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The government will not force businesses to preserve jobs

Власть не заставит бизнес сохранить рабочие места

Russian President Vladimir Putin announced a new plan to support the economy amid the spread of the pandemic coronavirus. “I charge to develop an additional programme of business support. Know entrepreneurs is not easy, but I see so everywhere in the world,” he said. The development program must engage the Central Bank and the government, it should be ready within five days.

 

The President also instructed to provide all enterprises of small and medium businesses a six-month delay for the payment of insurance contributions to extra-budgetary funds.

In addition, he proposed new measures to support the unemployed: the Russians who have lost their jobs because of the situation with coronavirus and applied to the employment service after April 1 must pay the unemployment benefits for three months on the top level of the minimum wage (SMIC).

On the same day, Moscow mayor Sergei Sobyanin has addressed to businessmen with an appeal to the maximum extent possible, to ensure the incomes of the workers and to refrain from their cuts during the fight with the coronavirus.

According to him, the actions of the state, municipal authorities and businessmen must be responsible and solidary. He also stressed that without jobs and sources of income of people “do not throw in trouble.”

The measures already taken to support the business reminded at the meeting with deputies of fraction of LDPR, the head of government of Russia Mikhail Mishustin. However, he expressed the opinion that this may not be enough.

“The situation is changing rapidly, growing problems, and even adopted a list of measures may need to update and think about what else to do,” he said.

“We need to objectively plan to solve the task of ensuring all budgets — regional, local and Federal, and to help the business”, — concluded the head of government. He also reminded that Russia will receive less income on a large scale in 2020 because of the situation with the coronavirus, and it will be a serious blow to the country’s budget.

Meanwhile, on the special difficulties facing Russia, writes the foreign press. So the Austrian newspaper Der Standard says that “the world faces a economic downturn, whose consequences — unemployment and loss of income.” In Russia, according to the authors, it won’t have savings to the population. Here are some abstracts of material:

“Oil and coal do not stimulate the economy, and downtime can lead to bankruptcy of up to three million small and medium entrepreneurs, primarily from the service sector. As a result, in turn, will increase dramatically and unemployment”.

“Experts suggest that the summer unemployment will rise from 4.4% to more than 6%. One this number is not informative, since, according to estimates, there are between 16 and 25 million self-employed small traders, mechanics or seasonal workers who are not counted in unemployment data. Economic stagnation threatens them with ruin. Besides already received numerous complaints from employees who were sent on unpaid leave is a common method of saving on salaries, while the Ministry of labour in late March declared this practice unacceptable”.

“According to the rating Agency “ACRE”, the real incomes of Russians will fall by more than 5%. For comparison: since the beginning of the Ukrainian crisis in 2014, real incomes have fallen by 7.5%. Therefore, the majority of Russians will enter into a new crisis without savings. In the past year from 17.6 to 20.9 million Russians lived below the poverty line”.

Recall that, despite appeals of the President and the mayor of the capital, many enterprises have already begun to cut staff, force them to write statements on their own, or to take unpaid leave. So, for example, “Sportmaster” has decided to close all its stores and offered employees to work in other retail chains. Experts predict the company to significant fines, but what choice did she have? Is there a way out? Because of the measures taken by the Russian authorities to fight the effects of the epidemic, the amount allocated, equal to 1.2% of GDP (for comparison, Germany allocates an amount exceeding a third of its GDP, the US is 12.4%) is clearly not enough to save everyone.

— Putin came out of the shadows in the most difficult moment in Russia is announced to quarantine — and it’s positive — said the Director of the Institute of the EEU Vladimir Lepekhin.

— I believe that extend its self-isolation for several days — and the society would start a major fermentation with unpredictable consequences. I think that the President was a certain pause in order to gather my thoughts in such a difficult situation. Unfortunately, he came up with two simple ideas: to maintain financial health and to help domestic businesses because the government in this regard turned out to be completely incompetent. First absolutely the right decision, though belated, but the second is still very ill.

Businesses definitely need the support, and — immediate and systemic, and the President to a certain extent, motivated the heads of subjects of Federation to address this serious problem. However, this problem is not regional, and Federal. Well, what can it do for your business, for example, bankrupt the Governor of the Kostroma region Sitnikov, who called on his countrymen to dig the beds yourself? In order to power could really support the business, you need to completely change the paradigm of relations with the Russian leadership and to the business and “pandemic”. Or you need to override the quarantine, or to enter a state of emergency to mobilize officials. Until then, betwixt and between: introduction population and the economy in a coma, instead of doing their intensive therapy.

In a situation when the President announced a poultice dying business, the same way they did and the Moscow mayor Sergei Sobyanin, made a formal appeal to the business community to refrain from layoffs. The treatment is perceived by society as blatant hypocrisy. Of course, the first thing that comes to everyone’s mind police, forced to close his business today, it’s a counter-proposal to the mayor to redirect spent on curbs 2 + 13 billion to people and business.

“SP”: — What to do such as “Zebra”? For dismissal, they can face penalties, and to pay nothing…

— “Sportmaster” and thousands of other similar companies these days are bankrupt. The only solution is the closure and liquidation, because in the current environment, these companies cannot even sell. Officials are not even aware of the scale of the impending disaster — I don’t know what is in Russia today to stop a private business, even for one day.

