Russian government tries to tackle problem of mono-industrial towns

The problem of mono-industrial towns regularly emerges in different regions of Russia. Source: Itar-Tass

The problem of mono-industrial towns regularly emerges in different regions of Russia. Source: Itar-Tass

The towns, which are a legacy of the Soviet Union, face unemployment and other social problems.

The Russian government continues to discuss measures to ease the acute problem of mono-industrial towns that almost entirely rely on just one or several companies located there. Much work is being done to this end, as the authorities seek to ease social tensions, yet experts believe they are unlikely to find a systemic resolution to this Soviet legacy in the foreseeable future.

On Tuesday, the Cabinet led by Dmitry Medvedev met to discuss the monotowns' employment problems in one of such problem localities - Tutaev, in the Yaroslavl Region.

The venue was not selected at random. The Tutaev motor plant is the largest local enterprise. About 40,000 people live in Tutaev, with 2,000 employed at the plant now against about 13,000 in the late 1990s. In November the plant switched to a four-hour work day as orders dropped, while production costs, in particular, electricity bills, increased.

Tutaev is only one of many Russian monotowns. Officially, Russia has a total of 342 monotowns, 235 of them have populations of more than 10,000. Some analysts believe there may be 500 monotowns in Russia.

The Cabinet suggested the efforts to address the issue be financed from the federal budget to pay some of business costs for the dismissal and installation allowances to those dismissed for moving to another place. The prime minister admitted the employment situation in monotowns was “grave.”

The allowance may total 400,000 roubles per person and twice the amount for those who agree to move with the family. While the initial programme stipulated migration to Russia's Far East, now it allows people made redundant to migrate to other Russian regions. A total of 14.5 million roubles and 3.64 million roubles are to be allocated for this purpose from the federal budget and regional budgets respectively.

The situation in monotowns, which, according to some sources, yielded up to 40 percent of Russia's GDP before the financial crisis, aggravated in 2008 when their major companies started to suspend operations, and people who had lost work began to turn out for protest rallies. Such demonstrations were the angriest in Pykalyovo, Leningrad region, where people blocked a federal motorway and forced the then Prime Minister Vladimir Putin to settle the issue "in the manual mode."

Since then the problem of monotowns regularly emerged in different regions. A state support pilot project was worked out and implemented in 2010-2011. At least it helped ease tensions for a while and create about 60,000 jobs.

Further measures are under consideration now. Among the proposals on the agenda one can see a wider programme for migration, including pendulum migration, for developing vocational training programmes, and creating industrial parks with preferences for investors, where dismissed or unemployed people will be able to find a job.

During the 2008-2009 financial crisis, the government allocated 40 billion roubles to support monotowns. However, then the emphasis was placed on the backbone industries, so the problem remained unsolved by and large. The government is no longer going to maintain low unemployment rates “by all means”, Dmitry Medvedev said at an investment forum in Sochi last September.

President Vladimir Putin called for permanent control over the situation in monotowns. “However strongly they may criticize us for the manual mode, in this case we need to consider each town in particular,” he said last year. “And we should not forget that each dismissal affects people’s lives.”

Experts have presented a variety of opinions of the government's efforts in this field, saying there is still no systemic solution, though the government managed to defuse the crisis and avert the looming social explosion. Many monotown enterprises are kept in operation only to avoid new revolts, they say.

The director of the Social Policy Centre under the Russian Academy of Sciences, Yevgeny Gontmacher, sees the government’s measures as a palliative. “It is like treating a gravely ill person with lotions,” quotes him as saying. The root cause of the problem lies elsewhere, he believes: “As long as our economy is based on the export of raw materials and is undiversified, monotowns will be gradually dying out. Their outdated mechanical engineering plants and processing industries are to be modernized. Therefore, nothing will help without an economy-wide modernization.”

“The problems are solvable, but there is nobody to solve them,” the REX news agency quotes political scientist Sergey Sibiryakov as saying. “Look at Belarus! All enterprises have been preserved and are operating. Any enterprise can change its specialization, if needed. The problem of dying monotowns is the problem of dying industrial production and the system as a whole.”

According to the president of the Confederation of Labour of Russia, Igor Kovalchuk, there are two ways to solve the problem. “First, the people should have an opportunity to move to the regions that offer available jobs,” Kovalchuk told Pravda.Ru. Another option as to retool the existing enterprises in line with demand, he said. However, this requires attractive conditions for businesses, which need to see some preferences before they agree to joint public-private partnership, he explained. 

First published by Itar-Tass.

All rights reserved by Rossiyskaya Gazeta.

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