Vladimir Putin's speech:

Good afternoon,

I am very pleased that my idea of meeting with several of the leaders of primary organisations has eventually evolved into such a representative meeting. I think this is only natural because such a meeting was needed.

Allow me to thank you for this opportunity to discuss problems that concern all of us, first of all, the status of the labour market and the prospects for resuming business activity and reducing unemployment.

As you know, during my domestic working trips I always try to meet industrial collectives and heads of trade unions. These meetings invariably produce specific decisions both at the government and the State Duma levels, which are then reflected in legislation. Take, for one, the improvement of pension legislation for some categories of miners who work under particularly arduous conditions.

"I hope a substantive and open discussion of the current situation will make it possible to elaborate effective solutions, find additional opportunities to support work collectives, and help those who have temporarily lost or are about to lose their jobs. I'm confident about this since we are well aware of what is taking place economically and socially", and you know these things better than anyone else. You have first-hand knowledge.

First allow me to say a few words about the economy. In the first quarter of this year the industrial production of practically all leading countries experienced a sharp decline, even a dive. Output dropped by 11.7% in the United States, by 18%-19% in Germany, France, and Italy, and by 33%, or even 35% according to some analysts, in Japan.

Regrettably, Russia has failed to avoid many of the problems that have beset the whole world. According to the latest information, our industrial production has dropped by 16.9%. As a result, more than 2.2 million redundant workers registered at the employment service by the middle of April.

The biggest number of workers was laid off in the processing industry, machine-building and metallurgy, the branches which employ the most qualified workers, which constitute our "golden fund".

True, unemployment has stopped growing and even dropped a little in the last few weeks. However, this should not be an excuse for self-complacence. The labour market is still precarious, particularly in single-industry cities. This is connected with lower business activity of the global and domestic economy.

From the very first days of the economic crisis, the Government has considered it its primary duty to help those who have lost or are about to lose their jobs.

The maximum unemployment benefit was raised to 4,900 roubles per month, and the terms for its disbursement have been simplified considerably. However, we have given a high priority to producing an active policy for the labour market.

The federal budget will finance regional employment programmes by more than 90%. In terms of money, this amounts to 43.7 billion roubles, out of which 9.4 billion roubles have already been transferred to 79 regions.

This has had a positive effect. When this money was appropriated, I did not expect this result, but it appears that this measure has been useful.

It goes without saying that I understand well the feelings of qualified workers who are losing their jobs and wages. Taking temporary jobs for low wages is not the best solution, but still this is a partial solution. Allow me to repeat that this still gives them some prospects, particularly in retraining. I will speak about this in more detail later.

Last week, we decided to increase a number of payments under these programmes. Thus, a benefit for starting one's own business was doubled to reach 59,000 roubles.

More funds will be allocated for the professional training of those who have temporarily lost their jobs. The per-person amount has increased from 5,900 roubles to 12,800 roubles. The period of training in some professions has also been extended. In fact, this retraining allowance was increased because of the need to prolong training periods. The managers of many regional companies believed that the funded periods for some specialties were too short in the past.

Finally, anti-crisis measures to support the financial system, industry, and construction - I am referring to government-awarded contracts, credit, guarantees, and lower taxes - have been designed to help those who need it. This is what these measures are all about. They are aimed at helping the people who work at specific enterprises and offices.

Under the circumstances, the Government is facing many tasks but its priority is to create the best possible conditions for resuming normal business activity and to render direct aid to strategic companies, without which the country simply cannot exist, and to single-industry cities where all people work at the same company and have no employment alternatives - up to 35% of the able-bodied population. The Government's number one task is to assist people who have found themselves in a predicament. It has adopted a whole package of social programmes for this purpose.

Colleagues,

I am convinced that Russia has a fair chance to emerge from the crisis a stronger country with a modern and competitive economy, because the crisis is forcing us to use energy-saving technology and modernise production assets to make them more profitable and competitive. Otherwise, some companies will not survive market competition. This is why we must not allow unemployment to demoralise society and undermine its labour potential.

Professional retraining programmes and other anti-crisis measures are giving people a chance to receive new professions and find better and more highly paid jobs.

We can attain these goals only through the mutual efforts of all the members of the social partnership, including trade unions, employers and the state.

In April 2009, the Russian Tripartite Commission approved special recommendations for the interaction of social partners during the economic crisis. We welcome the constructive stance of the trade unions, which actively contributed to the drafting of that document. We hope that you will help us to improve it by adding practical projects, which will become an inalienable part of business plans and crisis management programmes.

