Ivan Ovsyannikov: Russia’s Welfare Chainsaw Massacre

Russian President Dmitry Medvedev holds

Welfare Chainsaw Massacre
Ivan Ovsyannikov (Russian Socialist Movement)
September 30, 2013
anticapitalist.ru

A “welfare chainsaw massacre” is exactly what we might call the government’s actions and statements over the last few months. The ruling class is once again attempting to pay for the latest uptick in the economic crisis from out of the pockets of workers.

On September 1, while speaking to students at the Far East Federal University, Putin announced the transition to a policy of austerity and reduced social spending. “The world economy has slumped a bit, and ours is hunkering down behind it,” the president said in his typical manner by way of explaining the upcoming unpopular measures. And he supported an earlier proposal, voiced by Minister of Finance Anton Siluanov, to replace the “maternity capital” program with “targeted assistance to poor families.”

However, a few days later, Dmitry Medvedev said that the maternity capital program would not be cancelled. “But it will be modified,” Minister of Labor and Social Affairs Maxim Topilin added in a whisper.

The fact that public opinion has been probed on such a sensitive point is quite significant. The maternity capital program is almost the only widely publicized social achievement of the Putin era. Putin has repeatedly stated it was his idea. And now this essential element of Putin’s social populism has been openly questioned.

No less provocative looking are the experiment with introducing social norms for electricity consumption (see Andrei Zavodskoi, “Cruel Economy”) and the de facto raising of the retirement age, which has long been discussed and is today closer than ever to realization. According to Deputy Primer Minister Olga Golodets, “We are not discussing raising the [retirement] age for any category of workers. We’ve gone another direction by promoting voluntary postponement of retirement. That is our principled position, and the government’s position.” However, such tricks are unlikely to mislead anyone.

The most scandalous revelations, however, are the statements made by government officials concerning labor relations. If, until recently, Mr. Topilin based his ministry’s decision not to index Russia’s penny-ante unemployment benefits on the fact that “at present there remains a high probability of finding employment in the labor market,” Mr. Medvedev has now said the exact opposite. He argues it is time to get away from the policy of preserving employment at all costs and not be afraid of cutting inefficient jobs: “The times all of us now face are not the easiest. […] Some people—perhaps a significant portion of the population—will have to change not only their jobs but also their professions and place of residence.” There is no doubt we have fallen on hard times, but the Prime Minister is clearly disingenuous when he talks about “all of us.” Russia’s ruling elite has no intention of depriving itself of jobs and handsome profits. So, in a conversation with François Fillon, Mr. Putin elegantly hinted that he would “not exclude” the possibility of seeking a fourth term as president.

But has the Russian economy “hunkered down” badly enough to warrant such painful experiments on the population? Isn’t “stagnation” only a plausible excuse for implementing the longstanding plans of the gentlemen from the Russian Union of Industrialists and Entrepreneurs?

As was reported in late August, the Ministry of Finance planned to save 1.1 trillion rubles [approx. 25 billion euros] over three years by eliminating the maternal capital program and reducing expenditures on pensions. At the same time, federal and regional budget expenditures on preparations for the 2018 World Cup should amount to 438 billion rubles, that is, almost half a trillion. The mass protests and riots in Brazil, sparked by excessive government spending on the 2014 World Cup, are still fresh in everyone’s minds. Russians could learn a lesson or two from Brazilians.

But maybe massive sports venue construction projects will generate many new jobs and return the taxpayer money spent on them? No, they will not. Unlike the great construction projects of the Soviet era, when funds were invested primarily in developing production, Olympiads, Universiades, and World Cups are, by definition, loss makers for national governments. Many analysts trace the current economic disaster in Greece to the 2004 Summer Olympics, which enriched transnational corporations while depleting public finances. The London Olympics have also been declared unprofitable. As for the 2014 Sochi Winter Olympics, its unprofitability has been recognized by nearly all serious experts, including Vnesheconombank chair Vladimir Dmitriev, who said in an interview with Vedomosti newspaper that “a serious percentage of [Olympics-related construction] projects are calculated to make a loss.” According to Dmitriev, “Given the current model and market trends, there are big problems with returns on investments. For example, one million square meters of hotel space are being built in the Imereti Lowland. When this space goes onto the market after the Olympics, a sixty percent occupancy rate will be hard to achieve. The costs of many projects have seriously risen as they have been implemented. […] For many sites, there is no complete project documentation or confirmed cost estimates. All this confirms our doubts.”

