Prime Minister Vladimir Putin met with Chairman of the Federation of Independent Trade Unions Mikhail Shmakov and heads of primary trade union organisations


"To help people who have lost or are about to lose their jobs, we are launching regional employment programmes that are funded by the federal budget by 95%. We believe that regional and local municipal budgets should also contribute to this effort. However, realising that the incomes of the regions will also decline, we have decided to finance these undertakings almost fully. A total of 43.7 billion roubles have been allocated from the federal budget for this purpose."

Mr Putin's introductory speech:

Good afternoon,

I regularly meet with the Chairman of the Federation of Independent Trade Unions. He attends almost every Government meeting. However, under the circumstances, I have decided to meet with the leaders of primary trade union organisations as well.

Mr Shmakov agreed with me. He considered this meeting with his colleagues very useful. We in the Government also thought this would be the right format, considering the difficult conditions in which we have to live today - both in the economy and the labour market. In fact, working conditions and preservation of jobs are the main concern of trade unions, and we are going to discuss this in detail today.

This discussion is linked with the measures that the Government has planned and is already taking, and cannot be conducted without trade unions. As I've already said, the labour market is the most urgent problem.

The Government is constantly monitoring the situation together with trade unions and employers, paying special attention to single-industry cities and strategic companies.

I'm sure we'll come back to this subject. As you know, we have included many companies into the list of strategic enterprises although some of them are not of primary importance for the national economy. We have done this out of social considerations so as to give them the required special support.

In mid-March, the number of registered unemployed was 2.6%. This is about two million of economically active people. Another 1,140,000 have a shorter working day or are on forced leave. About 560,000 employees are slated for layoffs.

To help people who have lost or are about to lose their jobs, we are launching regional employment programmes that are funded by the federal budget by 95%. We believe that regional and local municipal budgets should also contribute to this effort. However, realising that the incomes of the regions will also decline, we have decided to finance these undertakings almost fully. A total of 43.7 billion roubles have been allocated from the federal budget for this purpose.

I'd like to repeat that our plans do not always reach the heads of the regions, not to mention their subordinates. Practice shows that this should be discussed. All of us should be aware of our opportunities, intentions and plans, and improve the mechanisms of helping people directly.

We are planning to create about a million temporary jobs. Over 220,000 people will be able to retrain or get help in opening their own businesses.

People in different places, including some employment centres, have made it obvious to me that it is not enough to give money to open a business. Companies that lay off employers should help them set up small businesses near big organisations, or municipal authorities should meet them halfway and timely lease space to them, help them connect to utilities, and so on and so forth. We will talk about this, too.

I think that trade unions could take a very active part in implementing employment programmes, above all, to inform people about the opportunities offered to them through their primary organisations.

They should immediately respond to any violations of labour legislation, such as failure to honour commitments to employees during lay-offs, deliberate delays in the payment of salaries, leave allowances and other benefits. Regrettably, off-the-books salaries have again become reality.

Off-the-books wages not only rob the budget. I'd like to draw your attention to the fact that they violate labour and future pension rights of employees. They don't always pay attention to details, and are happy to receive off-the-books wages, which are even a bit bigger. Usually, nobody thinks of the future, and that is wrong. I think that trade unions should prompt people on such issues.

Trade unions should occupy an absolutely understandable and transparent position on this score. I'd like you to pay permanent attention to this subject, and to cooperate with labour inspections and the Prosecutor's Office. I don't know what opinion you'll express in today's discussion but I think that labour inspections have stepped up their activities.

The hotline is open, and has already received more than 50,000 calls. More administrative and other reprimands have been imposed on employers. We'll talk about this in detail later. In any event, you should cooperate with labour inspections as closely as with the Prosecutor's Office. We'll return to the Prosecutor's Office the right to defend labour rights of citizens in court.

I'd like to add that on a par with increasing unemployment benefit to 4,900 roubles, we have changed the order of declaring people unemployed. Now those who have quit their jobs of their own free will are also entitled to unemployment benefits. This new provision should also strengthen legal guarantees of citizens.

Social partnership is acquiring special importance today. There is a strong need for trade unions' constructive position on the whole range of these issues. Employers should also demonstrate high responsibility. I think that employers and trade unions should cooperate to guarantee the stability of companies during the crisis.

Needless to say, trade unions have the right to question professional skills and competence of company managers. We can also speak about this in more detail. Economically justified programmes of restructuring production, enhancing labour productivity, and eliminating ineffective jobs are a different matter.

I believe that eventually the workforce and trade unions are interested in making production more effective. I'd like to emphasise at this point that regardless of the company's motives for laying people off, the future of every employee should never be forgotten. It is inadmissible to just kick a person out, even justifying this by the need to restructure production, make it more effective, etc. Yes, maybe you have to do this but think about the future of those who you have dismissed. After all, this is not so difficult and often not so expensive, but attention to people will always pay off.

I'd like to say a few words about the priorities of the new budget for this year. First of all, we have strongly oriented it to the implementation of all our previous social commitments. Needless to say, this is an anti-crisis budget.

