads in this country. I’m tired of the fact the regime treats me hypocritically not only as a disabled person but also as an individual. It treats everything as a resource that can be sent off to war, god knows where. And yet it cannot organize a decent urban infrastructure, a decent life. I think the government needs to revise its policy of restricting the number of rides on public transport one can take if you have a discounted travel pass. I ride public transport all the time and I travel around town more than the authorities think I do.
Seventy years old, she heard about the rally on the internet. Her main complaint is that the governor was decorated “for his contribution to cosmonautics.”
Merkushkin is impudent. He’s an outsider in Samara. My colleagues, who have worked all their lives at the cosmodrome, were decorated for their service. But why the hell did they did stick an honorary pin on him for his contribution to cosmonautics? He has made no contribution whatsoever to cosmonautics. A persons should be more modest. Yet our colleagues where shown on TV standing off to the side, while he was shown in close-up. How did Samara manage without Merkushkina? Probably, it didn’t manage. But little Nikolai showed up, and it has been once achievement after another since then.
Sixty-five years old, he heard about the rally from his grandson. His main complaint is that the restricted number of trips on the discounted public transport travel pass make it hard for him to travel to the Volga.
Can you deceive people like that? They compare us with Penza, where forty-eight rides is more than enough, supposedly. Samara is a huge city: fifty trips a month is not enough here. When I’m traveling, all my rides get eaten up by he transfers. It’s a huge city. In the summer, I want to go to the Volga to swim. How many transfers is that? Fifty trips runs out in two weeks. Then there are housing services and utilities. We are forced to pay for utilities, but the discounts come later, after we’ve paid. Yet officials have included a fee for major house renovations in our bills. I don’t want to pay it. What am I paying for? I’ve lived half my life in the same building, which is falling apart at the seams. Major renovations have never once been carried out in that building.
Sixty-nine years old, she heard about the rally from reading flyers. Her main complaint is how the money owed to pensioners has been used to pay for the governor’s palaces and the World Cup.
That scumbag Merkushkin took away all our benefits. How did he dare? He built himself palaces on Rublyovka, four palaces at three hundred million each. Does he have a conscience? Today, he was on Channel Two saying he built all the roads for us. The roads are all good, and everything in Samara is good. Only our pensions will have to pay for the World Cup. He’s a real bastard, a scumbag. We should send him packing back to Mordovia, where he can choke on his sons and relatives. Let’s keep coming out for protest rallies and demanding he resign.
Irina Olegovna and Lyubov Andreyevna
Forty-six and seventy-seven, they heard about the rally on the internet. Their main complaint is that the regime embezzles money and treats people like schmucks.
Irina Olegovna: I’m not a pensioner, but I came to stick up for them. I’m outraged by the injustice that flourishes in our country. The authorities have found the right people to rip off: pensioners. They holler about being a super power, that they defeated the fascists. Who beat whom? What’s the standard of living in Germany and the standard of living in Russia? Who did they defeat? Pensioners and sick children?
Lyubov Andreyevna: We’ve been spat on from all sides. You cannot get in anywhere to talk to anyone, whether it’s housing services and utilities or healthcare. Everywhere they could not care less about us. I’m seventy-seven. I use the internet and I know everything. I was a decision-maker when I was employed, but now I’ve been utterly humiliated. Thank you, Navalny, that you exposed Medvedev. We must send him packing
IO: It’s absolutely clear to everyone that regime embezzles money, and the fact they are silent is additional proof that thievery is going on. What happened to Serdyukov and Vasilyeva are proven facts. There was a trial, and they were let go. They sold off the property of the defense industry and lined their pockets. I don’t understand who needed this demonstrative flogging. They pulled out their dirty underwear, showed it to everyone, and put it away. I’ll be damned!
LA: Because they consider us idiots.
IO: Stupid schmucks!
LA: Stupid schmucks, cows, that’s who we are!