As for jobs, they really will be generated—for thousands of migrant workers. Federal Law No. FZ-108, adopted specifically for the World Cup, leaves no doubt about that. First, the law establishes special lightweight entry requirements for foreign workers involved in preparations for the World Cup. Second, it limits the applicability of a number of existing labor laws, effectively legalizing slavery. As the Confederation of Labor of Russia (KTR) declared in their statement on the subject, “The potential for runaway importation and recruitment of cheap labor, undermining the national labor market, and leading to a decrease in wages and legal guarantees in the area of labor relations, and an increase in the level of unemployment among the population, has been legally enshrined in the Russian Federation.”

The government could not care less about the fortunes of workers during the crisis, and it does almost nothing to hide it. How else can we account (to cite just one example) for Mr. Topilin’s proposal to deny free health care to all informally employed and unemployed people not registered with an employment bureau?

In light of the foregoing, the Kremlin’s actions aimed at reconciliation with the liberal opposition also become intelligible, as do unexpected initiatives to put the “against all” option back on voting ballots. The authorities fear that public discontent will grow and want to channel it in a direction that presents no danger to the ruling elite. Whether this political maneuver succeeds depends in part on the willingness of leftist political forces and trade unions to win over public opinion and make the fight against austerity measures as much of a mobilizing factor as it has been in Greece, Spain, and other countries facing the consequences of the capitalist system’s crisis.

Translated by the Russian Reader. Photo courtesy of deviantart.net

The Return of Serfdom?

iuf.ru
September 2, 2013
The Cost of the World Cup
FZ-108 primarily threatens hundreds of thousands of Russian workers

A serious discussion has erupted since the contents of the notorious “2018 World Cup Law” (or FZ-108, for short)* were revealed to the general public. The focus of the discussion has been the consequences of removing restrictions on employing migrant laborers and the possibility of their runaway exploitation if the law’s clauses on voluntary contracts (which place them beyond the reach of a number of articles in the Labor Code) are enforced.

However, the people most threatened by FZ-108 are Russian citizens.

When the discussion of FZ-108 was getting underway, many in Russia were disturbed by the fledgling campaign against “illegal migration” recently undertaken by law enforcement and local authorities in several areas of the country, a campaign involving police raids and mass imprisonment of migrants in special camps, where they were forced to live almost on the bare pavement, without electricity and other basic conveniences. Given this background, it was unsurprising and even natural that the public would pay more attention to the clauses in FZ-108 dealing with the employment of foreign nationals and stateless persons. The perception exists that the law has nothing to do with Russian citizens.

But is this really true? The answer is simple: no, it isn’t!

* * * * *

Major sporting events like the World Cup always entail the generation of tens of thousands of jobs in construction, light industry, building maintenance, catering, retailing, transportation and so on. Yes, these jobs appear only for a few years, but wise use of such opportunities can give the economy a stimulus for decades to come. Increasing employment leads to growth in domestic spending and private savings, which, in turn, improve demographics. These are the three pillars of sustainable economic development.

But all that happens only when the new jobs are decent, meaning the wages they pay allow people to spend money, including on major and long-term purchases (e.g., home appliances, furniture and cars), and maybe even take out a home loan, and the terms of employment enable them to feel confident in the future, save money, and start and raise a family.

However, the wording of FZ-108 makes it clear that none of these things are expected to happen in Russia. Instead, the authorities are planning to tackle the job of preparing and staging the 2018 World Cup with slave labor, thus definitely ruling out any positive effects both for workers and the economy as a whole. The only outcome of this championship will be the personal gain of a few.

Why is such a conclusion warranted? The fact is that FZ-108, unlike, say, FZ-310 (which deals with the 2014 Sochi Olympics),** expressly stipulates significant exceptions to labor laws, exceptions that will diminish job quality. They are mainly concentrated in the controversial Article 11 (Chapter 4), “The Characteristics of Work Related to the Staging of the Events.”

