Unemployment in Russia
End of the Iron Borscht Bowl
By Lynda L. Maillet

The "worker's paradise" in this former communist nation may soon turn into a worker's nightmare. Under the old regime in the former Soviet Union, everyone was guaranteed a job, albeit maybe not one they would have chosen. Recent market reforms, moves toward privatization, and cutbacks in government subsidies to state-owned companies have forced many enterprises to begin layoffs of unprecedented size. The percentage of the Russian workforce unemployed is relatively low at present (120,000 or 0.2% of the workforce), but by the end of 1992 this number may grow to 8 to 10 million people by some estimates. More sanguine estimates by the Russian government predict that unemployment will reach about 3 million by year's end (or more than 4% of the workforce of 74 million people), still 25 times the current number.

Most Russian managers are still extremely wary of firing workers. They are accustomed to the old system in which laying off workers was both extremely difficult and anathema to the Soviet system. Workers were considered members of the collective and not mere employees to be hired and laid off at the whim of the managers. At the same time, the process of dismissing a worker was difficult and tedious; managers had to justify their action according to strict rules as well as obtain permission from the local labor union.

As more and more enterprises become self-financing, the managers are finding it more difficult to cover the costs of paying and literally taking care of their labor force. Traditionally, Soviet firms would not only pay wages to their workers, but also provide them with housing, food, and entertainment because of the scarcity of these services. Over time, workers have come to expect these services (the value of which often far exceeded their base pay) and even new private companies offer special access to food, consumer goods, and housing in order to attract good employees....

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