As I reported in a previous post, Putin’s announcement in April of quarantines and “work holidays” throughout Russia in response to Covid-19 included promises of these work holidays being paid, along with a package of measures to provide some economic support to Russian households. The economic support included faster and additional payments to families with young children as well as unemployment benefits.
On the May 7th edition of Democracy Now!, Amy Goodman and her team interviewed the New Yorker‘s Moscow correspondent, Joshua Yaffa, who stated that “there frankly haven’t been many [economic safety net] measures at all.” Before I dissect how that statement is misleading, I will acknowledge here that Yaffa’s report on Russia was overall not bad in comparison to a lot of the trash that passes for such in the US/UK media. He did not jump to sensationalist conclusions when asked about the deaths of 3 doctors recently in the country. Additionally, it has been well-established for several years that Russia’s attempted “reforms” of the health care system have often created more problems than they solved in the regions farther out, particularly in terms of access. The results of Russia’s modernization of its health facilities have been uneven. These conditions are, of course, as Yaffa explains, going to make things more difficult during a public health crisis like Covid-19.
But in terms of Yaffa’s claims about economic support, this obviously didn’t line up with my earlier posting, so I checked with a couple of sources in Krasnodar and Crimea as well as another source who is well-informed about Moscow to find out if Russians were still being paid during quarantine, if businesses were getting any assistance from the government to meet payroll, and if unemployment was easily available to those who may have lost their job during this crisis.
I received general confirmation that state workers are being paid their salaries during the quarantine. Private sector workers are in a more complicated situation. There is government assistance for private businesses if they apply, but it has been noted that the demand is heavy. Unemployment is available to those who have lost their jobs at a rate of 19,000 rubles per month in Moscow and 12,000 rubles per month outside of Moscow. In terms of the purchasing power parity breakdown, this comes out to around $758 per month.
There are a few things to keep in mind when looking at these figures. The first is that, according to Jon Hellevig at Awara Group, around 70% of Russians report having enough savings to get them through 1-2 months of a loss of income. Russians also tend to have less personal debt compared to Americans.
Second, the national monthly average salary for Russia in 2018 was $800 per month. That may not sound like much to the average American but the relative cost of living is much cheaper in Russia, with a $1600 monthly salary in Moscow being calculated as equivalent in purchasing power to $6,000 a month in Chicago.
One of my sources in Krasnodar who knows people who have small businesses provided me a description of what he government is offering in terms of asssistance:
They are supposed to get the assistance from the state – that is – get deferred tax payments, postponement of land tax, transport tax, tax on the company property, deferred lease of real estate and land plots in state ownership.
Businesses that are among the industries affected by coronavirus can receive preferential loans. Business owners are supposed to pay monthly salaries to their employees, at least minimum salaries which amount to 12134 (Ru) –equals 150 US dollars). Those business owners who haven’t reduced their personnel may apply to the bank for free loan in order to be able to pay money to the workers. Employees who lost their jobs may apply for the minimum wages as well.
I was further told that small business owners they know do not want to take on loans – even on preferential terms – in the midst of such uncertainty. Many private small business owners are, thus, finding that it makes more sense for them to lay off employees and let those people file for unemployment. The process for filing for unemployment benefits is described as frustrating due to the red tape of having to provide paperwork to prove one has lost their job due to the pandemic. Another obstacle is the fact that many people were employed in the gray economy – in other words, in businesses that aren’t officially registered – or are freelancers. These people are not eligible for unemployment.
My source in Crimea has told me that there are some variations by region, with some state employees there working part-time or being paid partial wages. Certain private sector employees who’ve been affected by the pandemic – such as tourism – are receiving compensation from the government.
Overall, I get the sense that – like in other countries – there is frustration in dealing with the government to access what assistance is available and a sense of insecurity from not knowing how long exactly this unusual situation will last.
In a revelation that surprised even me, the IMF has projected that Russia will now surpass Germany as the largest economy in Europe in terms of purchasing power parity and will be number 5 in the world this year. Something to keep in mind when you encounter the next predictable round – using the Covid-19 crisis – of “Russia is collapsing’ stories from the US/UK media.