20 december 2008

Prime Minister Vladimir Putin met with Igor Shuvalov and Alexander Zhukov to discuss the work of the Governmental Commission on Sustainable Development of the Russian Economy

Vladimir Putin

Meeting with Igor Shuvalov and Alexander Zhukov to discuss the work of the Governmental Commission on Sustainable Development of the Russian Economy

"We have drafted an entire package of measures to support the real economy, and we will continue to streamline this package, but I want to repeat that we should have a clear idea of the influence of global and Russian economic developments on the nation's social sphere. And we must chart effective measures for reacting quickly to such social developments to support Russian citizens who require help."

Transcript of the beginning of the meeting:

VLADIMIR PUTIN: Good evening, colleagues,

We have charted a large short-term and mid-term package of social measures in the spheres of health care, education, and housing for 2009 and beyond. We proceed from the premise that all stated priorities and plans, including measures to enhance the stability of the pension system, namely, raising pension levels, will be implemented.

At the same time, we have to tackle these tasks in the conditions of the global financial and economic crisis that is also affecting our economy. This is why we have agreed to pool the efforts of the Government's economic and social blocks in order to obtain an objective assessment of economic developments and to create a mechanism for effectively and promptly reacting to such developments.

We have drafted an entire package of measures to support the real economy, and we will continue to streamline this package, but I want to repeat once again that we have a clear idea of the influence of global and Russian economic developments on the nation's social sphere. Furthermore, we must chart effective measures for reacting quickly to such developments in the social sphere in order to support those Russian citizens who require help.

Let's discuss the achievements of the last seven days and see what can and must be accomplished in the near future.

IGOR SHUVALOV: Mr Putin, the Governmental Commission on Sustainable Development of the Russian Economy held its first meeting on Wednesday, December 17. We have agreed on the relevant procedure for the Commission's work. The Commission will meet every Tuesday morning.

We have agreed that at its December 23 meeting, the Commission will first examine social monitoring results and specific measures that can be implemented by us together with the Russian Federation's constituent entities in order to facilitate a stable situation, and understand how the aid we have earmarked for specific businesses matches our aid to their workers.

Mr Zhukov and I have agreed to monitor social issues each Monday. We will discuss these issues in great detail at the Commission's meeting on Tuesday. After discussing social issues, we will focus on specific selective aid to businesses and will tackle economic issues.

On Wednesday, we also defined various criteria for working with specific businesses. Acting on your orders, we proposed specific criteria for the Economic Development and Finance Ministries. The Commission's members agreed that both criteria were correct. We must use these criteria for drawing up the lists of businesses.

You told the Government Presidium meeting that our focus must be on basic enterprises having sufficient proceeds. Enterprises that are often major employers and backbone of the towns. The Economic Development Ministry is preparing lists in line with these criteria, and will submit them to the Government on Monday.

At the same time, it was decided to examine a list of businesses that are probably not top important for the Russian economy, but that nonetheless have great significance for specific regions. This list, as well as a list of companies planning to lay off their workers, will also be submitted.

Right now, employers are informing the employment service about projected lay-offs, or about companies whose workers have not been laid off but are receiving unpaid leaves. These are unofficial statistics. We have agreed to monitor the situation in order to find out what companies have not laid off their workers, but nonetheless do not provide wages or social benefits. We consider this situation to be rather dangerous. We will also work on a list of these companies based on information that we are receiving.

We have agreed that banks with state capital, namely, Sberbank, Vneshtorgbank, Gazprombank and Vnesheconombank, will provide us with socioeconomic information through their client databases and credit committees because they know all about the situation of workers at specific companies. We will also receive such information.

The Commission is to prepare the lists on Tuesday, and we will inform you that same day. Commission members believe that such lists are not final. Depending on the situation, these lists will either be shortened or lengthened.

We are also acting on your orders that this list must include at least 1,500 companies nationwide, since similar commissions will work in the Russian Federation's constituent entities. We will maintain contacts with regional commissions. As you instructed, at least 1,500 companies will be included in the list.

On Tuesday, we will also discuss various scenarios. We understand that the Economic Development Ministry has submitted the basic economic-development scenario to the Government. At the same time, we must prepare proposals and must be ready to implement various measures in case of either more optimistic or more pessimistic economic-development scenarios.

On Tuesday, experts will report various scenarios for the 2009-2010 period. We are proceeding from the premise that the Ministry for Economic Development has submitted the basic scenario for the national economic advance. But at the same time, we should be prepared for different actions if the economy develops faster or slower, and draft proposals to this effect.

We have agreed to examine the investment programme of the transportation monopoly Russian Railways that same day. Mr Zhukov chairs the Board of Directors of this natural monopoly. As you know, the company will receive less substantial profits due to reduced railway traffic, but the investment programme must be implemented. We will discuss specific measures for supporting Russian Railways so that all investment projects can be implemented in full. If not, we will agree on well-justified reductions for the 2009 period. We will also cooperate with banks in order to finance specific projects.

ALEXANDER ZHUKOV: Mr Putin, acting on your orders, we have started monitoring the labour-market situation every week. Every Monday, we examine the monitoring results before the Commission's meetings. The discussion involves virtually all our ministries and representatives of those regions where, in our opinion, the situation is the most alarming.