IO: I agree with you completely. But ultimately they have to understand a point of no return will be reached, when it all goes to hell. What, are they waiting until people come after them with pitchforks? The country has already reached the boiling point. What the heck do we need Crimea for when our country is poor? I used to support Putin. He inherited a heavy burden, the country was in ruins. He seemed decent. I believed he’d put the country in shape. But then I realized what was what.
LA: Putin works for the oligarchs, not for himself. And we cows will all die off.
Eighty-two years old, he found out about the rally from a flyer. His main complaint is that payments have not been made to people who went through the war as children.
Look, I’ve brought a newspaper from 2014. Merkushkin promised to make monthly payments of 1,000 rubles to people who went through the war as children. But he didn’t give us fuck-all. We spent the war on a collective farm. Cold and hungry, we supplied the front and the cities with produce, while we ourselves ate grass and dirt. We survived, we were victorious, and now what? Now we are dying in poverty.
Sixty-eight years old, she heard about the rally on the internet. Her main complaint is that her family has been stripped of all benefits, and that the regime takes people for idiots.
I’m a history teacher, I worked my whole life. Three years ago, my daughter died, leaving me to take care of my granddaughter Lada. She’s thirteen and in the sixth grade. By order of the city administration, the city paid the difference in the housing services and utilities bills for her as an orphan for the whole of 2016. The payment was small, but it made a difference. I’m a veteran of pedagogical work and disabled. We were supposedly divided into two groups: “rich” pensioners, who got 19,000 rubles a month, and poor pensioners. Money was taken away from us under the pretext of giving it to the poor. Money was taken from 175,000 people and then returned, allegedly, but we still haven’t got the money back. I don’t think they took the money in order to give it back. I take my granddaughter to school. I have to transfer, and I use four rides on my discounted travel pass. When they limited the number of trips to fifty, they took us for idiots. They also sucker us out of rides. My friends recorded every trip and noticed that they were shorting us by ten rides. They run out before the month ends, and they kick us off public transport. They’re secretly stealing even from these crumbs, from the fifty rides, as if we couldn’t check how many rides we were getting. I feel ashamed of this regime. We worked honestly our whole lives, and now they’re punishing us, punishing orphaned children and disabled people. It’s disgusting.
Sixty-one years old, she heard about the rally on the internet. Her main complaint is the thieves in the government.
I have been denied the chance to travel by public transport. I need to drop off and pick up my granddaughter nearly every day. Of course, the number of rides on the travel pass is not enough. It’s just digusting. Why did they decide to limit us? What made them think fifty rides was enough for us? Merkushkin says that somebody made a thousand trips in a month on a seasonal pass. That’s utter rubbish. Even if it’s true, does that mean everyone has to have their benefits slashed? How many crooks and thieves are in the government? How many cases of corruption have been proven? In keeping with Merkushkin’s line of reasoning, all governors should be hauled into the Investigative Committee, no?
Organizing People through Their Wallets
The main organizer of the rallies, Mikhail Matveev, a Communist MP in the Samara Regional Duma, is certain that his best organizer, the person who gets people out to the protest rallies, is Governor Merkushkin himself, the man whose decisions have driven people to the edge.
“Our old ladies don’t just read newspapers and watch TV. They’re not as backwards as they seem. They read social networks and blogs. Young people tell them things. Plus, we leaflet mailboxes and residential building entryways. We printed around 15,000 leaflets for the March 19 rally. The printing was paid for by the party and by ordinary people. It’s not a lot of money, but we don’t have anymore. Residents help us by leafletting for free and printing the leaflets at home on their printers. But the main organizing factor is people’s wallets, and the main organizer is Merkushkin. It used to be that pensioners weren’t aware that the number of trips on public transport was limited, but suddenly they were kicked off buses. The pension checks arrived, they were 700 rubles less, and so on. Dissatisfaction has been growing. We are grateful to Governor Merkushkin for the fact that his blunt propaganda pisses people off. There are all the phrases he tosses off at meetings with constituents, like, ‘It was you who did it so that we did nothing for you,’ and so on. They make the rounds. There will be more protest rallies until we get the pensioners their benefits back and send the governor packing.”
