Transcript of the meeting: 

Dmitry Medvedev: First, my heartfelt congratulations on your professional holiday. I’m happy to be visiting you here in your railway yard. Congratulations to you and your families and friends, and all those who are celebrating Railway Worker’s Day today. Mr Yakunin (addressing Russian Railways president Vladimir Yakunin), how many people are involved in the railway system and in the work of Russian Railways?  

Vladimir Yakunin: The official figure is about 1.2 million people.

Dmitry Medvedev: This is only the workers, right?

Vladimir Yakunin: This is workers involved directly with the system, plus 800 pensioners - these are direct...

Dmitry Medvedev: Direct participants.

Vladimir Yakunin: And those who work in related infrastructure…

Dmitry Medvedev: This makes at least 5-7 million people, a huge number of this country’s population.

Railway Worker’s Day is one of the oldest professional holidays, originating back in 1796. This is a very interesting fact. I remember when I was a child I used to travel with my parents from Leningrad to the southern territories, and often it was on Railway Worker’s Day. It’s great that many traditions haven’t changed since.

This year marks the 175th anniversary of the opening of Russia’s first railway which linked St. Petersburg with Tsarskoye Selo.  That railway was only 27 kilometres long – while today the total route length of our railway system is some 85,000 kilometres. This is a vast industry that requires proper maintenance. I have inspected your railway yard a bit, and it leaves a positive impression as it is an up-to-date facility. I hope that your working conditions are adequate. We also just inspected some new locomotives, and I hope we’ll see more each year. You mentioned there are 30, right?    

Vladimir Yakunin: 31 new locomotives.

Dmitry Medvedev: Now there are 31, and that number will reach about 90 or so in the near future, right?

Vladimir Yakunin: Yes. This year, 83 locomotives have been received.

Dmitry Medvedev: This means that reequipping and modernisation is underway, and this is good. It is equally important that it will have an effect on the labour conditions and on efficiency, as well as salaries, living and recreation conditions.

I think I’ll finish my introductory remarks now so we can just talk about the development of railway transport in the country and life as you see it, with any positive changes or the lack thereof. Your railway yard is an example that reflects the labour and living conditions of a great many people who are also celebrating your professional holiday today.

But before turning off the microphone, I would also like to congratulate you on City Day, which is being celebrated in Omsk today along with Railway Worker’s Day. My congratulations to everyone! Let us talk.

Mr Yakunin, please say a few words if you’d like. We can pass it to our colleagues, if you wish.     

Vladimir Yakunin: Mr Medvedev, it is a great honour for us that you found time to inspect our locomotive shop. It so happens that this is the best among our many shops. But we didn’t make any special preparations for your visit… So what you saw today is the reality of our railway as far as locomotive maintenance is concerned. And as far back as the steam engine, our people who work here have always been the elite of the maintenance department. This is because they have always been well educated and technically trained, and have been people who respect the duty they fulfill. Rail safety depends on them. So allow me also to congratulate all of you on this holiday which is a railway professional red-letter day and is acknowledged throughout our country. The slogan this year is “175 Years of Russian Railways Together With the Nation.

Thank you very much for your visit, for the opportunity to talk with you informally.

Dmitry Medvedev: Thank you, Mr Yakunin. In addition to Mr Yakunin, we also have other people on hand who are responsible for the state of this industry – Deputy Prime Minister Arkady Dvorkovich, Transport Minister Maxim Sokolov, in fact all the authorities related to this sector. So if you want to talk about more than the holiday, about your routine work and its problems, this is a good time. We have here the ears to hear your thoughts. So please colleagues, you have the floor.

Alexander Taranenko (head of Russian Railways’ Omsk locomotive shop): Will you allow me, Mr Medevedev?

Dmitry Medvedev: Of course, go ahead, Mr Taranenko.

Alexander Taranenko: To date, my shop has a staff of 2033, 1,747 of them train crews, engine drivers and their assistants.

Dmitry Medvedev: That’s a lot.

Alexander Taranenko: Twenty-six of them are here.

Dmitry Medvedev: That’s a large figure, 1,700. And the total number is 2,000?

Alexander Taranenko: Yes, 2023 all told.

Dmitry Medvedev: And the general attitude here?

Alexander Taranenko: I believe we’ll learn about that now.

Dmitry Medvedev: We’ll ask them. Good. Please go ahead. My only request is that you identify yourself so I can address you. This is my first time meeting you.

