ICFTU Campaign on the Non-Payment of Wages in Russia

Newsletter 4. November 1997This is the fourth newsletter produced by the Institute for Comparative Labour Relations Research (ISITO), Moscow in support of the ICFTU co-ordinated campaign over the non-payment of wages in Russia. As in the previous issue, the views expressed are those of the contributors and their publication does not imply endorsement by any of the organisations participating in the campaign. The pages of the newsletter are open to any individuals or organisations who wish to contribute their news and views to the campaign.

Further materials are available from the campaign website at:

www.warwick.ac.uk/fac/soc/complabstuds/russia/nopay.htm.

You can join the cybercampaign and get additional information from the ICEM ‘Labour Website of the Month’ at www.icem.org/campaigns/no_pay_cc

Included in this issue:

Alan Leather: Restructuring Public Services: The Trade Union responseIn the last issue we provided a report of the seminar of budget sector workers held at Golitsyno in October. In this issue we publish the speech of Alan Leather, Deputy General Secretary of Public Services International, to the seminar.

Non-Payment of Wages in the Energy Sector: A Case StudyIn the last issue of the Newsletter we published the results of a case study of the non-payment of wages in the education sector in Sverdlovsk oblast, which showed one aspect of the absurdity of a system of public finance in which municipal authorities, dependent for revenue on bankrupt enterprises, do not have the funds to pay the wages of their employees. In this issue we publish the results of a case study conducted in Samara oblast which shows the other side of the same issue, an enterprise in what should be a dynamic sector of the new economy which is starved of funds by the shortage of working capital and the depradation of the tax authorities. This economic absurdity is compounded by the systematic violation of the law by the tax authorities, which continue to remove money from enterprise bank accounts despite the ruling of the Supreme Court in December 1996 that the amended article 855 of the Civil Code giving priority to wage over tax payments took precedence over the tax law and presidential decrees which had given the tax authorities direct access to enterprise bank accounts and authorised them to remove enterprise funds before the payment of wages. The only way in which the workers can assert their legal rights to receive their wage from the funds of the enterprise is to secure a court order every month. In many enterprises workers do this on an individual basis, but in the enterprise studied in this report the trade union makes a collective application on behalf of all employees each month. The wage fund is then transferred to the trade union’s bank account, and the union accountant is responsible for paying out the wages for the whole enterprise.

Seminar of Energy Sector Trade Unions, Novgorod, October 27 to October 30In this issue we present a report of the seminar of energy sector trade unions which are linked to ICEM, which was held in Novogorod in October, together with the final declaration of the seminar.

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Kemerovo and Chelyabinsk Regional SeminarsWe also present the final resolutions of the Kemerovo and Chelyabinsk regional seminars, held on the eve of the international conference held in Moscow in November.

Situation Centre of the President of the Russian FederationFor the amusement of our readers we also provide a report produced by the Situation Centre of the President of the Russian Federation at the beginning of September. This is typical of government thinking in making absolutely contradictory recommendations: local authorities should tighten up their collection of taxes in money form, while encouraging economic expansion and the growth of small business to broaden the tax base, without any recognition that the former measure will only further deprive enterprises of the money they need to achieve the latter. In similar vein, the president’s advisers recommend the traditional medieval practice of state monopolies, particularly of alcohol, as a revenue raising device, although this violates the Russian tax law which only permits local taxes that are explicitly authorised in Federal Law, and Article 8 of the Constitution that guarantees economic competition and prohibits restrictions on the distribution of goods within Russia (Chelyabinsk Oblast Court struck down an oblast law on taxing alcohol "imported" from other Russian regions or abroad, "Kommersant-Daily" reported on 14 November). The report also actually commends the growing practice of paying workers in kind, in flagrant violation of the ILO Convention ratified by the Russian government. This document only confirms the suspicion of many analysts that Russia is in transition from state socialism not to capitalism, but to state feudalism.

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Alan LeatherRestructuring Public Services: The Trade Union response

Russian Public Service Unions Workshop 12-15 October 1997, Golitsyno

I am particularly encouraged by the fact that this Workshop is part of a programme of activities that has brought together Russian trade union centres and the ICFTU in a common campaign to tackle the problem of non-payment of wages.

In the case of this Workshop there has been co-operation amongst international trade secretariats such as EI, PSI and Communications International. For PSI we have the added benefit of having representatives here from our affiliates in Sweden and Finland.

Amongst PSI affiliates there is considerable interest in this event. There is great deal of concern about what is happening to the public service in Russia both from the point of view of workers’ organisations and citizens. They are looking forward to greater co-operation with all public service trade unions and hopefully, in the not too distant future, we will be able to welcome more Russian unions into PSI membership.

Despite all the problems facing public service workers worldwide - PSI is growing in strength. We now have nearly 500 member organisations in over 130 countries. Our membership has doubled in the last ten years.

As an organisation we have to respond to the growing and changing needs of our members, none more so than our relatively new affiliates in CEE and the former Soviet Union. This has meant a huge learning process on both sides. At our forthcoming Congress in Japan in November constitutional changes are being put to Congress that will give the member organisations a greater say in the policy and functioning of PSI. In practice this will mean a restructuring of the membership on the EC. There will be more places for CEE and FSU representation, including an EC place for Russia.

I want to speak frankly about what confronts us today and in doing so I hope we can develop closer co-operation in future.

Some years ago, on one of my first visits to Moscow, I met Alexander Vasilevski, Chairperson of the Municipal Workers Union. He gave me some very important words of advice. He said that I should understand that although our physical appearance was similar what was going on in his head and what was going on in mine was completely different, given our totally different life experiences. These were wise words and they have helped me to comprehend aspects of the relationship between Western Europe and the FSU. However, despite our historical differences, we are now drawn into the same world. We are being influenced by the same economic and political forces and therefore we need to overcome differences and develop a common platform. I believe that is possible - I would not be here if I thought otherwise.

I know it is not going to be easy as national pride plays a large part in how we see ourselves and the rest of the world. For Russia - a super power - national pride is extremely important but that should not stand in the way of trade unionists from Russia and other countries developing a common platform and common action programme in response to the common pressures on us.

Before discussing ideas for a common platform I would like to spend a few minutes reviewing the present situation.

Global restructuring is today a major issue on the agenda of the governments, employers’ and workers’ organisation all over the world.

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Structural adjustment at a national level is part of this process which may be defined simply as increased reliance on market forces, and reducing role of the State in economic management. The process was initiated in the industrial countries ant then exported to developing countries in the 80’s and more recently to countries in transition. The changes in CEE and FSU have taken place when this neo-liberal theory was at its zenith. It has included actions such as a shift from state ownership to privatisation, from government regulation of prices and trade to liberalisation, and from the social pact with labour to policies which constrain and undermine trade unions.

Structural adjustment - as first developed - represented the application of liberal economic theory which - for reasons both ideological and pragmatic - extended its reach into the very fabric of government administration. The basic argument was that private was good and public was bad. It was only a short step from policies which reduced State influence in the economic sphere to policies which reduced the State, its functions and its structures. The core ideal is that governments should concentrate on the things only they can do and leave everything else to the market...

However, a number of analysts put the things differently: they state that government may do some things better than markets, and that the question of the costs of privatisation and deregulation should be raised! It is argued that public expenditure sustains rather than drains the private sector, and that cutting it within a structural adjustment package damages private output and profits. It is emphasised in this connection that a range of services from government from law and order to social security need to be provided on a different basis from the supply and demand mechanisms of the free market. The use of the free market as the guiding principle for economic reform underestimates the role of transnational companies which control most world trade and investment, with resulting centralisation of control over markets, pricing and investment.

What is the impact of structural adjustment in the public service?

Restructuring, the impetus for which has come from internal and external sources: internally, the need to reduce costs and to improve the functioning of the public service; externally, a climate of privatisation which requires the public sector simultaneously to reduce its own role, optimise conditions for the private sector, and adopt private business concepts and practices in its internal functioning. The degree to which countries have been obliged to develop this orientation or have endorsed it has varied according to political outlook, economic situation and availability of skills and resources. A number of countries came to see that they would never be able to meet the expectations of all the educated unemployed through public employment and, indeed, that they were in danger of perpetuating the mismatch between education and the labour market. Still more were finding the increasing size of the workforce harder to manage, and were conscious of declining efficiency. There was also a climate of change in organisational and management practice in the private sector, which started to influence the thinking of a number of governments. Finally, public opinion in many countries came to feel that there were too many public servants doing too little work.

The need to contain or cut costs is expressed as a primary concern by almost all developed and a number of the developing countries. The principal areas of restructuring have been organisational changes, size reduction and pay restraint.

I would like to quote from a speech given recently by a British MP, Chris Pond, who was speaking about employment and social protection in Europe. He said that “The costs of policies of deregulation and social devaluation have been high, measured in terms of poverty and social division, in both Britain and the United States. But the costs can be measured in economic as well as social terms”.

The lesson is that inequality is not only dangerous and socially divisive: it is economically wasteful as well. As the United Nations Human Development Report for 1997 warned: “Contrary to some

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perceptions, inequality usually hinders growth”. The European Commissioner for Social Affairs and Employment put it more graphically: “You cannot build economic prosperity on a social wasteland”.

What has been the response to the challenge of restructuring?

In many parts of the world the immediate response was to oppose change, to use the union strength to say no. But public sector unions soon realised that they were being overtaken by events. By just opposing they appeared to be against any form of change. They appeared to be lost in the past - conservative - dinosaurs.

They realised that it was more important to be part of the change process. They wanted a voice where the critical decisions were being made and this was easier in some countries than others. In those countries where there was a tradition of social dialogue, particularly in the Nordic region, it was possible to be involved. However, with changes of government in some countries that tradition was not always guaranteed.

Much of the PSI’s work internationally with the ILO and the World Bank has been to establish the right of workers to participate in the restructuring process.

At the last Joint meeting on the Impact of Structural Adjustment in the Public Services (Efficiency, Quality Improvement and Working Conditions) held in Geneva May 1995 the following conclusions were reached: - “Public sector reforms are most likely to achieve their objectives of delivering effective and high quality services when planned and implemented with full participation of public sector workers and their unions and consumers of public services at all stages of the decision-making process. Continuing dialogue between governments and the citizenry as a whole, including public sector workers, should be ensured. Effective communication, consultation and negotiation, with a view to reaching agreement with workers and their unions, are essential during restructuring”.

In the World Bank’s World Development Report for 1997 they came to the following conclusions - “Cross country evidence reveals that bureaucracies with more competitive merit-based recruitment and better pay are more capable”. “... And working with labour unions on programs that will enable workers to seek security in change rather than seek security against change?” PSI was very much involved in this process. Although we are not altogether satisfied with the outcome, considerable progress has been made. (See Focus article).