Demolishing the Population’s Income Is a Big Mistake by the Authorities
Special to Novaya Gazeta
October 17, 2015 Novaya Gazeta
Why the government prefers oil to people, why poverty could touch half the population, and why social services are losing out to defense spending
In previous years, when it submitted the latest draft budget to the Duma for consideration, the government repeatedly emphasized its social focus: it was all about people, they would say. Now, as the 2016 budget is being worked out, the authorities prefer not to think about this. Spending on the most people-focused items—education and health care—will be significantly reduced. Despite annual inflation’s soaring to nearly 16%, public sector wages will not be indexed at all, while old-age pensions will be indexed only by 4%. Tatyana Maleva, director of the Institute of Social Analysis and Forecasting at the Russian Academy of National Economy and Public Administration (RANEPA) told us how the social sector would cope with all these blows.
Based on your analysis of the projections for the 2016 budget now being submitted to the Duma, which of the social sector issues do you see as most acute?
Those caused by the insufficient indexation of old-age pensions. The government has chosen the most economical solution to this problem.
A 4% indexation does not correlate at all with the expected outlook for inflation. Thus, the budget risks reducing the real value of pensions.
The acuteness of the problem is amplified by the fact that, if we look at the history of incomes in post-reform Russia over the past twenty-five years, we see that pensions have fallen lower than all other sources of income such as wages and benefits. Only in 2010, thanks to the valorization of pension rights [a one-time increase in the monetary value of the pension rights of citizens with time in employment before 2002 – Y.A.] and pulling the minimum pension up to the subsistence level, we pushed the real value of pensions to where it had been at the outset of reforms in the nineties. It had taken twenty years to restore the purchasing power of pensions. But now, during a crisis, they are being demolished again by the budget under consideration. This is a big mistake by the authorities.
But why? After all, budget cuts are not the government’s whim, but hard necessity dictated by the economic crisis.
As events of the last two years have shown, there are basically only two kinds of resources in this country, oil and people. The price of oil has collapsed, but the people are still here.
It is people who are, in fact, the most reliable of all resources. Sooner or later, investment in people produces economic growth. Oil, on the contrary, is impacted by circumstances unconnected with the Russian economy; we cannot influence the market price of oil. It turns out that one key resource makes us hostage to the situation, while we are voluntarily refusing to support the other resource. So I would argue that during the crisis we should look for ways to support people and even risk a larger budget deficit if necessary. Most economists, including me, are forecasting a long crisis. It is only beginning, and demolishing people’s real incomes right at the outset of the crisis is fundamentally wrong.
How painful will the decision to partially index pensions be?
The government thinks that indexing pensions by 4% will affect only the 38 million pensioners. This is misleading. Models of consumption and survival are based not on individual strategies, but on the strategies of households, meaning families. Around 40– 45% of Russian families include pensioners. The experience of the nineties tells us that even miserly pensions, when they were paid, served as a safety cushion against poverty in families when their younger member lost their jobs or faced nonpayment of wages. Because, in this case, pensions support the household’s minimum consumer budget and act as social insurance. Consequently, the forthcoming partial indexation of pensions will reduce the budgets of 40–45% of Russian households. Meaning that the real impact of this decision will be the growing risk of poverty not among pensioners but among nearly half the country’s population.
The government contends that real incomes have fallen by 2–3%, and real wages by 9–10%. Do you agree with these figures?
At one time, incomes showed a more moderate decline, but now they are rushing [downwards] hot on the heels of wages. Because the factors that were propping up incomes, including pensions, have ceased functioning, and incomes are going to fall, maybe even lower than wages. Over the last year, we have experienced a huge reduction in incomes. Basically, the entire growth they had achieved over the previous three or four years has imploded. And there is no reason to expect the growth will be restored. The decline might simply slow down due to arithmetic: the base for comparison will decrease from month to month, and therefore the rate of decline in real wages may turn out to be 7–8%, not 9–10%. But this does not alter the fact the population’s income is likely to be reduced.