Dmitry Grishavin: I am an electric locomotive driver. My name is Dmitry Grishavin. I am proud and happy to be able to talk with you. My congratulations on Railwayman’s Day to all those present here. I would like to ask you a question, Mr Medvedev. In Russia, we have few people who want to be employed as workers or labourers. Most seek a higher education. Tell me please how you are planning to balance out…

Dmitry Medvedev: To find more hands?

Dmitry Grishavin: Yes, to hit a balance between people with a higher education and those of the working class who want to be professionals in their trades but do not seek managerial positions.

Dmitry Medvedev: Mr Grishavin, my namesake. To begin with, my congratulations on the holiday. And, second, I cannot strike this balance on my own. Neither can Mr Yakunin or the deputy prime ministers or the other ministers. This is an objective for everyone. Throughout the country, you are right; this balance shifted towards higher education in the 1990s. But I’m older than you, I believe, and I remember that in the Soviet times, when I was finishing school, about 30% of young people opted for universities, and 70% went on to get secondary vocational training. Those who dropped out from Form 8 went on to obtain a secondary and sometimes a basic vocational education. This helped to maintain the balance, as you say, between members of the working class and those with a higher education, or technicians and engineers, as required by the Soviet economy at that time. Later on, as I said, this balance changed. This does not mean that some ill-intentioned steps were taken or that the government missed some important trend, although the state is partly to blame for this perhaps, too. Another reason why this happened was that at some time, unfortunately, the value of secondary special vocational training, let alone of basic training, declined. Today, I think, 99% of young people finishing Form 11 enroll in higher educational institutions. But a considerable proportion of graduates of these institutions do not work a day in their field of education. They just obtain a higher education degree and do not pursue their speciality. This must make us pause and think about the value of higher education and the need to maintain the balance you mentioned.

How can we restore or rather create the balance necessary for our economy? We simply need to raise the prestige of industrial work, the work at a lathe, the prestige of all industrial jobs in general. This can be done only if we work together. On the one hand, of course, when we consider education, we need the state’s focus on the matter. Currently, vocational education in our country is the concern of the regions. The former system of vocational training is now a regional one. Many of our schools have closed down, but some of them live on and some function very successfully. Today we toured the Omsk University of Railway Transport … I was pleased to see that it caters not only to a management or high-level path but also to secondary-level students. It runs a college, which is good. It has the full spectrum of curriculum, so the first requirement is the state’s attention, the attention of the ministries and the regions, to the vocational training system. The second point, which is no less important, is the attention paid by the employer. The system here has one employer –Russian Railways. Perhaps this situation has disadvantages, but it has advantages too because it allows Russian Railways to maintain a powerful educational system, which includes nine universities and I do not know how many colleges and secondary schools, but several dozen surely.

Remark: Next to 40.

Dmitry Medvedev: Next to 40, you see. So your system has, thank God, preserved vocational training. The university rector told me: “You know, we provide not only secondary specialised education, but also basic vocational training.” This is important, because the second factor is the employer’s involvementr. And the third factor, I believe, is the working conditions (I think everyone here is an adult and knows what’s what): wages and the evaluation of work. Although it’s no secret that in many sectors (I don’t know the exact situation at Russian Railways) basic job salary rates are now higher than ones in many other industries that require a higher education, but there is no one to fill these jobs. 

I was once on a trip (I will remember it all my life), and I visited a secondary technical school that belonged to Transneft. It’s a rich outfit, of course, a fantastic building, I have to tell you. High-class equipment. All sorts of students were sitting in the classroom. Some were 15-16 year old kids. But as I walked down a row of desks I saw a very mature man, at least 25 or maybe 30 years old. I said, “What are you doing here?” “What am I doing? I’m studying.” “Isn’t it a bit late?” I asked. “No, it isn’t too late. I have a university degree, and now I am learning a worker’s trade.”

One can hardly imagine a more uneconomical way to spend government and semi-governmental money, because Transneft is a state-owned company and Russian Railways is a state company and many other companies are still state-controlled. First a person finished university and then realised that there are no jobs, or he is not interested in the jobs that there are, and the worst of it is that the education he has acquired is not enough for him to hold a factory job. What sort of university is that?

So, if we put all these three components together then everything will be fine. But there is perhaps a fourth component. It is informal, but it's necessary, and that is the attitude of society, the need to popularise the worker’s job, including through the media, so that films and TV programmes are not only about politicians, bankers and bandits, but also about workers. This may sound banal and may reek a little bit of the former Soviet Union, but it is absolutely right and fair. Yes, please.

