Posted at 11:00 a.m.
(St. Petersburg, Russia) In a previous article, I analyzed the consolidation effect that Western economic sanctions against Russia had on the country’s elites. As important as the sanctions are, the population is more concerned with matters of daily life than with geopolitics. One of these issues is employment.
Unemployment fell from 4 to 3.9% between January and May. In the Moscow region, it is the lowest (0.5%), while the North Caucasus has a rate of 11%, the highest in the country. New programs have been put in place to compensate for possible job losses. There is an increase in employment in industries that have to replace previously imported goods and equipment.
Even children must feel the wrath of the West: Lego has just withdrawn from the country.
More serious, the lack of imported components has caused the production of automobiles to collapse, many of which foreign brands are assembled in Russia.
The workers do not yet feel all the consequences. It is logical that Vladimir Putin expressly urged automobile producers to maintain employment.
Avtovaz, controlled by Renault and located on the Volga, continues to pay wages, but has reduced the working week to four days. Avtotor, which assembles BMW and Kia in Kaliningrad, also pays reduced wages and, just in case, has allocated workers 1000 m plots2 to plant vegetables. In early summer, production resumed, but on a reduced scale. While South Korea has not imposed sanctions, Kia wants to ensure that auto components sent to Kaliningrad do not trigger secondary sanctions from the United States. Still, the factory owner finds potential advantage in the penalties. It plans to launch sovereign production of electric cars and phase out internal combustion vehicles by 2024.
This optimism is not shared by a worker at the Volkswagen factory in Nizhny Novgorod who told local media that he buys the bare necessities and has had to cancel a vacation by the sea. With a mortgage to pay, he s worries as I remember life in the Soviet Union where work was guaranteed, so were vacations and, later, pensions. But, he admits, he could not then dream of the abundance and variety of goods brought about by the consumer society.
Tikhvin
A few days ago, I traveled to Tikhvin, an old city of 56,000 inhabitants, some 200 km east of Saint Petersburg. I went there to visit the birthplace, now a museum, of Nikolai Rimsky-Korsakov, a famous classical composer who often used Russian folk motifs in his works. However, beyond the tranquility of the museum, the city lives in anxiety. The 8,000 workers at the local railway rolling stock company expect job losses due to the disappearance of American parts for the production of cassette ball bearings. So far, the factory pays the workers, but they fear the worst. Another shock: the closure of a local factory that made furniture for IKEA. Some workers go for odd jobs, such as repairing dachas (country houses). Others hope to collect and sell mushrooms and berries.
The government remains firmly committed to private enterprise. Calls for the nationalization of key industries are falling on deaf ears, with Putin professing faith in the capitalist system and deregulation.
A law abolishing certain rights stipulated in the Labor Code has just been adopted. The union activists I have spoken with fear the worsening of economic injustice in a country where progressive taxation does not exist and personal income tax is 13% for all. As a result, workers are organizing. Recently, in the Urals, the delivery men of Ozon, the internet giant whose name and economic model are inspired by Amazon, won their case by threatening a strike when the management, invoking “the crisis”, wanted to halve their remuneration (currently 80 rubles, or about $1.80 per item delivered).
The effects of Western sanctions are being felt by the most vulnerable, whether in Russia or in Asia and Africa, who are facing a food crisis. In the West, many expect public discontent to force the government to withdraw from Ukraine. Such political goals, while inflicting suffering on their people, have never been achieved, even in small countries. We will see if the sanctions will force the hand of the government in a country of 147 million inhabitants spread over 11 time zones, but which, unlike Cuba or North Korea, has no unifying ideology.