It is one thing to get to the negotiating table but another to have something to say; Basically we are in favour of well-run and efficient, democratic, transparent public services. We cannot defend anything else. But what does that mean in practice? What do we mean by public services and who should run them? What should stay in public hands? What could be privately run? Could there be a public-private mix? What alternative strategies do we have?

We are well aware that for some governments there are no limits to privatisation. We are aware that private enterprise cannot wait to get its hands on different public services. It is clear that there are those in government in some countries who have links with the very companies who are taking over public services. There have been a number of cases where money has passed hands from the private to the public sector in order to secure access to public service contracts. In some countries this has involved political parties that have links with the trade unions such as in Italy.

This whole process of change places new responsibilities on public service trade unions. They have to have a much broader set of policies and the necessary skills available to implement them. They have to restructure themselves in the context of strategic planning. (I will not go into detail on this here but perhaps it could be the subject of a discussion). They have to have a view of the whole economic structure in which the public sector is a component.

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Public service unions in CEE and FSU are facing further specific problems. Tax collection is very poor and the pressure for a balanced budget very high, for obvious reasons. This puts strong financial pressure on the public sector. Due to the high level of employment and the reluctance of the state to make people in the public sector redundant, wages are extremely low. As a result workers are severely demotivated, and the better qualified specialists are leaving for the private sector. The quality of public services is deteriorating, which is a disincentive for people to pay taxes. The low wages and non-payment of wages are not only destroying the work ethos but they became incentives for people to steal at the work place, to take bribes or to charge the clients extra money. As a result many public services, which are officially provided free of charge or at a cheap price, are already in an odd, inefficient and unpleasant way privatised. Given the level of corruption in the state structure and the general lack of client orientation in the former soviet system, there is a strong case for radical reforms and competition to change a bureaucratic state sector into a transparent public service.

While privatisation has been a major issue in the debate on transformation, the importance of institution-building and good governance has been underestimated or by and large even ignored. These are, however, crucial questions for the further development of public services. Good public services are fundamental for social cohesion, equal opportunities and economic growth and efficiency. They have to provide a stable legal framework, effective law enforcement and a solid infrastructure in areas like health, education and local utilities. This is essential not only for private investment but also to enable citizens to make individual planning decisions for themselves and their children. In a market economy a calculable, effective and secure environment is a precondition for real freedom of choice for the majority of the people.

If privatisation takes place it is important that public services are still available for the public afterwards, as recommended in the World Bank’s 1997 World Development Report on the Role of the State in a Changing World. The WDR insists that for key services or natural monopolies there will be a role for the state in regulating and/or monitoring these services and assisting the poor and powerless. If, for example, privatisation of health care results in the exclusion of a substantial part of the society from proper health care, such a process should be opposed, as the WDR “guarantees” have not been met. Privatisation should be about providing public services efficiently and not abolishing them.

PSI is ready to organise workshops in Russia, as it has elsewhere, and develop communications networks to share experiences about the options and consequences of privatisation and restructuring in general in the public sector. The affiliates will be encouraged and supported to work out a Code for privatisation of public services in line with the principles established by public sector unions globally. The purpose of such a Code is to establish basic standards including trade union rights, minimum wages, anti-discrimination regulations, health, safety and environmental standards for any public service, whether the provider is the state or a private enterprise. Is short, it should help to ensure that competition on bad labour practices is excluded. The Code could be used as a strategic basis for a trade union policy approach towards privatisation.

PSI is ready to initiate and, as far as necessary, to co-ordinate international co-operation and solidarity with Central and Eastern Europe and FSU. At a first stage unions in the region will be asked to collect data about the involvement of transnationals in their respective countries and the policy of the trade unions in those enterprises which have been taken over by transnationals. PSI will develop, in conjunction with the Public Service Privatisation Research Unit, the existing detailed data base about these companies, and will help to organise direct links in particular between companies where active trade union locals already exist. PSI will identify a group of experts who are ready to assist the company trade union councils to establish bilateral links ant to overcome the well-known danger of mutual misunderstanding in the first stage of co-operation.

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We are seeing an increase in the legal restrictions being introduced by governments to curb the basic rights of trade unions. Unfortunately even in the public sector the employers are not fulfilling their legal obligations hence the violations of the ILO Convention on the non-payment of wages. We are concerned that there will be an increase in violations of trade union rights. We need to be alert to this issue. In neighbouring Belarus there has been a continuous violation of trade union rights that even today denies the independent trade union the basic right of being able to register as a trade union.

I would like to summarise the main points of my address:

1. We have to ensure that trade unions are a central part of the process of restructuring and are not just involved in some token manner. This requires the establishment and maintenance of genuine tripartite or bipartite structures.

2. It is necessary for trade unions to develop detailed policies and strategies around the whole process of restructuring and privatisation. This in turn means restructuring their own organisations to be able to cope with change. In particular we need to develop a code on privatisation which covers basic standards. As well being the basis for a strategic trade union policy on privatisation, these standards should be part of any collective agreement signed between the trade union and the new owners.

3. There needs to be greater co-operation between trade unions nationally and internationally because we are functioning within a global economy. This will enable us to exchange experiences and information, which will in turn strengthen our ability to meet our members’ interests.

4. We must be ready to have a dialogue with the international organisations such as the World Banks so that they are fully aware of the wider social and economic implications of their policies.

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Non-Payment of Wages in the Energy Sector: A Case Study

We continue to publish the results of sociological research into the non-payment of wages conducted by the Institute for Comparative Labour Relations Research (ISITO) in September, 1997 with the support of the Free Trade Union Institute of the AFL-CIO. In this issue we publish one of the case studies conducted in an energy-sector enterprise in the Samara region.

NOVOKUIBYSHEVSK OIL AND CHEMICAL INTEGRATED PLANT

(PUBLIC JOINT STOCK COMPANY)

1. Description of the enterprise.

Novokuibyshevsk oil and chemical integrated plant (Public Joint Stock Company) was established in 1964 for the high-capacity production of monomers (butadiene, isoprene, etc.) which are semi-finished products used in the production of synthetic rubber. Due to the fact that the enterprise does not produce final products ready for sale, it is dependent on consumers, i.e. chemical enterprises, which produce rubber. During the Soviet period, the production and technological chain was under rigid control, including both suppliers of raw materials and consumers of semi-finished products. Production of monomers was highly profitable. The transfer to a market economy, as well as the collapse of the USSR, destroyed that chain. Many consumers found themselves outside the Russian Federation. Meanwhile, Russian enterprises substantially reduced the production of rubber, and some of them (mainly enterprises which could produce a limited volume of monomers independently) practically stopped cooperating with suppliers of semi-finished products, thus, the number of consumers of the products of Novokuibyshevsk oil and chemical integrated plant decreased several times. The grave financial and economic situation of the Joint Stock Company was aggravated even more by the actual loss of working assets during the leap in inflation in the early 1990s together with high prices for raw materials and high tariffs for energy services. Since 1992 the Joint Stock Company found itself in a kind of debt trap due to the fact that it did not produce final products. Delays of payment for deliveries from the part of consumers made it impossible to make timely payments to the budget, to suppliers of raw materials and energy services, and as a result the amount of debt grew, mounting even more rapidly as a result of the imposition of fines, which often exceed the debt itself several times over.

Privatization, property structure. The Joint Stock Company was privatized in 1993 in accordance with the second version provided by the law, in which employees are entitled to buy a majority shareholding. During the privatization process, the union actively participated in selecting the form of privatization and urged the employees to support the second version. As a result, the labor collective received 51% of the shares, but the employees did not seem enthusiastic about purchasing the shares of their company because its economic conditions were very difficult. The union made every effort to increase the activity of employees (“to conduct educational and agitation work”). A privatization fund was established which, according to the chairman of the union committee, reached an amount large enough to pay for 80% of the shares assigned to the labor collective. At the conference of employees, it was decided to distribute these free shares (the shares of the Employees’ Shareholding Fund (ESF)) among workers depending on their qualifications and years of service. The possibility to receive shares of the company was given to male employees with more than 10 years of service at the company and female employees with more than 7.5 years of service.

In the autumn of 1994, when the situation was so difficult that even the closure of the Joint Stock Company was under discussion, emissaries of the Moscow-based Maxim Group of Companies

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appeared and commenced the purchase of shares. By May 1996, 48% of the shares belonged to Maxim, 37% of the shares to the Sibur Joint Stock Company and only 6% of the shares to the company employees. Today about 60% of the shares belong to Maxim, and the remainder of the shares are being purchased. Advertisments in the company offer to buy shares for Rb 110,000 (against their face value of Rb 1,000). The annual meeting of shareholders in May 1997 proposed the inclusion in the Board of directors of the Joint Stock Company of five representatives of Sibur Joint Stock Company, five representatives of Maxim, and the former General Director of Novokuibyshevsk oil and chemical integrated plant was nominated to the position of the Chairman of the Board of Directors by the members of the Board of Directors. However, a new General Director was appointed by Maxim, and he was a Muscovite and an economist. He visits the city of Novokuibyshevsk weekly to manage the Joint Stock Company. At present, the question of the participation of Novokuibyshevsk oil and chemical integrated plant in the Neftekhimprom Financial and Industrial Group is being finalised, together with the establishment of a new Closed Joint Stock Company, Butamex, of which Novokuibyshevsk oil and chemical integrated plant will be a part, together with a number of other companies, while Maxim will borrow from commercial banks with guarantees from the Neftekhimprom Financial and Industrial Group.

The volume of production decreased 8-10 times compared to 1990. Of the three gas fraction plants only one is now operational, and even this utilizes only 60% of its capacity. In 1996 Novokuibyshevsk oil and chemical integrated plant managed to survive financially, but without earning any profit. The major part (72.2%) of the total volume of commercial products was constituted by the production of condensed gas. Compared to the previous year, the volume of industrial production in the first half of 1997 decreased by 37.8%, due to cessation of production of isoprene and the decrease of production of condensed gas (by 30.5%) due to decrease of delivery of local hydrocarbon raw materials. 29.8 tons of domestic fuel were sold, but losses on these sales were more than Rb 5 billion. But simultaneously production of diphenyloxide and one of the catalysts increased by 48.9% and 38.4% respectively. The cost of commercial products was reduced by 0.4% compared to the plan for the first half of 1997, the cost of 1 ruble of commercial production decreased by 30.5%. That was due to the cessation of production of loss-making isoprene, the increase of production of profitable catalyst and the commencement of production of vapor at one of the modernized plants.

Number of employees. Novokuibyshevsk oil and chemical integrated plant takes second place in the number of employees in the City of Novokuibyshevsk (after the oil refining plant).