Dmitry Birzhin: Good afternoon. My name is Dmitry Birzhin, I am a locomotive driver. I think not only I…

Dmitry Medvedev: I understand that today only those whose name is Dmitry are asking questions. All right, so be it. This may be an option.

Dmitry Birzhin: I think this is a question that interests not only me but all Russian citizens who have children. It’s about pre-school education. Can it be assumed that a long-term and final decision has been taken that school education in the Russian Federation has been and will remain free? Thank you.

Dmitry Medvedev: A straightforward and specific question, and my answer is just as straightforward and specific: school education in our country has been and will be free. Next question.

Andrei Mozgovoi: Andrei Mozgovoi, I'm an electrical locomotive driver. Here is my question. We are very worried about the forest fire situation in Siberia. What measures are being taken to eliminate them, and who is responsible for this? Thank you.

Dmitry Medvedev: I’ll start with the second question. You know, I think that we are all – not only the leadership, not only the Emergencies Ministry – are responsible for the situation with our forests and the environment in general.

The causes of fires are often known, they are man-made. However, if you take the current situation in Siberia, it is absolutely anomalous, it has been decades since there was a situation like this. It is sad that in many places – here and in Tomsk where I am about to go by rail, people were simply suffocating, and it lasted a very long time.

At least this hotbed of fire has been suppressed, but the situation is still complicated, because judging from the forecasts…I recently chaired a meeting on this issue, and our weathermen reported that August will also be very, very difficult and one cannot expect heavy rains over Siberia, at least not over Western Siberia. So, this is our common challenge. But of course the key is the fire safety system. You know that the situation in 2010 was very difficult, all those present remember it. Perhaps it was even more acute in the European part, but it was tough in Siberia as well, and we had to change the fire fighting system drastically, to create voluntary units, and replenish the stocks of equipment, planes and helicopters. You know, if we had not done this in 2010, the situation in Siberia this year would have been much worse.

At least so far we have not had such dire consequences of fires as we did, unfortunately, in 2010.  That is, fires are not destroying communities (we have learned to protect them from fire), and vehicles and aircraft are being used on a large scale. Our fleet of Be-200 planes that can carry water, Il-76 and some other models, as well as helicopters, is several times larger than in 2010. This has enabled us to put out the flash points of fire and do so quickly enough when a fire began to spread.

But I would like to say once again that this is a common task, because nowhere in the world can anything be done without volunteer fire fighting units. Unless the people themselves, especially in small communities, are prepared to fight fires, no government can conquer them. This problem should be addressed systemically: by investing in technology, education and, last but not least, by behaving like human beings and not like pigs. Unfortunately, many fires arise because of a barbaric use of forests, simply because people make bonfires and so on. So, everybody should be very careful.

I hope that this difficult period for Siberia will be over in two or three weeks, but until then everybody has to be very careful. I will go to Tomsk right after this meeting and there we will discuss the aftermath of the fire and drought situation in Siberia and not only in Siberia, but also in some regions in the European part. More questions? Yes, please.

Gennady Kotkin: My name is Gennady Kotkin, I am a locomotive driver of a freight train. I would like to take this opportunity as a veteran of our enterprise to thank Vladimir Yakunin, the Russian Railways CEO, for pushing through the decision on new locomotives (and you probably took part in it too). It is always interesting to try new ones. In other depots they use clapped-out old locomotives, which is all in a day’s work. But we are really glad and proud to have new locomotives. As you may have noticed, this is our best depot, it really is. Thank you, Mr Yakunin, thank you, Mr Medvedev.

And this is my question. I often get young people as my workmates. I know that many have taken out mortgage loans, Russian Railways has many such programmes. Are any changes of federal mortgage rates in the pipeline? Many guys are complaining (many of them have newborn children), and it is too expensive. Russian Railways is trying to do something, but apparently some federal law is in the way… I am not, of course, a financier, but I would very much like to know. 

Dmitry Medvedev: It is not about the law getting in the way. Well, to begin with, I do not know who has pushed what decisions through, but I am very pleased to be visiting your depot at a time when the fleet of locomotives is being modernised. This is good because it has been a long-felt need throughout the country. It happens sooner in some places than in others, but I am sure that all this will be followed through, because Russian Railways has a massive investment programme. There are questions about tariffs, and we will discuss them with Vladimir Yakunin after this meeting.