Today, I received monitoring results from the past week. Right now, we can monitor the situation in nearly 9,000 companies and predict the future situation. The number of companies we are monitoring increases every week.

From December 10 to16, the number of officially registered jobless people has increased by 5.1%, or about 70,000 people. As of December 16, we had 1,395,000 officially registered unemployed individuals, a 1% increase from the previous week.

VLADIMIR PUTIN: Will new unemployment benefits be paid starting January 1?

ALEXANDER ZHUKOV: Yes, the new increased 4,900 ruble ($177) unemployment benefits will be applied.

VLADIMIR PUTIN: Who can expect to receive such benefits? Does the list include those laid off after January 1 or those laid off at this stage?

ALEXANDER ZHUKOV: Those contacting the employment service will receive them.

VLADIMIR PUTIN: After January 1? And what about those who have already been laid off?

ALEXANDER ZHUKOV: Those who have contacted the employment service, have passed all the required procedures, and have been officially registered will receive this sum.

VLADIMIR PUTIN: Even though this provision will take effect starting January 1?


VLADIMIR PUTIN: This has to be checked.


Not only are we monitoring indivivuals who have virtually lost their jobs and been officially registered, we are also keeping an eye on corporate intentions to lay off workers in the next two months. This considerably exceeds the number of laid off workers and has reached 243,000 people since early October 2008. In all, 45,000 people have been laid off since early October; of this number, 18,000 received new jobs.

Our employment agencies are working rather effectively. Basically, they have to provide more information about current vacancies.

Speaking of various sectors, the projected layoffs will affect engineering and metallurgical companies, the chemical and construction industries, and freight traffic. These sectors account for most unemployment and projected layoffs.

As of December 17, the total number of workers who are doing nothing, working part-time, or who have been forced to take unpaid leaves has increased by 207,000 since the previous week. Such information is also rather important, since these people have not been laid off but are either idle or are working part-time. This trend is also quite alarming.

Our social monitoring also focuses on backbone enterprises in one-company towns. As of December 16, 236 major employers have announced layoffs, due to liquidation or job cuts. As Mr Shuvalov mentioned, they announced a decision to lay off 25,000 workers. We will support these crucial enterprises first and foremost because such one-company towns offer no other jobs.

These are the main social monitoring statistics. In my opinion, we must focus on the Vologda, Chelyabinsk, Sverdlovsk, Nizhny Novgorod, and Yaroslavl regions, as they have the most complicated labour-market situation. As you know, metallurgical, engineering, and other companies are located there, notably, in the Yaroslavl and Lipetsk Regions.

Consequently, it is our task to chart action plans in the employment sphere together with these regions. The Chelyabinsk Region is the first such territory to have drafted this plan together with us.

Finally, the Federation Council is currently examining amendments to the 2009 federal budget and labour-legislation amendments that will enable us to implement additional measures for boosting employment. This includes several aspects. We stipulate ahead-of-schedule vocational-training programmes for corporate workers threatened by layoffs. This will require another 15 billion roubles ($541.5 million).

Naturally, we will organise public-works projects for unemployed individuals, idle workers, and those taking unpaid leave, so that they can also earn some money. This makes up for another 18 billion rubles ($650 million).

In addition to previous small-business incentives, another 6 billion roubles ($216.6 million) will be allocated to those wishing to open their businesses.

We must help workers taking turns working in other regions and finance their travel and housing-purchase expenses. In all, these additional projects will require 44 billion rubles ($1.6 billion). We believe this will be of great help to Russian regions.

VLADIMIR PUTIN: Good. I want to draw your attention to several circumstances.

First. Employment services must thoroughly analyse employers' layoff plans, so that they don't lay off more workers than is necessary. I am aware of this problem, and I want you to focus on it.

Second. We must discuss additional measures to help companies. We have failed to fulfill all our commitments while reducing the burden on specific companies during the transfer of social-sector assets to municipal entities and the state as a whole. Some of our major companies still control non-core assets that could prove dangerous to their business operations at this time of crisis.

Third. You and I have already mentioned the launching of public-works projects. We must see what additional measures can be implemented in order to help regions and municipal entities to launch projects transcending the public-works concept. This implies public building renovation and the health-care and education spheres, which are often the prerogative of municipal, rather than federal, agencies. We must think about additional measures for supporting their work in these areas.

Fourth. We have discussed the need to quickly and effectively redistribute the assets of our major infrastructure companies, namely, the state-owned Russian Railways, energy giant Gazprom, and the road-building sector. Those in charge of these sectors have assured me that they have the required assets that can be quickly and effectively redistributed. We must create this quick-redistribution system.

And, finally, our partners must realise that we cannot solve all business problems at taxpayers' expense. There was a time when they earned a lot, and today, the state is spending its reserve funds. For instance, we cannot buy social housing in line with old prices. We cannot take money out of taxpayers' pockets and facilitate the previously high construction-company incomes.

We must minimise the losses of such companies, preserve their viability, and create favourable conditions for their future development, but we must not facilitate their profits. Everyone involved in the process must realise this. Everyone must address the current situation in a responsible manner.

Now, let's discuss specific aspects of the Commission's work that I mentioned at the beginning.