Political Implications of Looming Problems with Wages and Jobs in Russia

News that employees of various Russian companies are suffering wage arrears are making into Russia’s national news—a worrisome sign for a government that claims to have stabilized the economy in the face of Western sanctions. In Yekaterinburg, the Ural Compressor Plant was late in paying wages to its employees for months due to failed export contracts and frozen partner accounts. Then it decided to reduce wages from October on. The Inskoy coal mine in the Kemerovo region went bankrupt in part due to sanctions affecting the Russian coal industry and financial transactions. Medical workers in the Altai Territory and construction workers in the Irkutsk Region complained of late payments. The drivers of a transportation firm in St. Petersburg mounted a protest in July after the company cut their wages in half. In late August, the employees of CNII Electronica, a contractor of the state-owned technology giant Rostec, sent a complaint over wage arrears to Vladimir Putin himself. The State Air Traffic Management Corporation announced that it may not have the funds to pay salaries due in September due to Western sanctions and the lingering effects of the COVID crisis. Wage arrears are not a novelty in Russia. If one looks at statistics provided by Rosstat, the state statistical agency, they do not even represent a particularly big problem right now. As of August 1, the total amount of wage arrears was 732 million rubles, down from over 1 billion in April, which itself is less than half of what was recorded during the height of the COVID crisis, let alone the 1990s. While Rosstat’s numbers are often questionable – in recent years, the agency has repeatedly changed the way it calculates inflation or real incomes – there is no reason to suspect that in monetary terms, wage arrears represent a significantly larger issue now than a year ago. Apart from sporadic protests and strikes over the past months, the state of the economy barely made an impact on the campaigns that preceded regional and municipal elections held September 9-11, even though some of the votes have been held in regions where industries were already affected by Western sanctions, such as Kaliningrad or Udmurtia. In any case, labor unions, in general, remain weak institutions in contemporary Russia. Labor protests, as specialists like Stephen Crowley have pointed out, mostly remained localized. Over the past two years the authorities have systematically and ruthlessly destroyed opposition structures that previously served as a conduit of frustration over economic problems. Surveys suggested – and experience has shown – that Russians regard elections as a means to vent frustrations, even if they are unfair and undemocratic. Now, the Kremlin will not face another election for at least another year.