According to plan, the average social pension should not be below the pensioners' subsistence level by the end of this year. All in all, real pensions will grow by almost 20% in 2009.

I said "real" because we cannot predict now the rate of inflation and our success in keeping it at bay but in general we should reach this approximate figure.

In the next few months, we should start forming the budget for 2010 and the planning period up to 2012 virtually from scratch. Regrettably, we are compelled to do this because of the crisis and a sharp reduction in the federal budget's revenues this year, and, as is perfectly clear, next year as well. This is inevitable. This is absolutely clear because the world economy recovery rates are very low. It is obvious that we will enter 2010 on the world crisis trend.

You and we should approach the nation's fundamental fiscal law in a very responsible manner. I want us to realise that this is our common task. We cannot increase expenses if there are no revenues. We'll fulfil all of the Government's previous commitments this and next year exclusively by using reserves accumulated in the previous years. Almost the entire budget deficit for 2009 will be funded from the reserves we have amassed earlier. We'll also take out loans on the domestic market. But we should restructure our revenues and expenditures for the next few years to receive a balanced and serious document that will meet the vital interests of our citizens.

It goes without saying we'll actively hold consultations in the Tripartite Commission. Mr Shmakov, his other colleagues, the Government, employees, and trade unions are taking a very active part in this work. I think that we can hear the first proposals today, at this meeting.

This is all I wanted to say in the beginning. Mr Shmakov, please take the floor. Mikhail Shmakov: Thank you. Present here are 12 heads of primary trade union cells. I would like to remind you that the 50 trade unions that form the Federation of Independent Trade Unions have 180,000 primary trade union cells. Thus, my colleagues here represent that section of trade union activists, the trade union workers, and some full-time and some part-time trade union officials. They work at enterprises with the work collectives and have hands-on knowledge of their needs.

During the course of our conversation today, I think we should touch on the anti-crisis programme that was recently discussed by the Government and has now been put up for broader public discussion, which in our opinion is the right thing to do.

The trade union part of the Tripartite Commission will meet on Friday to discuss that document. The trade unions are preparing their proposals for additions and amendments to its provisions.

We understand the seven priorities of the anti-crisis programme, but will propose some additions and corrections. Needless to say, we believe it is important that the obligations of the state to the population are at the top of the programme.

However, when we say that internal demand will drive reconstruction after the crisis and indeed during the crisis, in order to kick-start these mechanisms, an important element has been omitted - wages. Of course, it refers to economic indicators, but the word "wages" or, shall we say, calculations, including the minimum official minimum wage increase to 4030 roubles, in accordance with the law passed last year, is not there. I think based on the results of 2008, that figure will top 5000. It is necessary that the sum be included in the 2010 budget, and it will probably be 1000 roubles more than its current level.

On the one hand, this increased wage will be extra load on all employers, including government employers, and the state budget. On the other hand, it increases internal demand; in fact, the nominal wage is growing even in the midst of the crisis. We would like to prevent a drop in real wages, but based on the latest data, we have not been able to do that. Of course, the crisis affects the Russian Federation as well.

Another tentative remark, because as I said, we will present our extended remarks on the anti-crisis programme: when we speak about the long-term priorities of the country's modernization, we would like the programme to identify the growth points or at least areas by sector, if possible, because if we say that only an innovative economy will enable us to remain competitive in the world, then these growth points should be identified now. Under these retraining programmes, people who have lost their jobs should be oriented towards certain occupations and workplaces for which there will be demand in the future so they will not have to be retrained more than once.

You have mentioned that in the framework of the Tripartite Commission - by the way, the Tripartite Commission is active not only at the federal level, but in all the regions. In all the regions, the trade union representatives are members of the anti-crisis headquarters or teams that have been created. The Tripartite Commission gives due consideration to the issues that need to be resolved in each particular region.

Today, our Federation is actively monitoring 5678 enterprises. These are enterprises in which problems have been revealed that must to be solved through the proven mechanism, the Tripartite Commission, the Zhukov Commission, and the Shuvalov Commission, if necessary. Real assistance to such enterprises and mono-cities, as you have quite rightly noted, is being rendered in order to safeguard jobs there. I must say that we are waging an ideological battle -- I am sure this information reaches you - with the employers because some of them want to use the crisis as a pretext for shedding jobs and thus clearing their enterprise's balance books, including the workforce aspect. We think that the commitment of the Government and the regional governments to preventing mass unemployment represents a more sound approach. Yes, it may be costlier for some owners, but nevertheless, if we want to preserve industrial potential as the basis of future growth, as well as the human potential, this is the manner in which we must proceed.

I would hate to trespass on the time of my colleagues who also would like to speak, so I will touch upon just one more point. Are the trade unions interested in higher labour productivity? Of course they are. We support higher productivity through modernization of the workplaces and the creation of decent labour conditions and work places. However, some interpret this in a simplistic way, proceeding from the notions of the middle and early 20th century - that is, labour should be more intensive. That potential has practically been exhausted. It is necessary to change technologies. All too often, instead of modernizing production and introducing new technologies that genuinely increase labour productivity, employers simply try to save on wages to make economic indicators look more impressive. This approach only leads them into a blind alley. I just wanted to warn against using the crisis as an excuse for such policies.