First, Article 11 gives employers the right to establish long working hours unilaterally (Section 1).

Second, Article 11 allows employers to define the manner of payment for work at night, on weekends and on public holidays without regard to the stipulations of Articles 154, 113 and 153 of the Labor Code. Moreover, this can be done through collective bargaining, through the inclusion of such clauses in individual employment contracts or, more generally, through the enactment of “local regulations,” that is, yet again, unilaterally (Sections 2 and 3).

Third, overtime pay is abolished. Employers may simply compensate for overtime by “providing additional leisure time,” but the wishes of workers are not taken into account, and Article 152 of the Labor Code is effectively revoked (Section 4).

Finally, Section 5 abolishes such nonsense as the provision of elective annual leaves at times convenient for workers (such guarantees are given in Article 122 of the Labor Code, for example, to women before and after maternity leave). Like the rest of the lives of employees, holidays are governed by the “work plans of relevant organizations for preparing and staging the sporting events.”

However, as Vladimir Yurasov, a partner at the Moscow law firm Knyazev and Partners, rightly noted during an interview on RBK-TV, all these rules are clearly contrary to the Russian Federal Constitution. Article 37 of the Constitution states that everyone has the right to remuneration for work without suffering any form of discrimination, and that employment contracts guarantee workers statutory working hours, weekends and holidays, and paid annual leave, as stipulated by federal law. FZ-108 assumes that if workers are employed in the “preparation and staging” of the World Cup, this may very well serve as grounds for discriminating against them in terms of compensation, working hours and the right to paid leave and time off. In this case, “local regulations” are declared primary, rather than the Labor Code and Constitution.

Of course, these draconian measures do not apply to all workers in Russia, only to “FIFA employees, FIFA subsidiaries, FIFA business partners, confederations, national football associations, the Russian Football Union, the Russia 2018 Organizing Committee and its affiliated organizations, whose work activities are related to the staging of events.” The most interesting phrases in this clause are “FIFA business partners” and “work activities […] related to the staging of events.” Let us consider them in the order they appear.

As Article 2 of the law explains, a “FIFA business partner” is a “legal or natural person that has a contractual relationship with FIFA or its subsidiaries and is involved in events.” The list of such individuals and companies could prove to be quite long, because all commercial partners (including sponsors and licensees), suppliers, agents, broadcasters and so on will be included. Moreover, the provisions of the law apply not only to the “business partners” themselves but also to their subcontractors and subsidiaries.

Because preparations for the World Cup have just kicked off, the list of “FIFA business partners” is still incomplete. At present, for example, we know the names of only three companies that will serve as corporate partners to the 2018 World Cup: Coca-Cola, Hyundai-Kia and Anheuser-Busch InBev. In all, FIFA will have thirty-four such partners by 2018. Of course, all these companies have subsidiaries and subcontractors—personnel and temp agencies, construction and security companies, cleaning and catering companies, firms involved in maintaining equipment and buildings, supplying brand-name goods, producing and placing ads, and so on.

Another way to assess the scope of the problem is to compare the 2018 World Cup with another sporting event that will be hosted by Russia, the 2014 Winter Olympics in Sochi. We already know the names of all its suppliers, partners and licensees. Let’s take a look at the list.

• Worldwide Partners of the Olympic Games: Coca-Cola, AtoS, Dow Chemical, General Electric, McDonald’s, OMEGA, Panasonic, Procter & Gamble, Samsung, Visa

• General Partners of Sochi 2014: Aeroflot, Megafon, Rostelecom, Bosco di Ciliegi, Volkswagen Group Rus, Sberbank of Russia, Russian Railways, Rosneft

• Official Partners of the 2014 Olympic Games: Ingosstrakh, PwC

• Suppliers of Sochi 2014: Avaya, Baltika, EF English First, Kommersant Publishing House, Abrau Durso, Adecco Group, EXECT Business Training, Kelly Services CIS, Detech, Microsoft Russia, GAZ Group, Scania-Rus

In addition, nearly seventy companies have signed licensing agreements with the Sochi 2014 Organizing Committee.

It is obvious there will be no fewer companies wishing to link their logos to the World Cup. Only unlike the employees of Olympics partners, employees of FIFA’s business partners will be forced to waive many of their workplace rights.

