Wage Arrears Now Hitting People in More than Half of All Russia’s Federal Subjects, Workers Complain and Economists Confirm

Paul Goble

            Staunton, June 26 – A key indicator of how the Russian economy is actually faring under sanctions is that Russian workers are taking to social media to report that firms, both private and government-owned, are not paying their employees on time in more than half of the Russian Federation’s oblasts, krays and republics. Even worse is ahead, economists warn.

            The Russian government concedes that wage arrears now amount to 889 million rubles (12.5 million US dollars), but workers, analysts and economists say that the number is at least several times that and is hurting workers across the board in some sectors although not affecting many in others (sovross.ru/articles/2291/57810).

            The reason such arrears are a bellwether of problems is that they arise not so much as a result of the problems of a specific firm or sector but rather as part of a more general Russian government-orchestrated program to keep reported unemployment low by having companies continue to list workers as employed when they are in fact without work.

            But that tactic will only work for so long. One the one hand, workers are now filling the courts with suits against companies that haven’t paid them what they have earned, creating a situation in which the problem is coming to a head and the government is being implicated in what is going on.

            And on the other, many firms can no longer use this tactic and so are laying off workers. The number of jobs in Russia is now projected to fall by two million before the end of 2022, and unemployment is likely to grow from four percent to eight percent or even higher. Those are overall figures, and in some places, the absence of jobs is at depression-like levels.