2008: bad start, bad end

The current situation reminds me of the struggle against soaring prices early in the year. The world market has been denounced as the main, if not the only, reason for Russia's problems, and the bulk of the government's anti-crisis package is reactive, not proactive.

November was the first true crisis month, with an alarming fall in industrial production, 8.7% year on year with a 10.3% plunge in manufacturing. These are average figures whereas the production of cement fell 29.6%, rolled sheet metal 44.3%, and mineral fertilizers 51.6%.

The situation in the financial sector is no better. The other day Alexei Ulyukayev, first deputy chairman of the Central Bank of Russia, said capital outflow in January through November totaled $80 billion (the outflow really began in September) and could reach $100 billion by the end of the year.

The economic crisis will affect all Russians, some more than others. Statistics put the number of unemployed at 5 million in late November, or 376,000 more than in October.

The Economics Ministry expects unemployment to grow to 5.6 million people next year, the Health and Social Development Ministry thinks 6-6.5 million will be jobless, and pessimistic analysts fear the figure will be even higher, 7-7.5 million.

The worst off will be those living in towns that depend on two or three major employers. The problem with such company towns is that they have the highest number of skilled workers trained in Soviet times who are unlikely to find employment anywhere else because the internal migration mechanism is maladjusted.

In fact, it is easier for a guest worker from Asia than for a Russian citizen to receive registration and a work permit in Moscow.

The government has promised not to leave people in the lurch. Deputy Prime Minister Alexander Zhukov has said the government will allocate 44 billion rubles ($1.56 billion) to maintain acceptable employment levels, notably on retraining and social work.

These are palliatives. Can the government solve the problem?

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