How hard is inflation hitting people’s wallets?
Apparently, by year’s end we will be seeing 13–15% inflation. It is inflation that has a total effect on all incomes by devaluing them, regardless of social classes and age groups. But the risks that emerge among different social group because of high inflation are different. For examples, employees face the risk of job losses and cuts in nominal wages. This is already happening. We see cuts in benefits, reductions in allowances, and the axing of bonuses around the country. Moreover, while individuals are capable of combating other causes of income reduction such as job loss or reduction in wages by looking for a new job or retraining, they can do nothing to withstand inflation.
The number of poor people in Russia increased sharply over the past year—by three million people. Are the authorities capable of dealing with this scourge, or does everyone just have to wait for a rise in oil prices?
It is appropriate to recall how poverty has evolved in Russia. In the nineties, over 30% of the population was poor, but this was shallow poverty. When economic growth began in the nineties, poverty was significantly reduced. Many poor Russians moved into the so-called sub-middle class, rather than sinking into outright poverty. Economic growth reduced poverty levels relatively easily all by itself, without a restructuring of social benefits, without support for various social groups. But as soon as the country shifted from growth to recession, this seemingly happy trajectory turned into a disaster for us. Since, during the “fat” years, a reasonable system of targeted social support for the poor was not established, we are now reaping the consequences of its lack. Very many types of social support were eliminated in 2015, and certain “visionary” regions gutted many social benefits as far back as late 2014. Therefore, poverty will grow, and in this sense, indeed, the only hope is a hypothetical rise in the price of oil.
If the price goes up, there will be more money in the budget, and maybe benefits will return. But I am not so certain of this. It is absolutely not a fact that federal revenues are converted into institutions of social support. I think that in this case there will be a serious struggle with a high probability of the social sector’s losing to the military-industrial complex.
The country made this choice long ago, and it is clearly not going to be revisited.
The official unemployment rate in Russia has not exceeded 6%, which is quite a favorable figure by international standards. At the same time, there is lot of evidence that hidden unemployment has grown. What is your overall assessment of the employment sector?
Indeed, 6% is not a high figure at all. Actually, a low unemployment rate has been traditional in Russia in all phases of the economic cycle, whether the economy has been in growth, crisis, boom or recession. Over the quarter century that Russia has been living in the market economy, it has not really experienced unemployment. But economic laws still apply, and during crises, pressure on the market increases. Ultimately, the market extends possibilities for part-time employment, and this can be interpreted as hidden unemployment. People are willing to work a full workweek, but employers offer them part-time work, either half a day or two or three days a week.
The labor market has formed a kind of social contract under which employers save on costs by not dismissing employees, because the Labor Code forces them to bear exorbitant costs when letting employees go. Employees remain employed, which gives them the chance to earn seniority. And the state pretends not to notice any of this, because it also has a stake in the situation. It saves on unemployment benefits and thereby reduces its financial obligations.
Overall, how has the current economic crisis aggravated social problems in the country? Are there factors capable of causing society to protest and take political action?
It is not just the matter of the crisis. Long-term factors are also capable of impacting the social sector. Even during phases of economic growth, many social processes in Russia were not entirely favorable. Take demographics: the long-term trend has been determined by previous generations, and it cannot be changed. Nothing can be done about the fact that each successive generation in Russia will be smaller than the previous generation.
Furthermore, if we look at a longer trend, we have to admit that wages and other types of income have fallen undeservedly much lower than GDP has sunk. This has predetermined very many processes in the economy. Low-wage labor and a low-income population cannot be effective. We have repeatedly been taught this lesson over the last twenty-five years. Coming to terms now with a drop in incomes and wages means recognizing the inefficiency of our human resources. Yes, of course, no one gets rich during a crisis. But it is not a worsening of social tensions in the country due to a sharp collapse in incomes that we should be afraid of. We should be afraid of social apathy, of the population’s withdrawing into itself and washing its hands of the situation. From the socioeconomic viewpoint, this is a step backwards. This apathy can hold us back for many decades. And even if drivers of economic growth do emerge in Russia, and we expect that people will respond quickly, this might not happen.
