29 april 2010

Prime Minister Vladimir Putin meets with Valery Shantsev, governor of the Nizhny Novgorod Region

Prime Minster Vladimir Putin noted that industrial growth in the Nizhny Novgorod Region is almost three times higher than the national average. Moreover, the employment situation is improving, with the number of job openings exceeding the number of officially registered unemployed by 7,000. At the same time, as the prime minister observed, “wage arrears have increased slightly.”

Transcript of the beginning of the meeting:

Vladimir Putin: Mr Shantsev, the Nizhny Novgorod Region has gotten off to a good start this year. I can see that industrial growth is almost three times higher than the national average. That's a good indicator. The fiscal situation is also good - you had a surplus in the first quarter, didn't you?

Valery Shantev: We also had a 500 million-rouble surplus in April.

Vladimir Putin: Yes, that is also a good indicator. And you are implementing a number of federally funded projects, such as road construction and reconstruction in the Samara gateway.

Nevertheless, unpaid wages in the region have risen just a little. Overall I see that the unemployment has decreased, but wage arrears have increased slightly. What's going on?

Valery Shantsev: The labour market was under great stress last year. We laid off 38,500 people, though we immediately found jobs for 20,000 of them, including 7,500 workers who got jobs at their old production facilities after being retrained.

Vladimir Putin: So, our programme has worked, hasn't it?

Valery Shantsev: Yes, our joint federal and regional programme - most of the funding was from the federal government - worked well for that period. And in the fourth quarter we felt some relief.

These are the first results, but we must still make a serious effort to consolidate these results. The number of the people officially registered as unemployed has decreased by 3,500 people.

And what makes me particularly happy - not only me but also all those who work with me - is that we have more job openings now than we had before the crisis. We have 36,000 registered unemployed and 43,000 job openings. And so the stress ratio in the job market, the ratio of registered unemployed over job openings, has fallen below one.

Vladimir Putin: The labour market has been restructured slightly and recovery has been very rapid.

Valery Shantsev:
And, of course, our programmes have worked. Since 2006 we have been drafting and implementing programmes to develop productive forces in every district. We know that development primarily means economic development.

These programmes led to more jobs, increased industrial output and additional allocations. All in all, in three years we implemented about 2,000 programmes and invested 143 billion roubles, which produced 81 billion roubles worth of additional industrial output and increased tax revenues by 11.5 billion roubles. These tax revenues helped us soften the blow, because the system was already up and running.

Total wage arrears are around 170 million roubles, or about 0.7% of our 21 billion-rouble monthly labour compensation fund. But this figure represents real people.

Vladimir Putin: Unpaid wages have increased by several percent in the past month.

Valery Shantsev: The situation has stabilised, because the same few companies are the cause. Bankrupt companies account for 77% of unpaid wages. Some of them have been under external management for two or three years. Some went bankrupt at the end of the past year. And these wages are owed to people who were dismissed from these companies. They have gotten new jobs, but they are still owed money. Therefore, we are working with bankrupt companies on a case-to-case basis. Some of them should be revitalised, some not, because they have no production capacities or technology.

Vladimir Putin: Perhaps they should not be revitalised, but their former employees must be paid.

Valery Shantsev: Of course. We will soon launch a legislative initiative, and I think the government should also discuss this issue.

You see, to reimburse people for their unpaid wages, the property owned by these former companies needs to be sold. To sell this property they need to compile an inventory of it. During privatisation, when people just grabbed whatever they could get, many companies did not even register anything. They didn't even have any documentation. And now that the situation has been cleaned up, it is no longer possible to sell anything without a title certificate.

Vladimir Putin: Well, if there is no documentation, then these companies would belong to the state.

Valery Shantsev: By law they cannot spend money on anything until they pay off their payroll debts. They would have paid for surveying work in order to register, but they are spending any money they get on wages as soon as they receive it. For example, say they have paid 10% of the wages they owe. But if they had spent this 10% on registration and sale of property, they could have paid all of this debt at once.

Vladimir Putin: There are many problems, but they will have to be resolved all the same.

Valery Shantsev: I agree, wages are the most important issue.