But perhaps only a small number of workers will be affected by this restriction of rights? Unfortunately, the wording of the law gives no grounds for such a hypothesis. The law mentions employees whose work is related to the preparation and staging of the World Cup. However, the wording is utterly unspecific. How do we differentiate the work a company does in preparation for the World Cup from its other activities? For example, Coca-Cola produces beverages emblazoned with the World Cup logo. Does this constitute work performed as a FIFA business partner or not? Can it be construed as having to do with the preparation and staging of the World Cup? What about cellular network development work done by mobile phone companies? Or the introduction of new direct flights by air carriers? Without going out of our way to abuse common sense, we can construe nearly all commercial activity by FIFA business partners as preparation for the World Cup.

Of particular concern is the more than probable inclusion among the business partners of such companies as Adecco Group, EXECT Business Training and Kelly Services CIS – that is, companies still operating in the legal gray zone of personnel services. Given that Bill No. 451173-5, better known as the law banning contingent labor, which has already suffered serious damage and almost been stripped of its original intent, was returned for a second reading in the State Duma, the de facto support and promotion of these companies by official Russian sporting organizations and state agencies looks like a targeted attack on the quality of employment.

How many Russians will be affected by these measures at the end of the day? If we accept the flawed logic of FZ-108, we can agree with Russian Sports Minister Vitaly Mutko that the concept of the World Cup has been developed and adopted by FIFA in such a way that almost seventy percent of the country’s population will be involved in preparing for it and staging it.

Does this mean, as some journalists have predicted, the return of serfdom? The answer depends largely on the actions of the trade unions.

_____

* The full text (in the original Russian) of the Russian Federal Law “On the Preparation and Staging of the 2018 FIFA World Cup and 2017 FIFA Confederations Cup in the Russian Federation and the Amendment of Certain Russian Federal Legislative Acts” can be found here: http://www.rg.ru/2013/06/11/chempionat-dok.html

** The full text (in the original Russian) of the Russian Federal Law “On the Organization and Staging of the Twenty-Second Olympic Winter Games and Eleventh Winter Paralympic Games of 2014 in Sochi, the Development of Sochi as a Mountain Resort and the Amendment of Certain Russian Federal Legislative Acts” can be found here: http://www.rg.ru/2011/06/06/olimp-dok.html

Migrant Labor and the 2018 World Cup in Russia

iuf.ru
Migrant Labor in Russia: From Golyanovo to the 2018 World Cup

On July 11, 2013, the Russian Federal Law “On the Preparation and Staging of the 2018 FIFA World Cup and 2017 FIFA Confederations Cup in the Russian Federation and the Amendment of Certain Russian Federal Legislative Acts” came into force without any uproar, something inadmissible in such delicate matters. (Hereafter referred to as FZ-108 for brevity’s sake, the full text of the law in the original Russian can be found here.)

While the name of the law might not sound too promising, its content opens up truly outstanding prospects for any Russian employer even tangentially connected with the 2018 World Cup. FZ-108 establishes special conditions for the employment of “foreign nationals and stateless persons” (i.e., migrant laborers) involved in the preparations and staging of the World Cup and Confederations Cup.

Article 9 Chapter 4 generously eliminates the need to obtain permits for the employment of migrant labor and notify the relevant authorities of the conclusion or termination of contracts with foreign workers, or of their arrival or departure. Nor are migrant workers themselves required to obtain work permits. Quotas for the issuance of visas and work permits are waived for those employers involved with the 2018 World Cup. Article 10 is even more interesting: it abolishes all regulation and control over the recruitment of foreign nationals and stateless persons as volunteers—that is, it practically and plainly permits employing migrants without remuneration. Article 11 exceeds all limits of generosity. It allows employers to set long working hours right in the contracts of all workers “employed in the preparation and staging of the events” (with no explanation of what that phrase means) and waives the requirements for the compensation of night work, the compensation of work on weekends and holidays, and the duration and compensation of overtime (as stipulated by Articles 154, 113, 153, and 152, respectively, of the Russian Federal Labor Code). The icing on the cake is Article 56 Chapter 14, which exempts all payments made to migrants under labor, civil, and volunteer contracts from obligatory social security and insurance deductions.

