Unemployment looms over Russia Situation expected to get worse in '94

MOSCOW — Moscow--Mushrooming unemployment will be Russia's next great social crisis, and Fyodor Prokopov must keep it from sweeping away the fledgling economic reforms of the Yeltsin government -- and perhaps the Yeltsin government itself.

Mr. Prokopov heads the Federal Employment Service, which must cope with the dislocation and resentment of the millions of people likely to lose their jobs as the government's market program enters its next phase.


So far, Russia's unemployment rate has been insignificant -- about 1 million people have registered with the agency, out of a work force of more than 70 million.

But that will change as President Boris N. Yeltsin accelerates his economic reforms, which include cutting off enterprises from easy government subsidies. Mr. Prokopov expects there will be 6 million to 7 million unemployed by the end of 1993 -- a tremendous increase, though still only about 10 percent of the work force, similar to the rate in several Western European countries.


jTC "The most difficult thing," said Mr. Prokopov, "is waiting day-by-day. When will it happen? Where will it happen?"

Some economists think things could get much worse in the first six months of 1994. They forecast unemployment rates of 12 percent to 20 percent -- and higher if the economy falters. And the official unemployment rate probably underestimates Russia's problem.

Already, in Ivanovo, half the textile workers are on short-time because there's no cotton to be woven into cloth. A household survey, which has not been released, has reportedly found that millions of Russians are on mandatory vacation -- paid or unpaid -- and that millions more are working a short week. And many people who have lost their jobs have not registered with the federal agency.

When the crunch comes, the nation's fledgling unemployment support system could be overwhelmed, and there are few alternatives to finding jobs.

There are few want ads in Russian newspapers, except for those placed by western companies. Private employment agencies are rare. And job fairs are a novelty.

Unemployment issues are new to Russia. The Soviet system promised everyone a job, and not so long ago it was illegal not to have one. People were given jobs, even if there wasn't any work for them to do.

Things only began to change in the last few years. The first labor exchanges opened here two years ago, but they didn't have much business, as enterprises kept their staff levels intact.

But now the government is beginning to insist on profitability from state-owned enterprises, and the privatization of many firms has made efficiency a major concern.


So far, the burden has fallen most heavily on women in white-collar jobs. More than 70 percent of those who have registered as unemployed are women, and 90 percent of the unemployed formerly held office jobs. In part that's because a large number of "research institutes" within various enterprises have been shut down after cutbacks in science and education spending.

Women predominated in the institutes, where much of the work involved record-keeping, rather than pure scientific research. And today, they dominate the unemployment rolls because managers believe women with children are less efficient workers. Across Russia, they are the first to go when jobs are cut.

That will change somewhat as factories begin shedding workers. But, as in Eastern Europe, women are likely to remain a healthy majority among the jobless.

Galina Yuzvitskaya is typical of those who have lost their jobs, though at age 45 she is a bit younger than average.

She worked all her adult life as a researcher at the Ministry of Geology, until it was downsized in 1990 and she was assigned to a petroleum research institute. But that institute already had more people than it knew what to do with -- and soon, its function was eliminated.

Nevertheless, the institute stayed intact, and for two years Ms. Yuzvitskaya pulled down a salary for doing nothing. Finally, last year, she was let go.


"I decided I'd better change my profession," she said. "I wanted to work in medicine, and asked the people at the labor exchange to find me some training."

A few months later, she was enrolled as an adult student at Nursing School No. 11, along with 19 other laid-off white-collar workers seeking new careers. (Only two were men.) After a 10-month course, she received her diploma and today works as a visiting nurse for the Russian Red Cross.

As a nurse, Ms. Yuzvitskaya makes about $8 a month at current exchange rates. That's not bad compared to her previous salary, but Russia's tremendous inflation -- consumer prices are rising at more than 15 percent per month -- leaves her with less money in real terms.

Still, she's happy to have found some fulfillment in her work, and she only regrets she didn't make the move sooner.

She has a caseload of about a dozen patients, the youngest of whom is 80. She brings them medicine, gives injections, changes bandages -- and sometimes cooks and cleans, as well.

Ms. Yuzvitskaya is one of more than 1,200 unemployed Muscovites retrained through the employment service, and that program is one of the biggest weapons in Russia's fight against unemployment.


Focus on retraining

Andrei Grinberg, a division head in Moscow's Department of Labor and Employment, says a new, market economy will demand new kinds of work. His agency is focusing on retraining people to be accountants, drivers, commercial and financial workers -- and tax inspectors.

The retraining, financed by a 2 percent payroll tax, is carried out by various institutes of higher education, which have seen their regular student enrollments drop as they are forced to charge higher tuitions.

Right now, he says, Russia has the ability to retrain a million people at 3,000 institutes. But retraining programs have their limits. A 55-year-old textile worker, for example, is unlikely to establish a new career as an accountant.

So the employment service also is trying to limit job cuts. With a $70 million grant from the World Bank, the agency is offering management advice to help potentially profitable enterprises stay afloat. In some cases it is subsidizing payrolls temporarily so factories can keep skilled workers until business conditions improve.

Boosting entrepreneurship


The agency also is experimenting with programs to encourage entrepreneurship among workers likely to lose their jobs. And it hopes to help people move to regions of the country where jobs are available.

Unemployment benefits will keep people going for a while. They start at 75 percent of the previous salary, and then drop as the months go by. After a year, they expire.

That's how much time the employment service will have for heading off anger -- and potentially explosive unrest -- in a population that has never known the psychological and financial hardships of unemployment before.

"It's a very hard job," says Mr. Prokopov, "but at least it's an interesting one."