On the whole, however, I believe that at most enterprises that have trade union cells that are part of our Federation, the situation is relatively stable. However, more than a third of all enterprises are in crisis; my colleagues represent the enterprises where these crisis phenomena are evident but are to some extent being tackled, as well as the enterprises where they are not being tackled and where the situation is grave. One example is the Inductor Plant in Novo-Zybkovo, on which the city depends for survival. My colleagues will tell you about it. I don't want to speak for them.

Vladimir Putin: I would just like to react to what you have said. First, in terms of the social responsibility of enterprise owners: as you know, I have raised this issue many times at various levels, including with representatives from the business community. I think that in the present-day conditions, this is an indispensable part of business participation in the normal production process. It is inadmissible to use the current crisis phenomena to solve immediate problems. Indeed, competent managers and committed owners are aware of this. They understand that if they throw people outside the factory gates now, when economic recovery begins in the future - and it will happen sooner or later - good workers will be impossible to find. This is why the number one task today is to maintain the work collectives and, where possible, occupy people by retraining with a view to upgrading the technological level of their enterprise. All my meetings with people who have a responsible attitude to their work have demonstrated to me that they are aware of this. Everyone should be encouraged to behave in a socially responsible manner. That is one thing. And now another thing.

You have spoken about wages and the need to safeguard jobs. There is an element of contradiction there and we shall discuss it a little later. Some companies had been planning lay-offs. Large enterprises were planning to lay off thousands. These lay-offs were planned as part of restructuring and have nothing to do with the crisis. However, in the present conditions, they decided not to lay off labour. The company will have to choose between laying off as many workers as they had planned or laying off a lot fewer workers, with the risk of having to contain the growth of wages within the company.

Mikhail Shmakov: But this is precisely the aim of the employment programmes, which are financed to the tune of 43 billion roubles. One should strike a very delicate balance there.

Vladimir Putin: Yes, yes. But I haven't finished. The whole point of our measures to support the labour market, including the allocation of 43.7 billion roubles, is to support specific enterprises that are taking measures to preserve jobs or retrain their workforce for the future. Number one. Number two is the most important thing. Irrespective of anything we should do, our utmost aim must be to maintain people's living standards. We must work together to find the instruments and methods of solving that difficult task in the current conditions.


Closing Remarks by Prime Minister Vladimir Putin:

Wrapping up our meeting, I would first of all like to thank you for your comments. I have written some of them down and will try to promptly act on them.

Mr. Melnikov (Union Head, Inductor Factory, Bryansk Region), I would suggest that you meet with our colleague and discuss the issue that you have raised. He will arrange a meeting for you with Regional Development Minister Basargin. You can also discuss the Chernobyl issue with Mr. Basargin. I will notify him that you will be speaking to him.

Overall, I would like to say that during the recent years we have done a lot to change the structure of our economy, and, to a large degree, even the structure of our society. We have gained confidence in many aspects of our activity and development. Indeed, we are facing difficult issues today, and I would like to stress that these issues are no less difficult than in other countries. We can get through this difficult period with considerably less strain than other countries.

I would like to draw your attention to what I have already said. Some of the speakers today mentioned salary delays, particularly in the military sector. Regardless of anything, this is still very strange, as funds are being transferred and salaries must be paid on time. Speaking of the social sphere and public expenditures, we are increasing our spending, while in other countries they are officially cutting or freezing their public expenditures. During the crisis, this is somewhat illogical, even though it does slightly increase the domestic demand, but again, only slightly. Nevertheless, we do believe that under the circumstances, the increased spending is justified, provided the Government has sufficient resources, which we do.

Mr. Kholzakov (Union Head at Uralkaliy, Sverdlovslk Region) mentioned international competition. What we all need - the Government, the regional and municipal authorities, the Unions - is a sense of responsibility to the people and the country. We can't afford and should not allow anyone to take advantage of our difficulties and further "squeeze" us. I am not talking about politics here - I mean "squeezing" us out of international markets. If we behave irresponsibly, our competitors will certainly take advantage of it. I can guarantee you that.

Under various pretexts, they are pushing us out of the construction materials market, and will also force us out of metallurgy and mining. There is competition in every sphere.

Therefore, I believe that the unions should carefully monitor the developments in the social sphere and ensure that nobody is taking advantage of the situation, whether it is the bureaucrats, the owners, or the management. At the same time, we should all remain realistic and start thinking about the future. If we work as a team, without rocking the boat, but make it stronger now and in the future, we will be able to accomplish our goals.

I would like to thank you for your comments and suggestions. I am convinced that we will maintain a productive business-like relationship with the union leadership. Our dialogue has always been very lively, intense, and full of discussions, and that is exactly how we reach balanced decisions.

The primary union organizations will continue influencing the development and realization of our decisions by staying in contact with leadership of the Federation of Trade Unions. Thank you very much.

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