“SP”: — the Experts believe that the summer unemployment will rise from 4.4% to more than 6%. Than it threatens the economy?

I don’t know what the experts call such figures? Kudrino? Simanovskii? In the country a third of the population is formally unemployed a long time, but is more convenient to consider self-employed because these people somehow earn on a contract basis here and there. In the summer of of such people in the country will be half of the working population of the country. Than it threatens the economy and the state? For a start, a cold civil war population with the government: the population is to ignore the power and sabotage of its decision, officials will try to tighten the screws in all directions, stirring up an increasingly fierce resistance.

“SP”: — the Experts believe that the real incomes of Russians will fall by more than 5%, leading to poverty millions of people. Is it really so? The government will somehow try to prevent this scenario, or she is afraid of him? Or here at all desire to do anything?

— What 5%? This is again Kudrino “experts” think? Falling incomes in the current quarantine until April 30, dropping the income of the population by at least 20%. I think that someone in the government understands this term, but can not do anything — because he did not give the word. Today, no one in the country has no powers to do anything to prevent the disaster: control system is built in such a way that all serious decisions are closed on the first person. And the first person pretends that it has nothing to do with it, that the king should govern, not to manage that responsibility on the regions and the government, not realizing that the heads of regions and Federal officials paralyzed the current Russian system of administrative unity of command… Yet everything moves to the collapse in Russia of the current system of governance. And what to do in such a situation — known. The current head of state must either make way for someone else, or if he doesn’t want to leave, should immediately form a new team of managers, getting rid of the current one.

Economist, editor of the telegram-channel Politeconomics Khazbi of Budanov believes that Russia is facing unemployment and poverty are already evident.

But suffer, most likely, all groups of the population, how will the compression of aggregate demand, which at year-end will lead to a deep recession.

“SP”: — Der Standard writes that the negative effects declared by the President Vladimir Putin “outside” is aware APR and guide. However, with the growing number of infected, apparently, there was no other alternative. Whether there was no alternative?

— In fact, 60% of the companies continue to work anyway (office staff moved to udalenku, and work physical labor (storekeepers, drivers, etc.) continue to work. Employers even provide them with personal protective equipment (respirators, gloves). If we imposed a strict quarantine, as in Italy, the economic situation would worsen significantly. But given the epidemiological threat, the authorities ought to take extreme measures, and business and public support for large-scale fiscal incentives.

“SP”: — the Experts believe that the summer unemployment will rise from 4.4% to more than 6%. However, this number does not account for between 16 and 25 million self-employed small traders, mechanics or seasonal workers, who threatens to ruin. Besides already received numerous complaints from employees who were sent on unpaid leave. How would you assess the real figure of threat?

— I think the level of real unemployment is above 10%. Unfortunately, our statistics do not allow to make an objective assessment, as, for example, in the US, where according to forecasts, the unemployment rate for 2020 may lead to an unprecedented 32%. Therefore, we should focus on this figure.

“SP”: — the Publication notes that social protection in case of job loss is small: the government has allocated for the payment of unemployment benefits for about 350 million euros in recalculation on the European currency, 410 million euros for the payment of disability benefits. This will not last long and not for many. This is really small? Why not take some more? Over in the US all stupidly handing out thousands of dollars. Why Germany allocates to combat coronavirus excess of a third of its GDP, the US is 12.4% of GDP, and Russia is only 1.2%?

— According to Bloomberg, the Economics, the size of fiscal incentives in Russia does not exceed 0.8% of GDP. It is difficult to understand why the Russian government doesn’t want to help the economy. Perhaps this irrational fear that the reserves will dry up quickly. We see that even large-scale incentives in the US is not helping. Important not only the incentives but also the nature of assistance. There is a big difference between helping the financial markets and increased funding for hospital beds.

“SP”: — “According to rating Agency “ACRE”, the real incomes of Russians will fall by more than 5%. For comparison: since the beginning of the Ukrainian crisis in 2014, real incomes have fallen by 7.5%. Therefore, the majority of Russians will enter into a new crisis without savings. In the past year from 17.6 to 20.9 million Russians lived below the poverty line. The sharp decline in real income will lead to poverty of several million people. Is it really so? What this means for the economy and for the government?

— Falling incomes of the population always has a negative impact on aggregate demand. However, in relatively calm periods, citizens can maintain the level of consumption through consumer credit, which actually happened after 2015. Now the situation is different: banks are already starting to tighten requirements for loans, coupled with falling income will lead to a recession in the Russian economy.

“SP”: — Putin, Sobyanin, Mishustin regularly called on employers not to reduce staff, do not send on unpaid leave. But who will pay for it all? How do the authorities imagine it at all? And what about the employers? No money, can you hold it?

Is the cynicism of our authorities, who are well aware that in such circumstances small and medium businesses just can’t survive. It is obvious that the authorities are now concerned, first and foremost, only about themselves and large oligarchic business.

© 2020, paradox. All rights reserved.

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