Moscow’s On-Again, Off Again Approach to Subsidies Not Keeping People in Far North

Paul Goble

            Staunton, May 25 – Since the early 1930s, the Soviet and then the Russian government have provided subsidies to workers in the Far North to compensate for the vastly greater amounts of money they must spend on heating, food, and other services. Without these subsidies, few workers would have been able to remain there.

            But since 2007, when the Putin government changed the law, many people in the North have lost these subsidies, won their restoration in court, and then lost them again when regional governments didn’t pay or cut other funding or even demanded the return of funds already distributed (meduza.io/feature/2018/05/24/kak-gosudarstvo-otobralo-u-samyh-bednyh-grazhdan-severnye-nadbavki-a-potom-vernulo-a-potom-opyat-otobralo).

            Georgy Chentemirov, a Petrozavodsk govorit journalist, has prepared a special report on this for the Meduza news agency. He says that until 2007, the system worked as intended with those receiving low wages getting sufficient subsidies to heat their homes and buy enough food for their families.

            But then the law was changed, and everything fell apart. Many people lost their subsidies and went to court to try to get them restored; but the case proceeded slowly through the judicial system and a decision was not handed down by the Constitutional Court until December 7, 2017, which ruled in favor of the workers.

            Many suffered during this period, but the decision did not end that, Chentemirov says.  On the one hand, some regional governments in the North citing poverty simply refused to pay, while others paid the supplements but took money away from workers in other ways leaving the recipients worse off.

            And on the other, because the court decision affected only the most poorly paid people, it created a nightmare: With subsidies restored, many of them have been making more than teachers and other professionals, leading many of the latter to think about leaving.  On top of that, some regional officials have tried to force recipients to pay back money that the government says they should not have received.

            The regional governments, again citing poverty, appealed the Supreme Court’s decision, but the court in February of this year issued a declaration in which it said that no explanation was needed for its earlier decision, thus reaffirming it (consultant.ru/law/hotdocs/52779.html/). But it is far from clear that officials will live up to those decisions.

                And there is yet another problem: enterprises that governments have sought to put pressure on to get more money for the subsidies have cut basic wages in order to provide this assistance, leaving the workers less well-off and putting in a legal twilight zone out of which they cannot easily escape.

            As a result of this on-again, off-again, on-again, off-again approach to subsidies, many in the North have lost all confidence in the government. At least some of them will have no option but to move out of the region. And that means that the development of the North, something Putin has declared a national priority, is unlikely to happen anytime soon.