Ever More Russian Companies Behind in Paying Their Workers, Harming Employees and Other Employers

Paul Goble

    Staunton, Apr. 7 – A problem that plagued the Russian economy in the 1990s is now returning, with ever more Russian companies behind in paying their workers and thus using the money they retain to avoid having to borrow money at today’s high interest rates, a pattern that is bankrupting competitors who do pay workers on time and thus leading to spread of wage arrears.

    According to Rosstat, the Russian government’s statistical arm, the number of complaints by workers that their employers had not paid them on time rose to 18,400 in 2024, 37.4 percent more than a year earlier. But independent experts say that this rise is not only but the tip of the iceberg but accelerating (rbc.ru/economics/31/03/2025/67e55fbe9a794700fac68ed1)`

    Official figures suggest that approximately 240,000 workers are now owed more than500 million rubles (five million US dollars), a relatively small amount for the economy overall but a tragedy for those not getting paid, a threat of bankruptcy to competitors who do pay, and a worrisome figure given that overcoming wage arrears is something the Putin regime earlier pledged to do. 

    When workers aren’t paid, the companies involved use the money for other things  rather than borrowing to do so; and that means that wage arrears in a few companies affect others who do pay on time, harming their ability to operate and thus making the failure of some to pay wages in a timely fashion a bigger problem than it might seem.

    Labor union officials and independent Russian experts say that the current situation is not yet at the crisis level it was 30 years ago but that it is rapidly increasing to that level in many sectors of the Russian economy and will likely continue to grow as long as the cost to businesses of borrowing money remain high.