But what is the source of this apathy?
In the nineties, the population really lent a helping hand to economic reforms by a creating a strong platform for the informal economy. Everyone predicted that society would explode, but it did not happen. The population thus gave an advance to the government that was carrying out reforms. The country managed to make this incredibly difficult transition from one type of economy to another. The people’s patience was rewarded. We are seemingly now in the same situation. However, our vector is pointing down, not up. The current patience of Russians might pull the country down. The population has not been integrated into this economy; it has not become its subject. It has elaborated its own behavioral trajectories, tactics, and strategies, which do not correspond in any way to state policy. The state and the populace lead separate lives.
Are you not idealizing the nineties? After all, even now, during a crisis, people’s living standards and incomes are much higher than they were then.
What saved people from hunger and many people from death in the nineties? First, grassroots unorganized trading, whose symbol was the famous shuttle traders. A huge informal trading sector was formed, flea markets emerged, and so on. But this sector ultimately disappeared, losing out to powerful commercial chains. Second, a powerful sector of private household plots formed in small towns and villages in the nineties. Even if they provided no cash income, people lived off the land. During the years of economic growth, this sector has turned into dacha villages with lawns, and has also ceased to exist as a source of subsistence for households. Third, a small business sector took shape in some form, albeit a specific form with many negative traits. Nevertheless, there was entrepreneurial freedom. Now, all attempts to get small business on its feet have led to nothing. The administrative obstacles erected in recent years have shut the door to the big economy for small business. Fourth, by the early noughties, a small but noticeable nonprofit and NGO sector had been established in Russia. Now, many of these organizations have been labeled “foreign agents.” Formally, [many of] the NGOs continue to operate, but they do not have the ability to act freely as they see fit.
These are the four legs that have been sawed off the Russian market economy stool, and it will not be able to stand up without them. The set of factors that prevented social catastrophe in the nineties is no longer functioning.
Maybe other mechanisms will be developed, but so far I do not see them. So everything is going to depend on the speed, depth, and duration of the crisis. But if we proceed from the most probable assumption, that the crisis will shift into a protracted, sticky recession, the quality of services will fall, despite the fact that, purely superficially, universities, schools, and clinics will continue to function. We do not know yet how the population will respond economically to these challenges. It has very few options. In fact, its only option is to wait for mercy from the state. People have been prevented from taking care of themselves.
Translated by the Russian Reader. Thanks to Ilya Matveev for the suggestion.
State Duma Rejects Indexation for Working Pensioners
October 9, 2015 Lenta.Ru
The pensions of working pensioners will not be indexed for inflation. Olga Batalina, head of the State Duma’s Committee on Labor, Social Policy and Veterans Affairs, made the announcement on Twitter.
She noted that all working pensioners would continue to receive payments, but the payments would not be raised while they are employed.
“You quit work, indexation kicks in again,” added Batalina.
Earlier, on October 9, she announced that the government had to decided index pensions twice in 2016. Batalina explained this would be done so that pensions would increase to the level of inflation for 2015.
On October 8, however, Deputy Prime Minister Igor Shuvalov noted that the possibility of a second indexation next year would depend on the Russian economy’s growth.
On the same day,the government approvedthe draft budgetfor 2016. It is expected thatrevenueswill reach13.58trillion rubles, expenditures, 15.76trillion. The deficitis projected at2.8percent of GDP(2.18 trillion rubles).
A part of the treasury’s expenditures will be covered by a freeze on pension savings. Another cost-saving measure is reducing the indexation of pensions (to 4 percent at an expected inflation rate of 12 percent). Moreover, the idea of terminating pension payments to working pensioners was considered.
