Moscow on $1 a day

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The World

MOSCOW — Twice a week, Nikolai makes the trek along Moscow’s most congested roadway to a small one-story building packed with dozens of people in thick winter coats.

He sits and waits — for at least two hours, but often for much longer — to see if the unemployment office has found him a job. He always arrives at the office with hope, but after three long months and endless applications, his hope is starting to wear thin.

Nikolai is one of millions of Russians who have lost their jobs in a mass wave of unemployment, as the country’s economic boom has ground to a screeching halt.

“About half of my friends have lost their jobs,” says Nikolai, 25, who asked that his last name not be used. Nikolai lost his in October, when the federal forestry agency he worked for laid off half its work force.

According to the government, 6.4 million Russians are unemployed today, or about 8.5 percent of the working age population. At least another million have had their work weeks cut, or have been forced into unpaid leave. An untold number more have had their wages cut or withheld, a widespread practice in Russia when times turn tough.

All this has shocked average Russians and the system alike. For most Russians, quality of life  steadily improved under the presidency of Vladimir Putin, now prime minister, leading to sky-high approval ratings.

In the wake of the Soviet collapse, Russia hardly experienced any unemployment, though millions worked without pay as the economy adjusted to the shock of capitalism. It rose sharply after the August 1998 financial crisis, reaching 13 percent, and its steady decline since then contributed greatly to Putin’s popularity.

Now many find themselves thrust back into a situation — with no jobs or with decreased wages, able to buy fewer things, travel to fewer places — that they thought was gone forever.

Tamara sits in the same unemployment office in the northern Moscow neighborhood of Marina Roshcha. Her face is weary from the three-hour wait.

“I haven’t worked in 10 years, but now the situation in my family has changed,” says Tamara, who also asked that her last name not be used. “I’m hoping to find a job as a secretary. I won’t take less than 15,000 ($450) rubles a month, but I’m doubtful I’ll get that.”

That may sound a measly amount in a city that consistently ranks among the world’s most expensive. But it is much more than what Tamara can hope to make once she registers as unemployed.

Depending on previous wages, unemployment benefits in Russia range from a minimum of 850 rubles ($25) a month to a maximum of 4900 rubles ($147) a month, plus 850 rubles ($25) for monthly transport.

“If these people get the minimal benefit, of course they can’t live,” acknowledges Oksana Perelygina, deputy head of the office.

And once they get new jobs, they have to be prepared to accept lower wages, something many are unwilling to do.

Igor Davydov, 42, has been getting 3,000 rubles ($90) a month since being fired from his job as a driver for a furniture shop. “You can’t even live on that in one week in Moscow,” he says.

He’s been offered jobs, but the pay is too low — about half of the 40,000 rubles he was getting before. In the meantime, he’s taken his car to join the ranks of Moscow’s legions of gypsy cabs. “I can’t just sit around,” he says.

Analysts expect the unemployment rate to rise even higher. Following a calm March, when the ruble and stocks rose on the back of slightly higher oil prices, officials have begun warning that another downturn is in store.

“A certain growth on the world’s stock markets and in oil prices should not leave us relaxed," Finance Minister Alexei Kudrin warned in a government meeting late last month. “This is a temporary improvement.”

The government says the economy will contract by 2.2 percent this year. International organizations are more sanguine, with the World Bank expecting the Russian economy to shrink by 4.5 percent, and the OECD projecting a 5.6 percent decline.

The government has worked hard to keep social unrest at bay, urging regional governments and oligarchs alike that they must do all they can to keep employees on the payroll.

“We haven’t seen social unrest largely because the government has put lots of pressure on Russia’s major companies not to fire hundreds of thousands of people. Rather than cutting down on unemployment, they’ve decreased working hours. That gives a different psychological effect,” said Vladimir Tikhomirov, chief economist at UralSib, a Russian investment bank. The longer the global recession continues, however, the more those companies feel the strain.

“We’ve moved to hidden unemployment. But wages are falling, incomes are falling, people aren’t happy,” Tikhomirov says.

And he, like other analysts, warns that the situation will worsen sharply if Russia’s economy — highly dependent on foreign demand for its natural resources — doesn’t pick up soon.

“Government finances are already stressed. If unemployment increases much more, the government won’t be able to provide benefits to a large number of people, and then social-political instability can arrive,” he says.

The World Bank warns unemployment will rise to 12 percent by the end of the year, accompanied by a poverty level of 15.5 percent.

The worst is to come far outside Moscow, warns Evgeny Gontmakher, a leading economist at the Institute for Contemporary Development, a Kremlin-supported think tank.

“In the regions unemployment will probably be a lot higher — 30 or 40 or even 50 percent. That will be tough.”

For more on the global economic crisis:Click here for the full report

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