This simplified hiring procedure is a clear incentive for employers to employ foreign workers on the widest possible scale.

Here we should stop and ask ourselves to whom FZ-108 applies. The answer: any entity that is a “FIFA business partner.” By law, this means any legal or natural person in a contractual relationship with FIFA or its subsidiaries and involved in “events.” This might be a commercial partnership agreement or an agreement for provision of services, but in any case the provisions of the law apply to the subsidiaries and subcontractors of all these “business partners.”

Thus, the list of organizations with special rights vis-à-vis workers employed in preparing the “events” is very broad. We can safely include in this list the general contractors and subcontractors involved in building the stadiums, suppliers, FIFA sponsors (all thirty-four of them!), FIFA licensees (i.e., companies that have the right to use the World Cup logo on their products), firms providing security at the World Cup, and so on. Of course, all these companies have subsidiaries and contractors—personnel and temp agencies, construction and security companies, manufacturing facilities, cleaning and catering companies, firms involved in maintaining equipment and buildings, supplying brand-name goods, producing and placing ads, and so on and so forth. By the way, the recruiting agency Kelly Services is among the official suppliers of the 2014 Winter Olympics in Sochi. In light of the new law, we can easily imagine the consequences if this or any similar firm signs a contract with FIFA.

It is reasonable to assume the Russian authorities understand they will be unable to get ready for the World Cup employing only Russian citizens and are thus counting on migrant workers. Employers in construction, residential building maintenance, cleaning, retail, and other sectors where the skill requirements are low and cheap labor is the source of profits have long ago discovered this magic wand.

But we cannot help noticing that all these measures have been proposed and ratified by the same government that is literally right now organizing actual raids on migrants and imprisoning them in special camps in Moscow, Saint Petersburg, Yekaterinburg, Volgograd, Samara, Rostov-on-Don, and Kaliningrad. Does this mean that the right hand of the Russian state doesn’t know what the left hand is doing? Not in the least.

All the above-named cities are hosting the 2018 World Cup.

In accordance with FZ-108, any migrant worker needs to do just one thing to obtain legal status: become involved with the preparation and staging of the World Cup or Confederations Cup, that is, enter into an employment, civil or volunteer agreement with one of the organizers of the events, or with their contractors or subcontractors. Thus, for example, a migrant from Vietnam now being held at the camp in Golyanovo, after signing a contract with some subcontractor of a World Cup licensee manufacturing mascot dolls for the championship, will be legalized de jure. De facto, however, he or she will go back to another semi-underground workplace, but now no one will be able to exercise any oversight or supervision. Now the migrants who are liberated from slavery or buried after they burn to death in sweatshops locked from the outside will be absolutely legal. It’s a sleight of hand, as they say.

The anti-migration campaign of the authorities stokes openly racist attitudes in society, shifting public attention from societal and labor issues (which had recently come to the forefront) to the search for scapegoats. Meanwhile, there is no guarantee that the practice of stripping migrant workers who are employed in the preparations for the 2018 World Cup of their rights will not be extended to all foreign workers tomorrow, and incorporated in the Russian Federal Labor Code the day after tomorrow, thus fulfilling the most cherished dreams of the Russian Union of Industrialists and Entrepreneurs.

The fight against xenophobia, the persecution of migrants and the violation of their rights must, therefore, become one of the main issues on the agenda of the trade union and labor movement in Russia.

__________

golianovo_a

Migrants at the deportation camp in Golyanovo, which instantly became a household name. Photo © The Moscow News.

golyanovo_slaves_a

The name Golyanovo had been linked with migration even earlier, however. In the photo we see the liberated “slaves of Golyanovo,” who had been held for years in the basement of a grocery store, and their saviors from non-governmental organizations. Despite the best efforts of human rights activists, the criminal case against the slave owners has fallen apart. Photo courtesy of the LiveJournal blog Living Tomorrow.

egorievsk_a

During a fire at a garment factory in Yegorievsk, fourteen migrants from Vietnam perished. They were locked in the factory and thus could not escape to safety. A year later, punishment for the perpetrators of this crime is still a distant prospect. Photo courtesy of 1.tv.ru.