Russian History



By 1995 delays in wage payment had become a chronic problem even in profitable Russian enterprises. In many cases, enterprises simply passed along the burden of late payments of state subsidies and customer debts. At the end of 1995, the Government owed a total of US$112 billion of subsidies, of which about 27 percent were more than three months overdue. Most of its debt was to the military and energy sectors. Through 1995 an average of 19 percent of wages were paid late, and in January 1996 a total of US$2.1 billion was overdue in agriculture, construction, industry, and transportation. The State Committee for Statistics (Goskomstat) began keeping separate statistics for wages formally paid and those actually delivered. The payment record of privatized enterprises was worse than that of state enterprises, and in many cases workers were paid in merchandise rather than in cash. In early 1996, the average rates of overdue payment were 62 percent in ferrous metallurgy, 86 percent in oil extraction, and 22 percent in food processing.

In his presidential campaign, Yeltsin promised to abolish state-sector wage arrears and to encourage improvement in the private sector. By squeezing the national budget, Yeltsin achieved temporary results in the state sector, but his promise had no effect on other enterprises. Officials proposed several programs to raise average wages and streamline the inefficient system by which wages are delivered, but no meaningful reform had been achieved by mid-1996. In July 1996, coal strikes in the Far East, southwestern Russia, southern Siberia, and the Urals threatened a nationwide shutdown in response to continued payment failures in that industry.