The number of employees of Novokuibyshevsk oil and chemical integrated plant in 1990 was 5,000 people, for the first half of 1997 the average list number of employees was 3,085, including 2,615 production personnel. According to the management of the company, the number of employees could be reduced by another 50% with the current volume of production. According to the economic and financial director, the number of employees necessary to ensure the existing volume of production is about 1,000 people. However, there are no such plans for the nearest future. There have been no mass redundancies at the company. The total number of employees made redundant over the past several years was 300 people. The largest redundancy covered 144 people, including 70 who were again employed by the same company. In 1995 550 people were removed from the staff of the company due to the transfer of the trolley-bus administration and utility services department to the municipality, and in 1996 another 350 employees were made redundant due to the transfer of kindergartens to the municipality. The number of personnel in the first half of 1997 fell by 13.8% compared to the first half of 1996, due to the cessation of isoprene production, and labor productivity reduced by 29.6%. But the main reason for the reduction of personnel was the voluntary departure of employees who found jobs at enterprises with better prospects (the oil refining plant, thermoelectric plant, etc.). Moreover, according to the chairman of

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the trade union committee, those who resigned voluntarily were the best and most qualified employees who were attracted by higher wage. For example, the wage of an electrician at the oil and chemical integrated plant is equal to Rb 700,000, while at other enterprises an electrician may earn as much as Rb 2,000,000. Those who stay at the oil and chemical integrated plant are, according to him, «real fans with many years of service for whom the enterprise is home».

Mass forced vacations are no longer in use here, in the first half of 1997 an average of 70 employees were on vacation each month, maintaining 2/3 of their wage. In 1995 (which was the most difficult year for the integrated plant) about 500 employees had been sent on forced vacations for up to 3-4 months.

Debts of the integrated plant. The structure of debts of the integrated plant has changed. While from 1994 the major part of the debt had been for payments for energy services and delivery of raw materials, by April 1997 the integrated plant managed to repay its debt to Samaraenergo Company and Novokuibyshevskgorgas Company for the total amount of Rb 200 billion. At present, the total debt of the integrated plant is equal to more than Rb 100 billion, which is mostly for payments for delivery of raw materials as well as debts to the budget of all levels (the integrated plant has been a debtor to the budget since 1996). Meanwhile, the debt of the federal budget to the integrated plant is equal to Rb 12.2 billion as a subsidy to produce domestic fuel which should be sold to the population at prices fixed by the State. And although the debt of the integrated plant to the budget is practically equal to the above sum, the State does not support the idea of inter-settlements. The local administration actively cooperates with the integrated plant in making inter-settlements related to the local budget through different forms of repayment, thus allowing the enterprise to survive.

In general, the payables of the enterprise exceed the receivables.

Barter. The situation with debts (including wage arrears) is even more aggravated by the fact that practically none of the enterprises today is able to pay «real» money, proposing barter instead. That is why the integrated plant has to organize barter chains to ensure the delivery of raw materials and other materials and even to receive vouchers for a sanitarium for its employees. There is a special department of inter-settlements at the enterprise which is charged with the organization of barter chains and the search for «real» money.

Social sphere. The integrated plant had a large social sphere in the past. The city trolley-bus depot was constructed in 1985 and until 1995 financed by the integrated plant. The employees of the trolley-bus depot were a part of the personnel of workshop No. 8 of the integrated plant. There was also a farm attached to the enterprise which was situated in the country. Until 1995 the utility services department which was a part of the integrated plant provided services related to departmental housing. The integrated plant also maintained a number of kindergartens until October 1996, which after privatization formed part of the company’s authorized capital. Moreover, the transfer of kindergartens to the local administration was accompanied by a conflict between the local administration and the union committee of the integrated plant, which was against the transfer of kindergartens because of their possible closure. A summer camp and an after-work sanitarium have not yet been transferred from the integrated plant.

Prospects of development. The current situation with the production of synthetic rubber, according to the Synthetic Rubber Association, shows that in 1997-1998 no significant growth in the demand for synthetic rubber is expected, and that, in its turn, will considerably increase competition among previously allied enterprises. The integrated plant is presently excluded from the production of monomers. Along with the lack of raw materials, the major reason for that was the high cost of production of these products which caused a sudden growth of debts for energy services. The management has developed a technical program which it plans to implement to

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ensure the stable operation of the enterprise. The technical program envisages renovation of a number of production lines in order to transfer to more up-to-date and profitable technology which would allow it to produce final products, as well as an increase of the energy potential of the integrated plant itself in order to reduce the production costs. One of the production units which did not operate before was recently renovated in order to produce steam for the enterprise, and that will ensure a certain independence of the integrated plant from the monopoly of energy suppliers. To implement the above program, the management of the integrated plant has decided to join the Neftekhimprom Financial and Industrial Group and establish the Butamex Joint Stock Company, as was mentioned earlier.

2. Situation with wage

Wage arrears at the oil and chemical integrated plant took place for the first time in August, 1994 (the August wage was paid only in October) when the situation was very dramatic and the closure of the enterprise was under discussion. At first, wage arrears covered one month. By the following year wages were being paid monthly, but the arrears had reached two months. In February 1996 no wages were paid at all, increasing the arrears to three months through the following year. When the first wage arrears arose in 1994, the Maxim Company exploited the situation in order to purchase shares from the enterprise employees. The union committee urged the employees not to sell their shares (because in that case the labor collective would lose the possibility to influence the enterprise management, including over the social sphere), but all its efforts were in vain.

At present, wage arrears cover only one month (August) because in the first half of September the enterprise management paid wage arrears for June and July. The total amount of wage arrears is more than Rb 3.7 billion.

The average monthly wage of the enterprise employees increased in the first half of 1997 compared to the similar period of 1996 by 1.71 times and was equal to Rb 969,119 against Rb 567,039. The average monthly wage for production personnel was equal to Rb 997,113. The various categories of wage do not differ significantly. The minimum wage at the oil and chemical integrated plant is defined in the collective agreement as Rb 231,000, corresponding to the lowest grade of work under standard labor conditions, which is a bit higher than the average for the sector and above the minimum of Rb 212,000 laid down by the sectoral tariff agreement. A series of coefficients is applied: a coefficient of 1.8 is adopted for non-operating production lines, a coefficient of 2.3 for operating production lines, and a coefficient of 2 for personnel of the enterprise management.

3. Labor disputes

No labor disputes related to wage arrears have arisen at the integrated plant. In 1994, when the enterprise was on the edge of bankruptcy, a protest meeting was organized, and the situation was about to lead to a strike. But in fact the protest of employees against wage arrears was used to attract the attention of the Oblast administration to the difficult economic conditions of the integrated plant.

Upon the initiative of the union committee (and, probably, the administration, too) a strike committee was established. That decision was a part of the agreed policy of the enterprise administration and the union. The union committee conducted a union conference and selected the members of the strike committee. The chairman of the union committee (representative of the labor collective) and a workshop manager (representative of the administration who, according to the union committee, played an important role in resolution of the issue) were selected as the two co-chairmen of the strike committee. «The objective of the strike committee was the following: not to impede work in case any of the demands were not fulfilled, but to get a real opportunity for employees to work». Representatives of the strike committee visited the city of Samara several times to contact the Oblast administration. The thing was that at that moment the integrated plant

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had received demands from suppliers to pay for energy services, raw materials, customs services, railway services, and all that was added to by debts to the city and Oblast budget, with demand for advance payments an aggravating factor. As a result, the enterprise found itself in a vicious circle: debts impeded its operation because of lack of funds to purchase raw materials, and downtime, in its turn, increased debts (especially the fine for payment arrears). The main slogan of the strike committee could be formulated as follows: let us work to pay the debts!

It would be wrong to say that the enterprise management did not address the same proposals to the city and Oblast administrations and the Federal Government. The management tried to rescue the integrated plant using its own potential, and the union committee tried to assist that initiative using the authority of the labor collective. But the activity of the union committee and establishment of the strike committee played the major role in the initiation of the local administration’s decision to improve the economic conditions of the integrated plant.

After several requests from the strike committee and the enterprise management, the Oblast administration took a decision to freeze debts to the Oblast budget for a quarter and debts to the city budget for two quarters. The Oblast administration addressed Samaraenergo Company with a request not to halt provision of energy services to the integrated plant in spite of the existing debts.

As a result of the combined efforts of the administration and the union committee, the integrated plant received a number of benefits and thus was able to survive.

4. Evaluation of the situation with wage arrears and actions of the parties.

Position of the employees.

The employees of the integrated plant react to wage arrears rather quietly. Even in 1994, when the strike committee was established, there appeared to be no social tension at the integrated plant. Employees welcomed the initiative of the union committee, considering that the strike committee would secure regular payment of wages.

One of the enterprise employees commented on the current situation:

«On one hand, we are indignant at wage arrears but, on the other hand, we are not working at all, look: we come every morning, try to set up the equipment but it does not work - there is no butylphenol. We are doing something but we see that no production is produced. Surely, we want to get paid but we see that the production lines do not operate, so what’s the use of demanding anything? Thank God that we get even a little money. Besides, the employees know very well that other enterprises are in even more difficult conditions, including both their economic situation and huge wage arrears. Wage arrears influence the employees psychologically: «Hey, manager, do something to find money for us. We have been waiting since 1994!»

Wage arrears are not the major reason for the voluntary resignation of employees of the integrated plant. Voluntary resignation usually takes places due to insufficient wage; those who are able to get a new higher paid job are usually highly qualified specialists. In general, the level of wage at the integrated plant (including additional payment for unhealthy working conditions) is rather high compared with other enterprises of the Oblast and the city of Novokuibyshevsk. Recently the integrated plant management made public its intention to reduce the enterprise personnel. Yet there is no specific program and decision on redundancy, and under such conditions employees express their discontent only in private conversations without taking any collective actions of protest. The union committee’s activity in securing payment of wages is welcomed by the employees.

Position of the administration.

The integrated plant management is certainly worried about the problem of wage arrears. Managers are afraid that many employees may leave, i. e., on one hand, the integrated plant would lose its

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qualified personnel and the possibilities of production improvement would decrease and, on the other hand, the number of employees would reduce which would decrease the influence of the enterprise over the city and the sector.

However, the major problem for the enterprise management is to ensure the production process. That is why its principal efforts are aimed at the maintenance of production, searching for raw materials and possibilities to cut existing debts. The most effective way (at the enterprise level) to solve the above problems is to organize inter-settlements through barter because most of the suppliers and consumers are unable to pay «real» money. Such measures would help the integrated plant to survive. However, from the point of view of the existing wage arrears, organization of inter-settlements does not help much to solve this problem.

The enterprise management also planned to open earmarked accounts at Sberbank so as to avoid cash payments. The management also tried to overcome the wage crisis by providing employees with goods and products at the enterprise stores in place of wages. In particular, due to barter it became possible to buy (and sell to the employees) carpets, flour, sugar, meat products, tea, canned food, macaroni foods, etc. But the main objective of the enterprise management, according to the economic and financial director, is to pay wages on time.

Position of the union.

The union committee addressed the administration with questions related to wage arrears. The union committee tried to persuade the managers of the necessity of timely payment of wages «using the method of persuasion».

