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Russia: IMF Wants Public-Sector Job Cuts

  • John Helmer



Moscow, 7 April 1998 (RFE/RL) -- Russia's government and the International Monetary Fund (IMF) are proceeding with a plan to cut state-funded education and health-sector jobs for up to 300,000 people this year, ignoring a pledge by President Boris Yeltsin not to do this. Nicknamed the Kudrin-Fisher plan, after the Russian and IMF officials who negotiated it, this is part of the economic policy that Russia and the IMF have agreed to sign. More than $3 billion in disbursements from the IMF's current loan to Russia depend on this agreement.

Alexei Kudrin, a first deputy finance minister and protege of former First Deputy Prime Minister Anatoly Chubais, disclosed the job cuts at an awkward moment, just before Yeltsin dismissed the Russian government and fired Chubais. Yeltsin then declared he knew nothing about the job cuts. Speaking of Kudrin, Yeltsin claimed "this is either a provocation or he simply invented that." After the president insisted teachers would not be fired, Kudrin backed off, claiming no final decision has been made.

When Finance Minister Mikhail Zadornov was asked to clarify the plan Monday -- three days ahead of a nationwide protest against the government's refusal to pay back wages -- Zadornov said the job cuts would go ahead. According to Zadornov, the initiative was the Finance Ministry's. "It was a proposal of the Finance Ministry, authorized later by the IMF. It is part of the program to cut budget expenses. It is part of the agreement with the IMF. The government has not abandoned it," said Zadornov.

Kudrin has said the job cuts would save more than $6 billion in the 1998 budget.

IMF Moscow spokesman Martin Gilman has said the IMF expects that, when a replacement prime minister is approved by the State Duma, and a new government formed, it will abide by the terms the IMF worked out with its predecessor. Zadornov replaced Chubais as finance minister last November. He is to be reappointed to the new government, Yeltsin has indicated.

Gilman and his deputy, Tom Richardson, had no answer when RFE/RL asked about Yeltsin's rejection of the jobs elimination measure.

Gilman did comment, however, on another transaction the government claims was used to pay overdue wages and pensions last year. That was a secret loan, first reported by RFE/RL, which American financier George Soros admits to making to the government in June 1997. That, Gilman now says, was for $600 million.

When asked why the IMF did not object to undisclosed borrowing last year, allegedly to pay wage arrears -- but, now, insists on a jobs-elimination program, Gilman again had no answer.

An American economic expert, teaching in Russia tells RFE/RL the rationale for non-payment of wages "is that it pushes people into taking second and third jobs gradually, without dumping large numbers on the unemployment rolls all at once." But she added, "There is a difference between a policy of non-payment, and a policy of job cuts." The expert asserts that non-payment keeps institutions operating -- while, job elimination shuts them down. It is very difficult, she says, to restart them "if people are fired."

The organizer of the April 9 nationwide wage protest, the Russian Federation of Independent Trade Unions, isn't making the job cuts a target of attack. According to Andrei Isayev, the federation secretary, "we know this project was considered and approved by the IMF. But we got an oral undertaking from (Deputy Prime Minister Oleg) Sysuev that the government hasn't signed anything. That's why the unions won't make an issue of this now."

Sysuev was responsible for employment and social welfare in the outgoing government. Isayev said Sysuev did not provide details of the numbers and location of the jobs to be eliminated.

John Helmer is a Moscow-based journalist who regularly contributes to RFE/RL.
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