Translated by the Russian Reader
Balancing Russia’s Budget Could Cost Pensioners $46 Billion
June 24, 2015 The Moscow Times
Russia’s economic crisis is forcing the government to consider sweeping savings on pension payouts, a move that could go down badly with a core part of President Vladimir Putin’s electorate.
The Finance Ministry this week floated a proposal to save more than 2.5 trillion rubles ($46 billion) over three years by raising pensions at less than the rate of inflation.
The measure comes as the ministry struggles to slash spending amid an economic recession that is eroding budget revenues.
A steep devaluation of the ruble has meant that prices have grown much faster over the past year than salaries, and since payroll taxes are the main source of income for the pension system, the Finance Ministry has said continuation of inflation-linked pensions could threaten the country’s state-run pension fund.
In May, average nominal incomes were 7.3 percent higher than in May 2014, while prices were on average 15.8 percent higher, according to the Rosstat state statistics service.
“If the income of the fund continues to grow slower than its payouts, it could break the entire pension system,” the Vedomosti newspaper quoted Deputy Finance Minister Maxim Oreshkin as saying last month.
The government is already subsidizing a 3.3 trillion ruble ($60 billion) hole in the pension fund, said Pavel Kudyukin, an associate professor at Moscow’s Higher School of Economics.
“This is no longer affordable for the state,” he said.
According to documents for a government meeting on Monday obtained by news agency RBC this week, the Finance Ministry has drawn up plans to curb planned pensions increases from 7 percent to 5.5 percent in 2016; from 6.3 percent to 4.5 percent in 2017 and from 5.1 percent to 4 percent in 2018.
That means that payments will be increased not in the line with the actual inflation, which is expected to fall back into single digits early next year, but according to inflation forecasts made in early 2014, before Western sanctions over the Ukraine crisis and a sharp decline in global oil prices pushed Russia’s economy into recession. Russian GDP is expected to shrink by around 3 percent this year.
These changes, together with cuts to some other undisclosed social spending items, would save around 2.5 trillion rubles over 2016-2018, RBC reported, citing the Finance Ministry documents.
The government has said no decision has yet been taken.
The changes may require changes to legislation, which requires that Russian pensions are indexed twice a year in line with inflation.
Spending on pensions has risen rapidly in recent years as President Putin has sought to use booming oil revenues to raise living standards of pensioners and low-paid state employees.
Pensions were raised even in 2009, during Russia’s last economic crisis, Kudyukin said.
Russia’s roughly 40 million pensioners receive on average 12,900 rubles ($240) in state pension payouts, according to the data from Russia’s pension fund.
The Finance Ministry’s proposal to abandon the link between pensions and inflation aroused sharp criticism from other ministries.
Maxim Topilin, the labor minister, demanded that money be found for the indexation of pensions for next year and the following years and for an analysis of the effectiveness of spending, news agency RIA Novosti reported Tuesday.
Analysts polled by the Moscow Times doubted that the measure would be implemented, as pensioners provide a bedrock of support for President Putin ahead of planned elections in 2018.
“Pensioners are the current government’s main electoral support,”said Pavel Salin, head of the political science center at the Financial University. “The authorities will not reduce pension payments on the eve of the election period.”
Unwillingness to alienate voters is why another Finance Ministry proposal, to cut government expenses by increasing the retirement age of civil servants from 60 to 65 years, has little chance of approval, analysts said.
Hiking the retirement age has been on the agenda for several years — the idea has been repeatedly promoted by former Finance Minister Alexei Kudrin — but has never gained traction.
But even if the Finance Ministry succeeds in making savings on pensions, any discontent would not lead to dramatic political consequences, experts said.
The move could cost Putin a few percentage points off his rating, but not dozens, Salin said.
Putin could afford that — the president’s approval rating is at a record high of 89 percent, according to a poll by the Levada Center released Wednesday.
Given the political apathy of Russians and a surge in patriotic feeling that followed Moscow’s annexation of Crimea from last year, people will bear less generous pensions, Kudyukin said.
“The question is, for how long will they bear them?” he added.