The enterprise management itself realized the necessity to pay wages, but the shortage of working capital and the need «not to stop production» did not allow it to allocate the necessary amount of funds to wages. The situation became more complicated after the issue of the Presidential Decree of March 1996 on the priority payment of debts to the budget. As a result, payments to the budget were made by the bank from the account of the enterprise automatically and there was no money for wages - as in so many enterprises, the above Presidential Decree is the major reason for wage arrears. Besides, according to our opinion, not the least important role was played by the fact that there were precedents for wage arrears at other enterprises which could serve as a kind of justification for the integrated plant management («if wage arrears exist everywhere, we can afford them»). That’s why the management reacted to the requests of the union committee like this: wait for some 10 days, and it’ll be okay.

The union committee felt that enterprise management understood the situation and so did not initiate any actions, meetings or strikes and tried to prevent spontaneous actions of the employees by informing the labor collective of the course of negotiations.

At first the enterprise administration (under the pressure of the union committee) tried to use other methods of payment of wages. That meant the transfer of funds into cash through outside commercial organizations. However, the union committee, as well as the enterprise administration itself, were not satisfied with the above solution of the problem of wage arrears (due to its illegal character).

Another way out for the employees was to receive their wage on the basis of a court judgment. Under Article 855 of the Russian Civil Code, payments for wages have priority over payments to the budget. The primacy of this article over conflicting stipulations of the tax law and the Presidential Decree of March 1996 was confirmed by the Supreme Court in December 1996, but because the tax authorities have direct access to enterprise accounts they can nevertheless extract funds in violation of the law, unless the employees secure a court order to enforce the payment of their wages form the enterprise account, which has to be repeated each month. In this case the

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enterprise administration did not impede the above possibility for the employees to receive their wage since the losers in this case were the tax authorities rather than the enterprise administration itself. Here we have an example of an agreed policy of the union committee and the enterprise administration according to which the above method of payment of wages is currently the most realistic one.

No individual legal actions were started at the integrated plant. The union committee considered collective legal actions against the enterprise administration to be the most effective way to solve the problem of wage arrears.

At the labor collective conference it was decided to authorize the union committee to represent the interests of the labor collective in court. The letter of attorney which was a part of the protocol of the decision of the labor collective conference was attached to the legal action documents. The union prepared a statement of claim. Attached to it was a note (pay-list) on the amount of wages for each enterprise division for the corresponding month. In August 1997 that amount (actually the amount of wage arrears, as the delay was equal to one month) was Rb 3,722,348,350. Also attached were an extract from the collective bargaining agreement (the union committee is a representative of the labor collective), an extract from the Law of the Russian Federation on Trade Unions (where it is indicated that the unions by order of labor collectives have the right to represent their interests in court). The people’s court took a decision in favor of the union committee as the representative of the labor collective.

The court issued the writ of execution to the union committee. The writ of execution was submitted to the bank where the enterprise account was opened. And as soon as funds were transferred to the enterprise account, they were transferred to the account of the union committee which had won the case on behalf of the labor collective. While funds are transferred (the whole amount is not always transferred at once) the union committee receives money at the bank and distributes it among employees.

The first statement of claim of the union committee connected with the September 1996 wage was submitted in November 1996. Since that moment each month the union committee has submitted statements of claim for wage arrears and paid wages to the integrated plant employees.

Several problems arise in this context.

1. The union accountants and treasurers are charged with a large amount of additional work. They are responsible for amounts which exceed the ordinary trade union budget many times over. Accountants have to make calculations with which they never dealt before. The transfer of funds according to the writ of execution sometimes takes almost a month. The procedure of payment of wages to all enterprise employees during the year turned out to be so labor-intensive that the union committee informed the integrated plant management of the necessity to increase the wage of the union committee accountants.

2. The union committee cannot afford a sufficient number of cashiers to pay wages to the enterprise employees. The enterprise cashiers are involved in this work. The union accountant hands the money to the enterprise cashiers with their word of honor as the only guarantee. Certainly, the corresponding act is prepared but it has no legal power because the enterprise cashiers did not sign a contract on material responsibility with the union committee.

3. In order to receive cash at the commercial bank where the union committee account was opened it is necessary to pay a certain extra amount for transferring funds into cash. This decreases the total amount of wages. At first the union committee paid for the transfer of funds into cash from the union funds, and then it requested the enterprise to compensate those expenditures but could not submit any legal justification (besides, the enterprise management showed no enthusiasm in this

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respect). At last the parties managed to come to a compromise: the bank where the enterprise account was opened agreed to open a second account of the union committee to make payments according to the writ of execution and to set off the expenditures for the transfer of funds into cash to the integrated plant.

The union committee passed from the tactics of negotiations and persuasion of the enterprise management to the practice of statements of claim due to the financial and legal conditions of the enterprise operation and the impossibility to withdraw funds for wage payments from the enterprise account. Certainly, the enterprise administration is not enthusiastic about the above method of making wage payments according to the judgment. This entails payment of court costs (1.5% of the amount of claim is equal to Rb 50-60 million every month). But there is no other possibility for the enterprise management to ensure a regular (although with delays) payment of wage to the employees.

* * *

The method of solving the problem of wage arrears proved effective enough. It did not solve the problem completely (wage arrears still exist) but reduced the term down to one month. The success was undoubtedly due to the efforts of the union as well as to the support from the part of the enterprise administration. The actions were agreed and coordinated. Interrelations between the union committee and the enterprise administration do not have a conflictual character, there is mutual understanding of the necessity to ensure payment of wages and find appropriate solutions of the existing problems.

It is also important that the union leader has a high authority at the enterprise and is able to control the activity of the employees and influence their state of mind. The union committee also has a significant influence over the enterprise management. The enterprise managers never ignore the opinion of the union leader. Ten years ago the present union leader had been designated to take the position of deputy director on social issues of the enterprise but, as the position was not vacant at that time, he was elected chairman of the union committee instead. The position of deputy director on social issues no longer exists, but in practice the trade union chairman plays this role.

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Seminar of Energy Sector Trade Unions, Novgorod,

October 27 to October 30

A seminar of representatives of Russian trade unions which are included in the international association ICEM was held in Novgorod from October 27 to October 30. Participants included representatives of the All-Russian Committee «Electro Trade Union», the Trade Union of Employees of the Construction and Building Materials Industry of the Russian Federation, the Russian Independent Trade Union of Coal Industry Employees, the Interregional Association of the Chemical Trade Union, the Russian Independent Union of Miners, the Russian Gas and Oil Trade Union, the Russian Trade Union of Chemical Industry Employees, the Central Committee of the Trade Union of the Timber Industry of the Russian Federation. Representatives of the Mining and Metallurgical Trade Union of Russia, the Trade Union of Nuclear Industry and Power Employees, and also representatives of the trade union of nuclear workers of Ukraine also participated in the seminar,

The seminar began with a discussion of problems of non-payment between enterprises. This reproduces a situation in which the trade-union leaders are trying to play on others’ terms, having to resolve problems for the government and the employer. Then the participants began to move on to those reasons, which are in the hands of the trade unions.1

Although the main theme was designated as the non-payment of wages, the participants came to the theme from drawing up rather a long list of reasons for non-payment between enterprises.

The reasons for non-payment between enterprises.:

1. The tax system in Russia is established by the executive authority (in other countries - legislative).

2. Mutual non-payment.

3. High bank interest on credits for enterprises which want to pay wages.

4. Destruction of working capital of enterprises.

5. Wrong price policy (the means of state control of prices are directed against production). There is no mechanism for the establishment of prices which would promote development of production.

6. No mechanism for payment for state orders or for deliveries for federal needs has been developed.

7. Excise duties on gas and oil resources are unjustifiably excessive.

8. Change of ownership.

9. Inability of employers to work in market conditions (inability to manage)

10.Shadow economy.

11.The adoption of an unrealistic budget.

12.Unthought out direction of economic reform.

13.Remoteness of legislative process from the demands of life.

14.Destruction of economic relations.

15.Fall of production and replacement of domestic goods by imports.

1 At the request of the representatives of the trade-union organisations which took part in the seminar, we are publishing a verbatim summary of the discussion of problems of delays in the payment of wages without making any attempt to impose a logic on the exposition or development of the arguments.

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16.Criminalisation of spheres of the economy

17.Illegal withdrawal of funds from the economy and financial and credit structures and their appropriation for personal enrichment.

18.Loss of the state monopoly of the economically prosperous and profitable branches of production (those that always filled the budget).

19.Absence and imperfection of judicial system (practices of the courts).

20.Existence of tax privileges in the absence of budget funds. (Government)

21.Aspiration to support the budget sphere at the expense of the suppression of the industrial sector. (Government)

22.Absence of a system of responsibility of the officials of all levels for non-payment (Duma, Courts, Government)

23.The policy of the government directed at the complete dismantling of the industrial base. (Government)

24.Weak organisation of workers in the struggle for their rights. (Trade unions)

Barterisation of the economy. (Trade unions, Employers)

The discussion was then centred on the question which each participant was asked to answer for him or herself: ‘What depends on me?’

Several participants expressed the view that the result of government practice has been that trade unions have been pushed aside from the sphere of managerial decision-making, that everything has been done to make nothing depend on trade unions (for example, deprivation of the trade unions’ right of legislative initiative). Apart from item 24 (weak organisation of trade unions), in general there is not much that depends directly on them. A problem of trade unions is to strengthen their influence and through this to resolve all the other problems which depend on the trade unions.

Boris:2 On the question of the payment of 5,4 % for social insurance we have bombarded everybody with letters, we have organised people. The only thing that we can do is to ensure the organisation of the trade unions.

Voldemar: the government looks only at force and only takes account of those with real force.

Oleg: one of the methods is negotiation. In some cases these methods work.

Tatyana: What we have done has been insufficient, the methods have been right, but we have not done enough.

Oleg: I think that out of one hundred organisations which have non-payment, twenty pay wages on time, so non-payment is not the reason for the delay of wages.

Tatyana Yakovlena: In spite of the fact that there are various reasons for the delays we have to understand the present situation. In each trade union we have to understand it separately.

It was proposed to consider: 1. Government and 2. Weakness of trade-union movement.

Irina: the employer has dropped out of consideration

2 The participants in the discussion adopted the decision that everyone would introduce him or herself as he or she would like others to address him or her. Therefore we give only the first names of the participants, without surnames and titles.

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General conclusion: In the sphere of influence of trade unions there are the government, employer, trade unions, that is tripartism. One of the reasons for the delay of wages lies in the weakness of social partnership, which depends on the position and actions of all three parties.

Andrei: It is necessary to identify the forces which produce the reason for delays. To struggle with the consequences, without paying attention to the reasons, is senseless. It is senseless to struggle against any decree of the government, as there are interests which have pressed through its adoption. Therefore the government also draws us into a struggle against documents, because it forces the trade unions to play on an another's field, obviously condemning them to defeat; and in case of a victory of the trade unions it is always possible to adopt a new document.