In the past, we used to say, "The cobblestone is the weapon of the proletariat." This is no longer true. Now it is the mind that is the weapon of the proletariat, because all participants in the process, especially during a crisis, should be aware of the in-depth processes underway economically and socially. They should understand this and accept responsibility for our developments, for the approach we are taking and the demands we are formulating.

Our actions must not drive enterprises into a dead-end. We must not practice the art of self-promotion - I am referring to state officials and trade union leaders. We must not derive pleasure from being the good guys protecting the interest of the people, a region or an enterprise, but rather ensure that our actions bring about positive change, and not force the country, a sector or an enterprise into a dead-end, bankruptcy or liquidation.

By acting together, we can and must find positive solutions, and I am sure that this is exactly what we will do.

There are many areas where we expect trade unions to show initiative, above all in controlling compliance with labour legislation and labour safety.

The crisis must not be used to justify layoffs in violation of legal procedures. Likewise, it is unacceptable to save money on workers' health and labour safety costs or on the cost of hazardous industrial safety measures.

You can be assured of the full support of the Russian Government in addressing these problems. I would like to remind you that we have recently adopted a law expanding the powers of the prosecutor's offices to protect work collectives.

Trade union solidarity must play a crucial part in helping people in dire straits. The Federation of Independent Trade Unions is the largest public organisation in the country, with a huge physical plant and organisational resources. Consequently, it has large possibilities to help trade union members in difficult times. The people now need your financial and moral assistance more than ever before.

I would like to encourage you to pay special attention to young people, who are, alongside people approaching pensionable age, the most vulnerable group in the labour market.

To conclude, I would like to draw your attention to one more issue - the pension reform. This is something that concerns everyone.

You are certainly aware of our plans to increase senior citizens' incomes. There is this new trendy term, valorisation, which means the adjustment of past earnings to account for changes in living standards between the time when pension rights are earned and when they are claimed.

In 2010, the average size of labour pensions for old age should exceed 8,000 roubles, a 45% growth in nominal terms and something the Finance Ministry is simply awed by.

This is a very complicated issue and a challenge, which is another widely used word these days. As I have said, we'll conduct a fairer evaluation of people's pension rights earned during Soviet times. This concerns more than just those who are currently retired. Those who have not yet reached retirement age will have their pension rights increased, as well.

The rules regulating the operation of the pension system will be changed. The existing system is imperfect and overcomplicated; it consists of several unrelated parts. The unified social tax will be replaced with a social insurance premium.

Trade unions leader Mikhail Shmakov has always lobbied for replacing the UST. I hope this idea will be promoted amongst the public because it will certainly increase fiscal pressure, even if not right away.

We have agreed not to do this in 2010, yet overall the pressure on the economy and businesses will be growing. We need a sustained pension system with inherent sources of income.

The expenses will be high. We'll have to cut taxes and the overall pressure on businesses at a time when federal revenue will be falling. We have already decreased them by 700 billion roubles. Next year, we'll have to increase spending on the pension system by 700 billion roubles. This is an extremely difficult task. We'll have to balance the budget so as not to send the macroeconomic indicators spiraling, as they are crucial for the economy and consequently for jobs.

I sincerely hope that the trade unions will see to the implementation of all the decisions made in this respect. They should cooperate with employers, the Pension Fund, and the tax service. Together, they should do their utmost to ensure a smooth shift to a new pension system, which will be stable and reliable, and will provide appropriate living standards to our senior citizens.

Thank you.

* * *

Vladimir Putin's closing speech:

Before you take a break, I would like to comment on what my colleagues have said here. I have mentioned some points and there is a note about a particular enterprise, but that needs to be dealt with separately. I will find a way of responding to that later.

As far as general remarks are concerned, I would like to draw your attention to systemic issues. I have already talked about this in public on several occasions, and I now return to the point, as these are important matters.

Two of our colleagues have spoken, representing different sectors in the economy: the automobile and metals industries. Both have suggested that the Government close the domestic market to foreign competitors. The metals sector has asked for practically all metal imports to stop, while the auto industry has asked for nearly all competitive assembly lines to be closed.

I'll begin with the metals sector. The minute we cease all imports from the western or eastern steel industry, such as China, the automobile industry cannot make cars. Everything grinds to a halt. Our auto industry is thus far not vertically integrated being unable to supply all the components necessary for assembly.