Now regarding your question about home mortgages. Of course, this is a topic that concerns a vast number of people in our country, people who work on railway transport. It is approached in different ways, but it has nothing to do with any legal bans.

The situation has to do with the overall situation in our country. The more difficult the financial situation, the higher the mortgage rate. Let me illustrate this with some simple examples. Six years ago, when I first started to study the mortgage system in our country as a member of the government, our mortgage rate varied depending on the region (give or take a few percentage points) between 13%, 15% and sometimes even 17% a year. This is an impossible rate. Why? Not because there was some malign collusion between banks or because the state let the problem to get out of control, of course not. The mortgage rate depends on the value of money in this country, and the value of money (the bank price) depends, among other things, on inflation. If inflation was at 10%, 11%, 12% then if you do the math, the mortgage rate, plus some margin for the banks and other spending included in the mortgage rate, add up to this level. This year and last year the mortgage rate is much lower.

Why is it lower? Because inflation has dropped even though we had a crisis a couple of years ago, so we will go on curbing inflation through various macro-economic measures. Simultaneously, the overall mortgage rate will go down, but I stress that this is the overall rate.

Now regarding the specific mortgage rate: depending on, shall we say, how rich the employer is, he has an opportunity to influence the mortgage rate and subsidise part of it. We are currently thinking about how to solve the housing problem for public sector employees. That is even more difficult than, say, for enterprises such as Russian Railways. These are major organisations that earn money, so they are able to add some of their own money and bring the mortgage rate to below the national average. In that case, the mortgage rate becomes more or less acceptable. We set the target of an average national mortgage rate of 5-6% a year, which practically any family can afford, provided it is earning money.  

So, when, as the case is today, the mortgage rate is 9-10%, or 11%, part of the cost can be paid by the organisation. I know that Russian Railways has mortgage programmes. I do not know how many people are covered by it – Vladimir Yakunin probably knows.

Vladimir Yakunin: Mr Medvedev, unfortunately, considering the scale of the network, not as many people as we would like. As for young people, and the question was about young people, we have provided special conditions for them – for them the mortgage rate, considering subsidies, was 2.5% even at a time when the banks were charging 14%.

Dmitry Medvedev: Well, this is far too low.

Vladimir Yakunin: It’s only for young employees.

Dmitry Medvedev: Well, this is to support young people, to keep them within the system. That is right.

Vladimir Yakunin: As for the current rate, it is 7%, which is because the company is able to take on additional social burdens. It takes money, and our only way of earning money is through tariffs. For our part, we absolutely support the government’s policy in this respect, and we support young workers because they do not yet have any savings and to count on mom and dad is not appropriate.

Dmitry Medvedev: Usually within a system the credit rate is either subsidised or the down payment is compensated for. I don’t know your approach, perhaps it is both?

Vladimir Yakunin: With us it is both ways. In fact, in line with the government’s demographic policy, we exempt a family from the down payment for 10 square metres at the birth of their first child, and 14, 18 sq m at the birth of the second. In general, we can exempt them from any down payment.

Dmitry Medvedev: What number of children exempts a family from the down payment altogether?

Vladimir Yakunin: At the birth of the third child. You know, I was surprised to learn that we have 40 families with nine children in our system.

Dmitry Medvedev: Really? Well done. They should be exempt from any payments, including for the future.

Very well. The last thing I wanted to say about mortgage. This is a very important issue in this country, because the absolute majority of people are not content with their housing. Even if a person has a good home, he always wants a better one, so it is impossible to solve the issue once and for all, but it is our duty to make substantial improvements. We will do this, and of course, the Russian Railways joint stock company will do it as well. But what we should not do is we should not allow an imbalance between credit rates and the amount of housing, or, to use economists’ jargon, we should avoid the kind of “overheating” that happened in America in 2008. It was mortgage loan overheating that triggered the mechanism of the economic crisis, and whatever they might say, the mechanism was launched by the Americans because they issued too many mortgage loans. This is just a fact, but we will not allow it to happen.

So, colleagues, my co-workers are looking at me, if the next part of our journey was not to be covered by rail we might have continued to talk, but being railway workers yourselves, you understand that if I start abusing your time, we will not be able to move and we will disrupt traffic. I think that would be wrong and I am sure you are with me there. So I would like to congratulate you on your holiday, and my regards to your friends and families. I wish you good cheer, to earn well, and in general to be as happy as you are today on this holiday. Once again, congratulations on this double holiday.