The reasons for the non-payment of wages:

1. Arbitrariness of the employers. (Employers).

2. Economic profit for the employer in non-payment of wages. (Employers).

3. Impunity of the employer for non-payment of wages (Duma, Government)

4. Shortage of money supply (in the remote regions) (Government)

5. Misuse of money resources of the enterprises allocated for wages. (Employers, Government)

6. Absence of criminal liability for non-payment of wages. (Duma),

7. Lack of funds caused by non-payment. (Employers, Government)

8. Absence of state strategy for the resolution of the problem of non-payment. (Duma, Government)

9. Absence of funds in the federal budget. (Govenrment, Duma)

10.Absence of funds in local authority budgets (Employers, Government, Trade Unions)

11.Payment of wages in kind.

12.Mutual settlement between enterprises in kind. (Employers, Government, Local authorities)

13.Crediting purchase of large items by particular employees at the expense of wages. (Employers, Trade Unions)

14.Inability of the chiefs to work in new economic conditions. (Employers. Government, Trade Unions)

15.Unemployment and fear of losing one’s job.

16.Delayed payment of money for wages by commercial banks. (Banks, Employers.)

17.Priority of tax payments before wages. (Duma).

18.Failure to give priority to payment of wages. (Government)

19.Non-payment by consumers. (Employers.)

20.Sabotage on the part of the state. (Government)

21.Low self-valuation of one’s labour power.

22.The consent of the workers to non receipt of wages (under pressure of circumstances or representatives of administration). (Trade union, Employers).

23.Failure of the state to provide social benefits and allowances (Government)

24.Enterprises have no access to sources of short-term credit (absence of preferential credits for wages). (Government)

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25.High bank interest (Government)

26.Manipulation of payment of wages for political ends. (Government)

27.Weakness of trade-union organisations. (Trade unions)

28.Non-use by the worker of judicial protection. (The people, trade unions)

29.Absence of mechanism for the implementation of court decisions (Duma, Government).

30.Low level of legal understanding of employees. (Trade union, State).

31.Collective guarantee of the employers. (Employers)

32.Artificial restraint of bankruptcy. (Employers, Trade Unions)

33.Unlimited corruption. (Government)

34.Absence of public, including trade-union, control of the payment of wages. (Trade Unions, Duma, Government)

35.Absence of trade-union organisations at small, medium and large business enterprises. (Employees, Trade unions)

36.Artificial restraint of the growth of wages at enterprises by means of non-payment of wages. (Government).

37.Absence of liability of the employer before the worker for non-payment of wages. (Duma)

38.Absence of associations of employers in a number of areas. (Employers).

39. Negative influence of international financial structures on the economy (International Financial Institutions).

40. Lack of specificity or weakness of collective agreements in items concerning non-payment of wages. (Trade Unions).

The underlined items were identified by the participants in the seminar as problems for which the trade union bears responsibility.

Irina: Taking account of today's situation and economic possibilities, there will not be a speedy decision. The work of the Central Committee is mainly connected with the government and work with the employers is mainly the business of the chairman of the trade union committee.

Nadezhda: In a triangle the employer cannot act without the government. Branch agreements do not work, because we do not have employers with a normal legislative base.

Ivan Ivanovich: On any question there is a method (individual or collective work). Individual work for us is the practice of removal of the chief, because he is not able to work with people. In reply to criticism the chief can listen to me, and can act. In the second case it is necessary to connect with the collective (general meeting, collective actions etc.). It is necessary to determine methods of pressure (even, as people have determined today, the method of blackmail). I agree that there is no legislative base, it is necessary to define what laws we need. (Question to all: are new laws needed, or is our main problem the fact that those we have, the strategic directions of the work of trade unions depend on the answer to this question.

Vladimir: When we put a question about the incompetence of the chief, the proprietor begins to pull. May be he should be sent to study to improve his qualifications, even at the expense of the trade union, and, if he receives bad marks there then this also give us an external assessment of his competence. One would be able to say that he is completely hopeless. It is possible even to include this item on retraining of the director in the collective agreement.

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Irina: the trade union should work in the legal field. Our problem is to test those people who work in our field. Why should we be scrambling about in someone else’s kitchen garden. They used to invite the trade union committee to participate in the hiring of new employees. Why should they pass us the responsibility for mistakes in the personnel selection of management?

How can the trade-union leader affect the situation with wages at the enterprise? The leader should have personal relations with the chief of the enterprise. The director has begun to work in new conditions, but he is still the same person as was there in former times. At first get agreement on a personal level. There should be a service attached to the trade union committee, which can analyse the economic and financial information on the activity of the enterprise.

We have the right to request the information from the director. We in the collective agreements have a list of the information, which should be given to the trade union committee by the director. In the collective agreement it is necessary to write a “treatise” with subitems. If he does not provide the information, we call him to a meeting of the trade union committee. It is already the level of collective action. The availability of an economic or legal service alongside the trade union committee depends on the financial situation. But if a lawyer can be invited for consultation, the economic service should exist permanently.

¹: Not all our presidents are full-timers. And the availability of an economic service assumes that this is a large enterprise with a full-time president.

Irina: For the small enterprises there should be an economic service together with the regional committees of the trade unions. The chairman of the trade union committee is not able to decide anything independently. He should inform the members of trade union on the state of affairs in the enterprise and what is being done by the trade union committee. To rouse people to any kind of actions and to convince them to do something, it is necessary constantly to inform them of what is happening.

It is necessary to give them information about what is being produced and what is sold. It is necessary to remove the contradiction between the workers and the engineering and technical employees, as much depends on the successful work of the marketing service.

At our enterprise press releases are prepared explaining how much has been produced, how much has been shipped, how much money has been received, how much went on wages. We make such a press release for the factory and for each shop, therefore everyone knows about the place of the shop in the factory.

Svetlana: Is there money in the account? What can one do in order to receive wages? What employer does not recognise the judicial claim that wages are not paid. I ask the court, how many accounts does the enterprise have and how much money is there in each account. They usually gives us one account in which there is no money and in which the balance of the enterprise is kept. However, the director goes on business trips, which means that there is money. Therefore, by finding out about the availability of money, we can simply render pressure on the director.

I am concerned at the creation in the Duma of a body under the name KER. KER proposes to move to a fixed-term labour agreement between the worker and employer. All must begin with the law. If we look at the employer and trade union, the main thing is the collective agreement. In it, it is necessary to define that we have to receive the information. Therefore we can identify the improvement of the collective agreement as a method.

¹: As a condition of improvement of the collective agreement it is possible 1) to include in the agreement one hour per month for a trade-union meeting in working hours for discussion of the collective agreement 2) Payment of one hour per month by the employer for meetings outside working time; this is world practice, which is applied in a number of domestic enterprises

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Irina: article 37 works, we have just removed an enterprise director for violation of the collective agreement.

¹ It is necessary to provide in the collective agreement a mechanism of reimbursement of damages for the non-payment of wages on time as a personal liability of the chief or at the expense of the enterprise.

Svetlana: If such a financial liability is defined in the collective agreement, any court will recognises its correctness. If it is not present, they award such a tiny percentage that there is no sense in going to court.

Vladimir: It is necessary to adopt new and improved legal provisions about the criminal, administrative and material liability of the proprietor.

General discussion:The Seminar then broke up into three groups for discussion.

Group One: Work inside the trade union:Boris: The trade union should be strong. There may be a strong leader, but it is still not a strong trade union. An organised trade union does not give the leaders a quiet time. When we struggle for the fulfilment of resolutions, the ordinary members of the trade union may not know about these resolutions or may not agree with them. Therefore there should be a knowledge of the members and positive motivation of membership in the trade union, a belief in participation in a uniform organisation. What is to be done? 1. Finance, 2.Staff, 3. Training. 4. Information, 5. Agitation

Questions to Boris: What do you mean by a strong trade union?

Boris: strongly organisationally and financially.

Gennadii: How does it apply to the third group (which worked on the question of trade unions and the government)?

Boris: Inside the trade union there should not be struggle. All struggle goes on at the level of government and employer.

Oleg: When you spoke about finance, were you guided only by the finance of trade unions or did you also have in view transfers from the employers, governments?

Boris: Only trade union fees.

Oleg: Do you think that the trade union can carry out all its tasks relying only on trade-union fees?

Boris: Yes.

Tatyana: Do you refuse to accept the percentage which enterprises transfer for mass cultural work (0,3 %)?

Boris: Of course not. But membership dues should be the basis.

Oleg: We are not meeting here on trade union money. That means that we have agreed with those who do not only use trade union funds.

Vladimir: In a broad sense, by trade union finances we mean all receipts for authorised activity.

Question: For what are trade unions not enough?

Boris: Organisation, which assumes the existence of the trade union as an association of sympathisers. If the president has one thousand two, three convinced members backing him, the director can not act as he acts now. The same thing at the level of the government.

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Oleg: I disagree with the opinion of group that the funds offered to them, will help to resolve the problem of non-payment of wages.

Second group (Trade Union and Employer):Ivan Ivanovich: The main problem is the interrelation of trade unions and employers: as they influence and can influence the timely receipt of wages. We consider that the first thing is individual work. There is a method of individual work, it is necessary to begin with it. The second thing that we look at is collective work. Such work begins with the collective with the creation of an appropriate economic service, with the participation of the trade union committee, legal service, by providing economic information to members of the collective, and the final collective act is the collective agreement. We consider that is necessary further to perfect the collective agreement, by concluding it, or bringing it into conformity with the branch tariff agreement, and by taking it up to top, the general agreement. By coiordinating all this chain: the collective agreement, tariff agreement, general agreement, we can build a common demand - collective. By providing a prospect of the development of normative rules, financial and criminal liability of the chiefs of the enterprises for delay of wages, and also from participation in the appropriate negotiations, and here our group is solidary with the first group, i.e., that to bring all this about it is necessary to conduct training of trade-union activists in new conditions and, probably, it is expedient today to try to conclude agreements for social partnership at the appropriate level. Today we consider that there is no legal base for this, but we should try out the rules of the game at the enterprise to develop them, having these rules, and, executing collective and individual work, the collective of this or that enterprise can achieve the timely receipt of wages.

We have said: «perfection of collective agreements», for example, as specific training in working hours of the employees of the given collective. We can not simply do this at our own discretion. That is, those questions, which are socially important from the point of view of the receipt of wages in time need to be included in the collective agreement.

Today not all questions at each enterprise can be included in the collective agreement. The legislation allows the employer to not accept those or other functions of the collective agreement. When they now say: « at whose expense is that training? » - answer : «at the expense of any source of finance».

Questions:

Tatyana: Is the collective agreement really not a normative document for the enterprise? It is the unique normative act for the enterprise. You should enter negotiations and achieve inclusion of demands in the collective agreement.

Gennadii: Who does not now give you anything for training? And at whose expense is the training?

Ivan Ivanovich: At the expense of any financial receipts.

Irina: we can convince the members of the trade union, only by giving them the correct economic information. In this case only we can raise people to action.

