Russia has problems paying wages

Russians have begun to feel the chill of the financial crisis, as it triggers layoffs and wage-payment delays reminiscent of the economic collapse in the late 1990s.

Russians are becoming more pessimistic about the economy, polls show; above, a protest against the government in Moscow last month.

On Thursday, Prime Minister Vladimir Putin promised new measures, including lower corporate taxes and higher unemployment payments, in addition to an existing bailout package.
Government data show that wage arrears jumped in October to over four billion rubles ($145 million), their highest level in a year, and that firms owe back pay to 300,000 people. Economists say the real figures are likely to be higher, though far below those seen in the 1990s, when tens of millions of people were affected. Then, workers went without salaries for months on end, sparking nationwide protests.
A Moscow-based advertising executive said she hadn't been paid her salary of 40,000 rubles a month since September. "I keep going to work because I don't want to lose all the money I've earned," she said. "I'm hoping I might get paid before the New Year."
The government has insisted there is no serious crisis and that Russia is much better off than Western countries, airing public reassurances on state television. But as the banking system stutters, the ruble falls and firms dismiss staff, that storyline is becoming harder to sell.
Opinion polls show Russians are becoming more pessimistic about the economy, though some surveys show that many remain convinced the country isn't yet in crisis.
The independent Levada polling center found a fifth of people said their wages weren't being paid on time, and a fifth of those surveyed said that they or family members had recently been laid off.
Economic data also are getting grimmer. Finance Minister Alexei Kudrin has said falling oil prices mean Russia may run a budget deficit of 1% next year, while the central bank said Wednesday that it had spent $57.5 billion propping up the ruble in the last two months.
Earlier this week, government data showed growth in industrial output was 1.6% in October. Data from the Moscow-based Romir market-research agency show that consumer spending, while still high, has begun to decline as banks have curbed lending.
Mr. Putin addressed the growing economic storm on Thursday at a congress of the ruling United Russia party, which he leads.
The party's political future "will directly depend on how we cope with the problems that our country and citizens are facing today," he told party members. Opposition politicians have forecast that social discontent will boost their own ratings and begin to eat away at the once-solid popularity of Mr. Putin and President Dmitry Medvedev. So far, there's little sign of that in opinion polls.
Violence continues in Georgia, Russia and analysts say tensions could increase again after a five day conflict that saw Russia launching a massive counter-attack against Georgia. Courtesy Reuters. (Nov. 21)
In his speech, Mr. Putin said he'd do "everything" to prevent an economic collapse of the kind Russia suffered in 1998, when the government defaulted on its debt and the ruble lost two-thirds of its value overnight.
"We have amassed sizable financial reserves which will give us the freedom to maneuver, allow us to maintain macroeconomic stability," Mr. Putin said. Russia's international reserves, the third-largest after China's and Japan's, have dropped by more than $122 billion since early August. Government officials insist the reserves, which stand at $450 billion, will last.
Mr. Putin pledged fresh measures in addition to an existing bailout package valued at more than $200 billion. He promised lower corporate tax rates, higher payments for the jobless, and said the Kremlin would keep spending to keep the ruble stable. He avoided talk of layoffs, warning of what he called "structural changes in the labor market."
But as oil prices continued to fall, his words failed to soothe capital markets, underlining Russia's acute dependence on oil. Oil and gas account for two-thirds of Russia's export earnings. Stocks on the ruble-denominated MICEX exchange dropped almost 7% on Thursday, while the dollar-denominated RTS exchange fell nearly 7.5%.
The price of oil Thursday on the New York Mercantile Exchange fell $4.00 a barrel, or 7.46%, to close at $49.62, down for the fifth straight trading day.