Russia Leaves Recession in the Past

At the end of April, Prime Minister Vladimir Putin made his annual address to the State Duma, Russia's lower house of parliament, on the government's work in 2009 and first quarter of 2010. This is the second public address of the head of the government of this nature.

Dmitry Medvedev gave the idea of address in November of 2008, and it was supported by the Prime Minister who said it was “another step in the development of our political system,” because “the government is interested in the assessment of its work by legislators, and parliamentary parties representing interests of the majority of the Russian population.”

The last year’s address was a presentation of anti-crisis program of the cabinet of ministers, and the observers were particularly interested in the results of the work in this area.

Prior to the address, All-Russia Public Opinion Research Center (VCIOM) published the results of the poll assessing the work of the government. Compared to last year, the number of those not happy with the work of the government has decreased by five percent. The respondents deemed beneficial “introduction of an effective anti-crisis plan,” “development of social sphere,” “growth of salaries, pensions, benefits and timeliness of payments.” The polled listed unemployment, poor attention to sports, and mistakes in social sphere, including utilities complex, as failures.

It was interesting to hear what the Prime Minister himself thought about the results of his government’s work. Surprisingly, the opinions of the officials and ordinary mortals coincided.

Putin said Russia had pulled out of the recession sparked by the global economic crisis and starting July of last year “has been steadily showing the signs of recovery.” Putin also said that it could be possible to stop allocating funds from the anti-crisis fund starting 2011. He added that during the crisis it was necessary to make quick decisions regarding funds allocation; therefore the government undertook the task. “Next year we could abandon this practice,” he said.

The Prime Minister also mentioned that effective work of the government in implementation of anti-crisis measures has helped Russian companies that were able to attract loans in the amount of 374 billion rubles backed by government guarantees. The measures have also helped the government make money on this support. The profits from allocating temporarily free budget funds exceeded 19 billion rubles last year, Putin reported.

Putin also addressed social policy in his speech.

Speaking about layoffs he said they were possible and appropriate, but only in case of modernization of production. “Layoffs may be caused by technical re-equipment of production and necessity of the efficiency increase. In this event it is pointless to fight for inefficient jobs,” said Putin and explained that in such cases it is better to provide people with opportunities to re-educate and find new jobs. This is what the government is doing right now.

The Prime Minister reminded that in 2010, 40.5 billion rubles will be allocated for the programs aimed at jobs creation. “There will be new things like internships for graduates of high schools, colleges and vocational schools, aid in job placement for people with disabilities, reduction of stress in the job market of mono-cities and special support measures in the North Caucasus Federal District,” he said.

He gave a positive assessment to the government’s work with regard to pensions. “There are no pensioners in Russia living behind the poverty line,” said Putin stressing that Russia became the only country in the world that “in the current situation started a large-scale pension reform and significant raise in pensions.”

He talked about those employed in the government sector. Putin said that the size of indexation of allowance and military pensions planned for 2009 was not reconsidered (the increase was 8.5% since August of 2009). In 2008 the payroll for federal government employees was increased by 30%. The salary of teachers in some subjects of Russian Federation has exceeded the regional average, etc. “Many countries decrease all social benefits, freeze pensions and salaries. We do not do it practically,” Putin stressed.

The Prime Minister could not ignore the issues connected with the raised utilities prices that caused much frustration in certain regions. Putin said that in the first quarter of 2010 the utility prices grew on average by 11.5%. “This is what it is,” he said and reminded that earlier it was decided to transfer the right to set maximum utilities prices from the Federal center to regional authorities.

Putin explained that the regions that have not gotten rid off cross subsidization in the power sector were suggested a soft transitional method, because these regions did not make timely decisions about raising prices. Many municipalities and regions have exceeded the allowable maximum price by 25%. Some municipalities had “egregious examples” where the prices grew by 70%. “What should we do with them now? I will ask you to extend this period of soft transition and don’t make them, say, abandon cross subsidization within one year,” he said.

The work on modernization of medical facilities will be continued. "More than 30 percent of all medicalfacilities in the country are run-down or in need of capital reconstruction," Putin said, "all this despite what has already been done in the framework of the national project. Many clinics and hospitals don't have the necessary equipment to provide medical care according to modern standards. In the next two years we will allocate approximately 300 billion rubles for bringing order to the entire health care network of the country,” Putin said.

In his address, Prime Minister Putin indicated the main priority – confirmation of the fact that Russia is a social state, said Dmitry Badovsky, deputy director of the Institute of social systems of the Moscow State University. “Quality of life, investments in human capital, development of the society and social modernization (not just the economic one) which includes medical sector, education and housing, is the government’s priority and will remain this way,” he stressed.

As for the communication reform, the expert believes that “the main thing is communication. When there is an opportunity in real time, in the form of a dialogue with all fractions, to talk about future, when the government can formulate priorities for the nearest future, suggests new projects, programs that will later become draft legislation in the State Duma.”

Lev Pravin

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Author`s name Dmitry Sudakov