Nikolai: The work on economic training, did that not happen?

Ivan Ivanovich: We consider that in this situation it happens but it is not sufficiently fundamental. Today the absolute majority of the masses do not understand the structure and composition of the money they receive and how much of their wages is made up of profit received by the enterprise. Today our problem is to make sure that each employee knows what his wage is paid out of and what are its components. And how much of the general mass of goods sold this comprises.

Oleg: How far do you think the members of the trade union are ready for such retraining?

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Ivan Ivanovich: I would say only a few percent, but without it the trade union will not survive.

N: where does the weakness of trade-union organisation lie?

Ivan Ivanovich: There is no co-ordination and organisation.

Suggestions:

1) To improve the legislative base promoting the active creation of informal unions of employers, responsible for those tasks which are assigned to them by individual employers (enterprises).

2) To take measures to bring to responsibility officials, including those of the Ministry of Labour, for evasion of the fulfilment of their responsibilities (This arose because the Ministry refuses to be the third party involved in the conclusion of branch agreements at the federal level.VB.).

Irina: We do not need the Minister of labour in a hundred years. The authority of the Ministry of Metallurgy has passed to the Department of Metallurgy of the Ministry of the Economy. But they do not suit us, and we are acting as the initiators of the creation of an association of employers.

Oleg: They replied to us that the Ministry of Economy has not taken on these powers and is not an employer.

From Nizhni Novgorod: In Nizhnyi Novgorod oblast the territorial agreements have been concluded and in connection with this a package of documents on the association of employers has been created. Such documents already work in Samara and St. Petersburg. At many of our enterprises public commissions for the monitoring of economic activity of the enterprise have been created which trace flows of money and economic activities and are elected at a general meeting of the labour collective.

Discussion of the second group:

1. Creation of a system of social partnership (legal base) at all levels.

1.1. Adoption of a law on social partnership.

1.2. Adoption of a law on employers.

1.3. Prohibition of natural forms of payment of labour.

1.4. Financial transparency in the expenditure of money resources at the enterprise (creation of public commissions to monitor the economic activity of the enterprise).

1.5. To expand training of trade union activists and employers to work in new market conditions at the expense of the employer.

The participants in the seminar declare that the existing dependence of the payment of wages on the fighting qualities of the trade-union leaders is an attribute of the legal nihilism prevailing in Russian society. The trade unions suffer defeat in the legal field for the reason that the government and employers ignore the existing legal norms.

The government should recognise non-payment of wages in all spheres of economy as a nation-wide problem, and enter negotiations with the employers and trade unions on the development of a state program

- which would include low-cost targeted state credit for the payment of wages;

- support for the law

Oleg: the tax service will trace payment of wages for previous months in the event that the law will equalises the payment of profit tax and payment of wages.

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Yura:a legal act on the proprietorial responsibility of enterprises and organisations for the non-payment wages is needed, which would provide an opportunity of an auction sale of their liquid assets, and also currency resources, and initiating proceedings for the bankruptcy of enterprises, which have the indebtedness for wages of more than a certain number of months and these are tending to increase.

A law imposing the criminal and administrative responsibility for the mis-direction of funds intended for the payment of wages, pensions, benefits and other social payments is necessary.

A law is needed which would give primacy to the allocation of grants and subsidies from the state budget for the settlement of wage debts to the workers of establishments and organisations which are financed from the budget, and social payments to the population.

Group 3 (Trade Unions - Government)

1. To propose to the government of the Russian Federation that it recognise the situation with the non-payment of wage debts as a national problem, as, under the Constitution of the Russian Federation, the Government bears full responsibility for the maintenance of the rights of citizens, including the rights to compensation for labour (Constitution article 37).

For the resolution of the problem we propose to the Government that it develop a national program, including public associations (trade unions and employers), which must provide:

- A mechanism for the creation of conditions for the liquidation of wage debts (introduction of preferential credit for the settlement of debts; support for legal measures, by means of which the workers can achieve fulfilment of their labour agreements concerning the payment of wages, priority of payment of wages over other payments, creation of a program of training of workers with financing from the budget).

In connection with the absence of legal rules concerning the responsibility of Government of Russian Federation and other officials for the creation of the problem of wage debts, to ask the Government to support the draft federal law «On the modification and additions to some acts of the Russian Federation for strengthening the protection of the labour rights of workers», submitted by the trade unions to the State Duma.

Group ¹ 2. (Trade Unions and Employer):

2. To speed up the financing of the system of social partnership at all levels by adopting the laws::

· « On social partnership »

· « On employers and their associations »

2. To forbid the natural form of payment of labour.

3. To introduce normatively regulated public control of the financial activity of the enterprise

4. To train workers for work in new market conditions at the expense of the enterprise.

5. To improve the mechanism of responsibility of officials for the non-payment of wages.

The question of the prohibition of wages in kind was discussed. The common opinion of the participants in the seminar was that the existence of such a form of payment contradicts the ILO Convention, humiliates the people and gives opportunities for the employers to fail to fulfil their responsibilities. The salary is defined in the wage scales in roubles, not in the quantity of rubber boots or crystal chandeliers, which the workers are compelled to receive in the form of wages.

Tatyana Yakovlena: the main things that the trade unions must decide are:

1. To agree a common position

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2. To resolve not only the problems of non-payment of wages, but also the problems of the finance of trade unions (the financial condition of all trade unions does not allow trade unions to use strikes as methods of protest to the full)

3. Not to wait until foreign trade unions find money to hold seminars, but to find money for such meetings, and to find money in the budget of ICEM trade unions. We need to be co-ordinate our efforts within the framework of ICEM.

All the participants in the discussion, without exception, expressed the opinion that the seminarhad been very useful. The common result was moved by one of the participants in the seminar: ‘we have united for the resolution of a particular problem. This function should be executed by FNPR. I consider that the kind of work which we has been done here leads to a resolution which has been produced not within the apparatus, but has been produced by us’.

* * *

A big plus was the fact that the work on the problem has gone beyond the framework of the seminar, to the meeting of ICEM trade unions on November 5 this year on the basis of the mining and metallurgical trade union of Russia, where it was modified and adopted as the final document of the trade-union discussion.

* * *

DECLARATION

of participants in the seminar in Novgorod Velikii 27-30.10.1997, within the framework of the trade-union campaign against delays in the payment of wages in Russia

We, representatives of trade unions of basic industries, having come together for a seminar in the framework of the trade-union campaign against the non-payment of wages in Russia, by studying and by discussing various aspects of the problem, came to the following conclusions:

In our opinion, the main reasons for the non-payment of wages are:

1. Arbitrariness of the employers.

2. Economic profit for the employer in non-payment of wages.

3. Impunity of the employer for non-payment of wages

4. Shortage of money supply (in the remote regions)

5. Misuse of money resources of the enterprises allocated for wages.

6. Absence of criminal liability for non-payment of wages.

7. Lack of funds caused by non-payment.

8. Absence of state strategy for the resolution of the problem of non-payment.

9. Absence of funds in the federal budget and in the budgets of the subjects of Russian Federation.

10.Payment of wages in kind.

11.Mutual settlement between enterprises in kind.

12.Inability of the chiefs to work in new economic conditions.

13.Unemployment and workers’ fear of losing their job.

14.Delayed payment of money for wages by commercial banks.

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15.Priority of tax payments before wages and failure to give priority to payment of wages.

16.Non-payment by consumers.

17.State policy causing the collapse of domestic industry..

18.Low self-valuation by the worker of his or her own labour power.

19.The consent of the workers to non receipt of wages under pressure of circumstances or representatives of administration).

20.Failure of the state to provide social benefits and allowances to its citizens

21.Absence of preferential credit for the payment of wages.

22.High bank interest

23.Manipulation of payment of wages for political ends.

24.Weakness of trade-union organisations.

25.Non-use by workers and trade unions of opportunities for judicial protection.

26.Inefficiency of mechanisms for the implementation of court decisions

27.Low level of legal understanding of employees.

28.Collective guarantee of the employers.

29.Artificial restraint of bankruptcy procedures.

30.Corruption.

31.Absence of state and public, including trade-union, control of the payment of wages.

32.Absence of trade-union organisations at some small, medium and large business enterprises.

33.Artificial restraint of the growth of wages at enterprises by means of non-payment of wages.

34.Absence of liability of the employer before the worker for non-payment of wages.

35.Absence of associations of employers in a number of branches.

36. Negative influence of international financial structures on the economy

37. Lack of specificity or weakness of collective agreements in items concerning non-payment of wages.

In our opinion, the resolution of the problem of the non-payment of wages can be achieved through the following main measures.

1. Interaction of trade unions with Federal bodies of executive authority in order to:

Propose to the government of the Russian Federation that it recognise the situation with the non-payment of wage debts as a national problem since, according to the Constitution of the Russian Federation (item 37), the Government bears full responsibility for the maintenance of the rights of citizens, including the right to compensation for labour.

We propose that the Government include trade unions and employers to develop a national program to resolve the problem of non-payment of wages, through which to provide the mechanism for the creation of conditions for the liquidation of wage debts including:

· Introduction of preferential credit for the settlement of the debts;

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· Provision of legal measures, by means of which the workers can achieve fulfilment of their labour agreements in particular regarding the payment of wages;

· Priority of payment of wages before other payments;

· Creation of a program of training of workers financed from budgetary funds

In connection with the absence of legal rules concerning the responsibility of Government of Russian Federation and other officials for the creation of the problem of wage debts, to ask the Government to support the draft federal law «On the modification and additions to some acts of the Russian Federation for strengthening the protection of the labour rights of workers», submitted by the trade unions to the State Duma.

To speed up the financing of the system of social partnership at all levels by adopting the laws::

· « On social partnership »

· « On employers and their associations »

2. In the sphere of interaction of trade unions and employers it is proposed:

· To speed up the formation of a system of social partnership at all levels;

· To introduce normatively regulated public control of the financial activity of the enterprise;

· To improve the mechanism of responsibility of officials for the non-payment of wages;

· To forbid the payment of labour in natural form;

· To organise the training of workers in economic and legal knowledge for work in the conditions of a market economy.

In present conditions the resolution of the problem of non-payment of wages is the primary task of the trade unions .

The trade unions declare their readiness to conduct active work in the following directions:

· Realisation of a complex of measures to increase the organisational effectiveness of trade-union bodies through the qualitative selection of trade-union staff; training of trade-union workers to work in conditions of market relations; application of economic and propaganda methods of motivating the membership of the trade unions; strengthening financial and executive discipline.

· Increase the role and quality of collective agreements; organisation of the permanent monitoring of the fulfilment of the arrangements achieved as a result of negotiations; uses of legal methods of influence on officials for failure to abide by the conditions of agreements;

· Attraction of attention of the mass media and of Russian and foreign public organisations to the problem of the non-payment of wages; preparation and transfer of information to the foreign investors of the actual state of affairs regarding the problem; realisation within the framework of current legislation of various collective acts of protest.