And that is why when defending domestic markets as we have done, and as we will continue to do, we must be sure to act carefully to avoid taking actions in one industry that could cause a problem for another industry. Also, these industries employ hundreds of thousands and even millions of people.

This affects all sectors. But this is not just an issue for production-based industry; it is a personal matter for you, for your families, your nearest and dearest, for all Russian citizens and for all consumers.

Everyone knows how our citizens reacted, let's say, in the Far East, to what I would call the very restrained actions of the Government in limiting the import of used foreign cars. That is how this affects consumers.

We could forbid everything. Remember the lyrics of that Vladimir Vysotsky song, about how they even forbade a parade and that soon they'll have forbidden everything? If we did forbid everything, life would become impossible, and our industry in general would be damaged.

This is a delicate matter. We need to understand the consequences of each step taken. But, here I agree with the first speaker; in my view, the role of trade unions can and must be raised in the lives of enterprises, in their work. And in precisely this regard I would like to return to the thesis that I voiced here today: "The weapons of today's proletariat are their heads, their brains, and their knowledge."

If the trade unions want to play a more active role in business life, then they need people who know the law, who understand economics and the unfolding social processes. Simply making noise, promoting oneself, only hurts the workforce. But the approach is, in my view, absolutely correct.

Now, regarding the state reserves, this is a difficult question. It seems the state reserves could bail everyone out, but the state reserves cannot buy everything. These are direct budget expenditures. Some metals can be purchased, those known as low-tonnage metals, some alloys, and some expensive metals in low volumes. But that will not solve the problem, I assure you.

What we need is to raise the level of business activity in the domestic economy, and wait and contribute, as far as Russia can, for the recovery of demand and business activity of the global economy. Only then can we expect a recovery in production.

Previously 60% of our metals production was exported and we were selling metal product to the US, China in smaller amounts, and the European markets. We cannot use the budget to make up for this difference, as you understand, however much we may want to. Further, if we spend all the reserves then there will be nothing left to pay pension costs. Who will that help? We'd have nothing left to pay teachers, nothing left to pay the army. We would have to suspend all rearmament programmes. That is why, unfortunately, state reserves cannot solve all our problems.

However, we are buying what we can for the national reserve and for domestic state needs. For example, in agriculture we have carried out significant intervention on grain purchasing to support prices. This has played its part. This means we have helped the agricultural sector receive the resources it needs to begin the spring field work, to carry out their sowing and so on.

The same approach is being used in other sectors. For example, regarding machine building and automobile assembly, we have increased the financing of the ministries and the agencies that buy vehicles for internal needs. We have increased these funds, and in some areas, we even doubled them.

If the Ministry for Emergency Situations had budgeted for a specific number of cars - we almost doubled the amount. They ordered these cars from domestic manufacturers. The same goes for the Ministry of Defence, the Ministry of the Interior, and so on. They in fact need to renew their car fleets. So we should do it now when this support is needed. And that's what we're doing.

Let's consider another important strategic question which also affects everyone - keeping tariff increases in check. Tariffs are used for the most part to support the investment programmes of companies. Of course, during the economic downturn tariffs growth should be kept in check.

I visited one plant, Tver Railway Car-Building Works, and met with the employees, their representatives, and the trade unions there. Frankly speaking, I went there after the meeting that Mr Shmakov arranged with your colleagues. There I met with the head of the primary trade union organisation of the plant who told me about the problems the business is experiencing. 

What was their biggest problem? They had no orders for railway cars from Russian Railways; they are not building any wagons because Russian Railways does not have the money to buy them. Freight traffic volumes have fallen, in addition to that we cut their tariffs, so Russian Railways is down. We did not allow them to raise the tariffs as they had planned: only 5% and that's all. That's it; there was nothing left to fund the orders. The Urals Wagon Factory is also slowing down production, but here, nearby, in Tver, there was a real dead-end.

Let me again return to the issue, which is that we all need to use our heads. In the current economic climate, every step we take has definite consequences. This is why I tend to agree with the thought mentioned here earlier at this conference - we must either freeze all tariffs or we must take a considered approach to all of it. It's true that we need to take a well-considered approach and agree all our moves.

Everyone needs to understand what is going on, and all these steps should be as transparent as possible. People have to understand what is guiding their local, regional, and Federal agencies as they make this or that decision. By understanding the events taking place, we will be able to achieve what is most important. We will be able to consolidate our efforts to overcome these problems, and we will, undoubtedly, overcome them. But of course, we cannot do this without your help and support.

I would like to wish you success. Thank you very much.