Kemerovo Regional Seminar

On November 18-19, 1997 a regional seminar on the non-payment of wages took place in Kemerovo, Western Siberia. Representatives of the following trade union organisations took part in the seminar:

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-0 Kemerovo regional organisation of chemical trade unions;

-1 Federation of trade-union organisations of Kuzbass;

-2 Regional trade union education and training centre;

-3 Rosugleprofsoyuz;

-4 Trade union of public health service employees;

-5 Confederation of labour of Kuzbass;

-6 Trade union of employees of local industry and communal-household enterprises;

-7 Kuzbass Independent trade union of the energy industry

-8 Trade union of chemical industry employees;

-9 Energy trade union

Each trade union was invited to send two representatives, one from the city or regional trade-union organisation and the other from a primary organisation of the same trade union. Representatives of the local mass media were also invited to the seminar.

After an introductory discussion and sharing of experiences, the seminar considered the question of strikes in relation to the problem of non-payment of wages, including the problem of the trade union’s responsibility, the problem of strikes and the survival of the enterprise and the question of spontaneous strikes. The problems of the liability of the employer for refusal to participate in dialogue with the trade unions and the problem of payment of wages in kind were also discussed. Finally, the problem of collective agreements in the context of non-payment was also discussed.

The following final resolution was drawn up by the Kuzbass Regional Seminar:

FINAL RESOLUTION OF THE REGIONAL SEMINARPROBLEMS OF DELAYS IN WAGES IN KUZBASS AND WAYS Of

RESOLVING THEM

This resolution is a result of discussion of participants in the seminar. The non-payment of wages is caused not only by the shortage of money in the economy, but also by the inept, and at times simply unfair policy of enterprise management, the inadequacy of the labour and trade union laws.

On strikes

In Kuzbass an explosive socio-economic situation has been caused by the long delays of wages and social allowances in all industries and in the budget sphere. It results in the acts of protest in various forms - from spontaneous strikes and hunger-strikes, up to mass acts of civil disobedience.

The trade unions realise that the strike is an extreme display of despair and discontent of the workers, but does not resolve social and economic problems, damaging the enterprises, their workers and state.

However, in present conditions of economic and legal chaos together with the inactivity of law-enforcement bodies, the trade unions are compelled to resort to the organisation of strikes, as an

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extreme measure for the rescue of health, and at times even the life of workers and members of their families.

The wide experience of the strike movement in Kuzbass shows that the employers, in the end, are compelled to meet the demands of the workers, but this is only achieved at huge moral and material cost for all involved in the conflict. At the same time the bodies of the prosecutor, state labour inspectorate and other power structures actually distance themselves from participation in the resolution of industrial conflicts.

The trade unions consider that responsibility for the occurrence of strikes in most cases lies on the employers and government bodies of all levels, as there is almost always an opportunity to avoid a strike. Frequently, the actions of a management can be characterised as “provoking a strike ”;

Proceeding from the above we consider that in both the region and in the country the need to create a more effective system of resolving industrial conflicts has ripened.

The Kuzbass trade unions propose:

1. Immediately to make amendments to the labour laws of the Russian Federation, strengthening the measure of responsibility of the chiefs and officials for delays in the payment of wages and non-fulfilment and violation of collective agreements.

2. To maximise the efficiency of the prosecutor’s supervision of infringements of labour laws, and also to take measures for the simplification and acceleration of f judicial proceedings concerning the infringement of labour legislation.

On collective agreementsThe Kuzbass trade unions consider collective agreements to be the main form of interaction of the employer and workers.

At the same time, the trade unions are convinced that the legislative base does not allow trade unions to develop high-quality collective agreements. There are many reasons for this, but it is especially necessary to focus on two.

First of all it is difficult, and at times is simple impossible, to obtain high-quality information on the financial and economic activity of the enterprise connected directly or indirectly with the payment of wages and social allowances. Chiefs of the enterprises cover their incompetence and lack of conscientiousness by suppressing, hiding and distorting information and provoking the workers into conflict.

But the main factor is the absence of any real liability of the employers for their failure to observe the obligations stipulated by the collective agreement. The existing measures of responsibility are so inefficient, that nobody takes them at all seriously.

So long as there is no real employers’ liability in this country for their unwillingness honourably to conduct negotiations and observe the obligations they have undertaken, the number of conflicts, destroying the economy, will increase.

Thus the trade unions do not want one-sided advantages for themselves and stand for the equal responsibility of all parties concluding labour agreements.

On the rule of lawThe problem of non-payment of wages in many respects also arises because the ratification of international agreements and conventions on labour relations is not accompanied by the adoption of appropriate federal laws ensuring their realisation in practice.

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The line of federal bodies of executive power directed at curtailing the practice of concluding branch tariff agreements, the emasculation of their contents and the attempt to replace branch by regional agreements which have less legal force and obviously are not accompanied by finance causes alarm.

On payment in kind in place of wagesThe payment of wages in kind (products, service, waste products, raw materials, finished products and consumption goods which cannot find a market) has developed in recent years in the oblast and across the country as a whole.

These goods, products and services are offered to the workers in settlement of wages at prices much higher than market prices, depriving the worker of personal choice so that the constitutional rights of the citizens of Russian Federation are infringed.

The replacement of wages by goods has come to assume a mass character and has turned for the employers into an uncontrolled and unpunishable method of personal enrichment.

The trade unions consider that wages should not be paid in the form of natural products or goods, but only in money form. In this question the trade unions have no the right to make any compromises, since it is a form of a robbery of the workers and they demand the necessary assistance of the state for the terminationof this vicious practice.

On the relation of trade unions with employersTrade unions are now the only force in the country, which stand for the protection of the interests of employees, the preservation of the enterprises from ruin, the preservation of jobs etc.

The trade unions try in an organised way to resist abuses and infringements of the legislation of the Russian Federation and collective agreements by the employers.

The relations between trade unions and employers can be under construction on the basis of partnership or open opposition.

If the interests of the employer and workers coincide, the trade unions are ready to act as equal partners in upholding the interests of the enterprise and its workers. However, the management of enterprises frequently uses this readiness in a unilateral way: they willingly call trade unions to their aid of when it is necessary to tap money from the centre but refuse co-operation when the money is received and it has to be distributed.

Therefore trade unions of the region declare their readiness to enter into conflict and to act in the role of defenders of the interests of the workers, using all legal means and methods of upholding their interests, if the employers act counter to the interests of the workers and, moreover, restrain their rights.

On the financial system and taxesA key place among the reasons for the non-payment of wages is taken by problems of the budget and tax system. The activity of the state creates the impression that it seeks money not where it exists, but where is easiest to appropriate it. The number and size of taxes exceeds any reasonable limits. Existing requisitions have deprived the enterprises of circulating assets, and the tax debts and the fines and penalties imposed on top, hang the sword of Damocles of bankruptcy even above enterprises with good prospects, depriving them of a future and their workers of their wages.

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The absurdity of the existing tax system is especially obvious in the example of the subsidised coal industry, when it is necessary to pay two and a half roubles in tax for every rouble of subsidy, that was noted even during parliamentary hearings on problems of the coal miners.

Even more unattractive is the policy of the state concerning income tax paid by natural persons. The existing progressive income tax does not correspond to the real wage level and already by the middle of the calendar year places a heavy burden on the mass of workers who live only on wages. By the end of the year the situation becomes catastrophic. It is not enough that wages are not paid, after their payment the state strives to pick the worker’s pocket, declaring as «superincomes» sums which, actually, hardly suffice for the support of a family.

The conclusions are obvious to trade unions: the problem non-payment of wages will not be solved until the tax policy of the state is changed, which will allow enterprises to fully develop production and to pay their taxes in time.

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Chelyabinsk Regional Seminar, November 20-21

Thirty representatives of trade unions which are included in the structures of VKT and FNPR participated in the seminar. After two days of very constructive discussion the participants in the seminar adopted the following declaration.

Declaration

of representatives of trade unions of Chelyabinsk oblast taking part in a seminar on problems of delays in the payment of wages

Having discussed the delay of wages in Chelyabinsk oblast, the participants of a seminar note that indebtedness for wages has become a chronic social evil.

As of 1.10.97 it had reached 989 enterprises and organisations in the oblast, including 316 in industry, 168 in construction, 300 in agriculture, 70 in transport and 135 in the budget sphere. The overdue debt for wages exceeds 1680 billion roubles and remains at the level of the beginning of the year. The average delay amounts to three months, in industry 3.2 months, in construction 3.5 months, in agriculture 4 months. At 321 mechanical engineering, metal working and machine-tool construction enterprises the delay in the payment of wages amounts to 4-6 months, and in 12 defence enterprises about 7 months. In three textile and the light industrial enterprises the workers have practically not been paid at all for about two years.

In budget organisations the wage debt has decreased, but remains more than 163 billion roubles, including 42,1 billion roubles in transport, 27.5 billion roubles in public health services, 17.2 billion in education, 8.4 billion in culture and art , and 42.7 billion roubles in science and scientific services (or from 0,8 up to 1,5 months’ delay).

Apart from this, a significant part of wages and benefits are paid in kind owing to the shortage of money. Unemployment benefits are paid with a six-month delay, and part of this is also paid in natural form.

The non-payment of wages is a consequence of the country’s current economic and social policy, which has resulted in the chronic fall of production and the widespread phenomenon of non-payment. Over the years of reform the gross product of the region has more than halved, industrial production has fallen 2,5 times, consumer goods production 3,7 times. The volume of investments has fallen 3.8 times. The overdue debt of industry, transport, construction and agricultural enterprises amounted on 1.10.97 to 26,764 billion roubles, having increased by 34% since the beginning of the year.

The government has established a system of regulation of the productive sector of industry by means of restrictive money policies and the heavy incidence of taxation in the absence of an appropriate banking and financial system. The enterprises are deprived of necessary working capital and cash money for the payment of wages.

The government of the Russian Federation and the authorities first of all try to meet their obligations to the financial markets and financial organisations, the collection of taxes and filling the budget to the detriment of the payment of wages. Legal mechanisms, by means of which it is possible (individually or collectively) really to achieve the fulfilment of labour agreements concerning the payment of wages, still do not work. The prosecutor and labour inspectorate do not secure the fulfilment of legislation concerning the payment of wages.

The delays in the payment of wages, pensions and allowances has caused increasing protest of the workers. From written petitions, local assemblies, meetings and picketing, it has passed to mass collective actions, up to All-Russian actions, and extreme forms - strikes and hunger-strikes. The

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strike movement from the beginning of the 90s has strongly entered the economic and political life of Russia. The bursts of protest move from one branch to another. So, while in 1996 93% of strikes and 51% of their participants arose in education (and this branch has the largest wage debt), in 1997 73% of strikes and 97% of their participants arose in industrial enterprises, including such enterprises as ChTZ, Stankomash, Polet, Chelyabinskugol’. The main reason is the delay of wages.

Educational workers and coal miners have shown themselves to be the most organised groups. At the same time, acts of protest, especially in non-state enterprises, have not resulted in a radical crisis of the condition of the economy or the payment of wages.

The delay in the payment of wages is a crude infringement of the constitutional and legislatively established rights of workers and a the practical refusal of the employers, government and power structures to take responsibility for observance of these rights. Problems of the rights of the workers and the rule of law have moved to the front rank in Russia.

Having discussed the situation with the delay of wages at enterprises and organisations of the region and by exchanging information and experience of work on this problem, the participants in the seminar consider that for the improvement of the situation it is necessary:

I On the organisational level:

- as the consideration of labour disputes in courts, because of their congestion, is delayed for a long time, even by several years, legislative bodies and the government of the Russian Federation should adopt a federal law on the creation of an institution of labour courts for the professional and effective resolution of labour disputes

- to provide systematic information on condition of payment of wages and redemption of the wage debt in Russia and the region through the mass media.

II On the economic level:

- to carry out measures to create tax conditions favourable for the development of domestic production;

- to achieve order in the priority allocation of funds for the settlement of debts and payment of wages for the current period;

- to strengthen work on mobilisation of sources of financing of the budget deficits.

III On the legal level:

- to work out a system of measures ensuring the real work of all existing normative acts, aimed at increasing the economic, disciplinary and administrative responsibility of the chiefs of enterprises and organisations for the delay of wages;

- to initiate the elaboration and adoption of federal and regional laws about the responsibility of the chiefs of enterprises and organisations for delay in the payment of wages and social payments with the restoration of criminal liability and about the state order and control over the observance of the labour laws and other normative acts;

- to ensure the fulfilment of the Decrees of the President of Russian Federation:

1. ¹ 66 from 19.01.96 ‘On measures to ensure the timely payment of wages and other social payments due from the budgets of all levels’;

2. ¹ 209 ‘On checks of the observation of the legislation on the payment of labour’;

3. ¹ 218 ‘On bringing officials guilty of delayed payment of wages, pensions and other social payments to disciplinary responsibility’;

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4. Article 2 of the Law of the Russian Federation ‘On the resolution of collective labour disputes ”;

5. The Constitution of Russian Federation (point 3, article 37) about the right of workers to receive compensation for their labour duly and in full volume;

6. Article 2.96 of the Labour Code on the right of the worker to payment for labour;

7. The ILO Conventions of 8.06.49 ‘On the right of workers to receive compensation for their labour duly and in full volume’

- Trade Unions of Russia to strengthen monitoring of the observance of collective agreements, in particular regarding the payment of labour, to use to the full the rights given by the laws of the Russian Federation ‘On trade unions, their rights and guarantees of activity’ and ‘On the resolution of collective labour disputes’;

- With the aim of creating an effective system of tripartism and establishing a juridical foundation for labour relations, the Government of the Russian Federation and legislative bodies to speed up the adoption of a law on the association of employers. The Government of the Russian Federation and State Duma to give publicity to the process of preparation of the law on the association of employers by holding public hearings on this problem.

The participants in the seminar:

- Demand that the leaders of All-Russian trade union associations should address the General Prosecutor on the question of the responsibility of the Government of the Russian Federation for infringement of the constitutional rights (in relation to the payment of labour of workers of the budget sector and workers of enterprises in state ownership). The participants in the seminar ask international trade unions to render necessary support to Russian trade-union centres.

- Consider natural forms of payment of labour as an infringement of the ILO Convention on the payment of labour;

- Address international trade unions with the proposal to render solidary assistance to Russian trade unions in their struggle for an increase of the minimum payment of labour up to the level of subsistence.

- Realise, that it is time to pass from local to all-Russian actions and recognise the necessity of conducting All-Russian collective acts of protest as forms of pressure on government and employers.

The payment of wages should become a priority of the social policy of the state!

November 21, 1997 Chelyabinsk

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Situation Centre

The President of the Russian Federation

_______________________________________ ____________________________________

Federal Agency of Governmental Communications and

Information of the President of the Russian Federation

MEASURES OF THE CENTRE AND REGIONSTO REDUCE THE DEBT FOR WAGES

(Materials of the regional and central press

for August, 1997)

4 cåíòÿáðÿ 1997 ãîäa

¹ 56/288

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The total indebtedness for wages in the Russian Federation amounted on August 1 to 54.592 trillion roubles and in comparison with July 1 had decreased by 1,3%. The indebtedness due to the absence of direct financing from the budgets of all levels amounted to 20% of the total and had reached 10.940 trillion roubles by the beginning of August, a decrease of 3,6% on the previous month. The indebtedness as a result of the lack of their own funds of enterprises and organisations, as a result of which more than 10 million employees have not been paid for their labour, had decreased since July by 0,7%.

In August the Ministry of Finance of the Russian Federation paid a total of 5,9 trillion roubles to reduce the debt of the Ministry of Defence for the payment of servicemen. By December 1 the indebtedness to them for wages and bonuses should be liquidated.

The Ministry of Finance of the Russian Federation has signed agreements with the executive of the subjects of the Russian Federation defining the size, terms and conditions of rendering financial help from the federal budget for the settlement of their wage debts to employees of the budget sphere as interest-free loans. The liquidation of their indebtedness will be achieved on a 50-50 basis, though in some regions the size of the budget loan will exceed 50 percent. At the same time eight federation subjects which have a stable financial base, have undertaken independently to redeem their debt to employees of the budget sphere by January 1, 1998, without any support from the federal budget. The other regions need loan allocations from the federal budget of 11.3 trillion roubles.

The administration of the subjects of the Russian Federation should in the near future find the means to cover their share of the indebtedness before employees of the budget sphere. To do this it is very important precisely to define the limits of the regional responsibilities. For example, in the Arkhangelsk area, of the total sum of indebtedness amounting to 250 billion roubles, the debt of the regional administration amounts to 36 billion. The other 214 billion roubles is the debt of municipal bodies. And if the administration of some areas actively search for ways of replenishing their budgets, others wait for help from the federal and regional authorities. So, in Vladimir oblast at a regional level the sum of budget arrears has been reduced, but at the level of raions and cities it is growing. In the first half of September it is necessary to finalise agreements with the heads of municipal bodies concerning the amount of financial help to be granted to them by regional administrations in the form of interest-free loans, and the amount to be found locally, and also the development of timetables for paying off their debts.

In cities and raions, in order to acquire additional financial assets, it is necessary to increase the sale of local consumer goods, to use municipal property better, more actively to carry out the privatisation of property, to expand the sphere of paid services, to introduce cash-payment machines and to toughen the granting of tax and leasing privileges. The receipt of “live” money in the budget is promoted by the expansion of the network of wholesale markets, both grocery and commodity. It is necessary to create conditions for the development of small business. Small business, for example, provides 40% of all receipts in the budget of Kalmykia. At the same time it is desirable that the local administration should take more interest in the management of the process of tax collection. Control of the activity of the administration is also very significant. Checks reveal numerous infringements in the distribution of money arriving in cities and oblasts to pay off debts, particularly to the teachers (Krasnoyarsk, Arkhangelsk regions).

Budgets of all levels have a strong interest in increasing tax receipts through the stabilisation and growth of industrial and agricultural production. But the commodity producers are already held down by existing debts. So, while the tax indebtedness of enterprises in the Republic of Marii El is almost 370 billion roubles, fines already amount to 680 billion. Many infringers would agree to pay arrears if they were promised an instalment plan for the payment of

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their fines. This problem should be decided before the adoption of the 1998 budget, for example to begin the new year ‘with a clean sheet’ and to transform enterprise debts into various kinds of financial instruments.

For regional and local administrations successfully to repay their indebtedness and to pay current salaries to budget sphere employees, it is necessary not only to take steps to increase the income side of the budgets, but also to reduce non-monetary forms of payment. So, an order of the head of government of the Republic of Kareliya obliging the heads of local administrations to develop measures to raise more money for the local budgets prescribes that the proportion of taxes paid by enterprises in non-monetary form should be limited to 20%. In Vladimir the city administration has decided to encourage those who pay their taxes purely in money by offering them something like a 20 percent discount. In the near future a city commission for the reduction of the debts of enterprises and organisations will be created. The city administration will probably use the services of a firm which will sell products offered to the budget instead of “live” money.

An important article for replenishing regional budgets is the excise tax on alcohol production, half of which remains in the regional budget. In Nizhnyi Novgorod oblast they expect to receive about 600 billion roubles by the end of the year from the sale of locally produced spirits, which will allow the regional authorities to reduce their indebtedness for pay to budget sphere workers by 270 billion roubles and debts for child benefits by about 250 billion roubles. To do this, the governor has moved to strengthen control of the production of alcoholic drinks at local enterprises, to replace protection, by October 1 to introduce a local excise mark to create a trade police, to organise state wholesale warehouses and to liquidate all underground distilleries. As the sale of imported products is unprofitable for the region, control of the wholesale importation of alcoholic drinks will be strengthened. Such experience has been acquired in particular in the Magadan region, where the administration has created a department to preserve the state alcohol monopoly. A major step in this direction has been the introduction of a quota on the delivery of vodka which is allocated on a competitive basis. This takes into account guarantees of the quality of the vodka supplied and the absence of debts to the budget owed by the wholesaler.

Other measures to attract additional money for the budget are undertaken. For example, through the sale of property shares belonging to the regional administration (Leningrad oblast) or the issue of the regional loans (Perm oblast).

At the same time, in conditions of shortage of “live” money the practice of paying employees of budget organisations in the goods and services of enterprises in arrears to the budget is becoming more widespread. Apart from reducing the wage debt, this also helps to repay the tax debts of enterprises to the budget. The governor of Kursk oblast has adopted a decision to extend this practice. The problem is to ensure that the range of the goods is acceptable to the budget sphere employees and the prices are reasonable.

On the eve of September 1 the situation was tense in many pedagogical collectives in the country, where the payment of wages had been delayed for many months. For example, the teachers of Krasnoufimsk, Verkhnei Tury and Kirovgrad in Ekaterinburg oblast refused to begin the new academic year as did the collectives of 70 schools in the Arkhangelsk region. The teachers of Murmansk threatened to strike from September 8 if by then they did not receive a real schedule for the payment of the wage debt. In many cases only assurances of the representatives of regional and local government bodies that intensive debt reduction will begin in September made it possible to prevent the failure of the start of the academic year.

Conclusions

1. In the first half of September it is necessary to finish the development of schedules of debt reduction for the wages of budget sphere employees at the level of oblasts, krais and cities.

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2. It is necessary to undertake the re-structuring of the indebtedness of enterprises to the budget more widely.

3. While there is no possibility of completely rejecting non-monetary forms of payment to the budget, it is necessary to limit their size to 20-30%.

4. In connection with the beginning of the academic year the reduction of the debt to educational workers demands special attention.

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