Economic geographer Natalya Zubarevich talks about how regional elites are “walking through a minefield. Natalya Zubarevich: "The worst risk for Russia is degradation" Natalya Zubarevich December
Image copyright Egor Gaidar Foundation Image caption The former model of economic growth in Russia stopped working in 2013, says Natalia Zubarevich
Russian regions are accumulating budget imbalances and continue to get bogged down in the crisis. Where the lowest point of this peak is unclear. But it is also clear that this trajectory of decline is unlikely to lead to broad social protests, says Natalya Zubarevich, director of the regional program of the Independent Institute for Social Policy.
The main risk for Russia is to continue moving towards "downward adaptation of the population", which leads to degradation within the existing economic model. She expressed this opinion during the lecture "Depression in the Regional Dimension", read by her on Thursday at the Sakharov Center.
One of the organizers of the event was the Yegor Gaidar Foundation.
According to Natalya Zubarevich, the crisis that Russia is now experiencing began in 2013, when the "machine" of the old economic growth stopped working. The model that emerged in the 2000s has stopped.
Three dimensions of the current crisis
What was before? Oil prices were rising in our country, the economy was becoming more money. In parallel, to put it mildly, institutions did not improve, and there were more barriers to business development. But while the price of oil was rising, this system was balanced. As soon as the price of oil rose, even at $110 per barrel, that's it, the economy slowed down.
We stalled in December 2013 - already that year was zero in the industry, incomes were barely growing. It all started with stagnation, and we went into negative territory when external factors were added: Crimea, sanctions and anti-sanctions, which had the most impact on inflation.
The new crisis is slow, we still have not been able to find new growth drivers. On a nationwide scale, the crisis unfolds at three levels. First, regional budgets are suffering: for three years now they have been out of balance and are experiencing very strong debt pressure. This imbalance began in December 2012, when for the first time the regions had to account for the increase in salaries of state employees (in accordance with the May decrees of Vladimir Putin).
Secondly, we are witnessing an investment crisis: there is a significant reduction in direct investment.
Third, the crisis has an effect on income and consumption. Finally, as far as industry, the real sector is concerned, the current crisis is not quite the same as before: we are used to the fact that a crisis is a factory stopped, a lockout [closure of an enterprise and mass layoffs of workers], a strike. The current crisis is not like that - it is more hidden.
Image copyright getty Image caption Russia is moving on a trajectory of "downward adaptation", Natalya Zubarevich believes"Patriot Test"
The most annoying thing is that this crisis hit quite hard those regions where there were already modernized industries - first of all, our auto industry, especially the assembly industry. Industries where there is good management and a good product at the end - they fell.
In total, the debt of regions and municipalities is 2.66 trillion rubles - about 3% of GDP Natalya Zubarevich
The decline in the automotive industry amounted to 30%, but the situation with the production of railcars is even worse - minus 60%. Here it crashed throughout the production of wagons. Evil tongues say, let's now look at Uralvagonzavod in Nizhny Tagil. It is known that tanks are produced there at the most 20%, and the rest is wagons. Now it is very difficult for them there: they have a big test for patriotism. Following the auto industry and wagons are semi-depressive regions: Kostroma, Kurgan, Pskov, Amur Region. Each crisis they sag and then hardly "push out".
Well, who does not particularly feel this crisis from the point of view of the real economy? These are three groups of regions: the first group is a modern, new oil and gas industry (Sakhalin, Yakutia, the oil industry of the Krasnoyarsk Territory, the Nenets District). The second group is our agrarian south and the regions of the Central Chernozem region. The third group is the regions of the military-industrial complex. They grow the fastest: 7-11%.
If we compare the levels of subsidization of the regions in 2014 and 2015, they have not changed much. However, in 2014 federal transfers in general were more. The crisis is still pressing. However, one should not think that where subsidies are higher, there are more risks. For example, we see that a high proportion of transfers from the federal budget to consolidated budget Chechnya. But are you sure that Chechnya should be afraid? I'm not very sure here.
Regions are honest and regions are cunning
Who do we have now in the black? This is, for example, Moscow, Tyumen region. The Leningrad region is, in my opinion, a civilized budget policy. At the same time, there are regions that are poor, but at the same time live within their means, trying not to accumulate deficits. In 2015, the Vladimir region became poor and honest; it ended the year with a surplus. There is a responsible budget policy.
In total, the debt of regions and municipalities is 2.66 trillion rubles - about 3% of GDP. At the same time, there are regions that are brilliant at receiving federal transfers. In this sense, one of the remarkable places is the Republic of Mordovia. She now has a record: the debt is 165% of her own income. And don't be afraid of anything! And the deficit for this year is 24%. That is, they spent 24% more than they earned, and they feel good.
They give Mordovia a budget loan, but she - such a cunning one - does not try to replace expensive commercial loans with it, but continues to spend even more. In our political conditions, this is possible. In this picture, I read the lobbying opportunities not only of the regional authorities, but also of interest groups somehow connected with the regional authorities.
Airbags for the labor market
If you look at the dynamics of unemployment in the Russian regions, then a very small, insignificant increase occurred in 2015, but it was not catastrophic. Why? We are constantly told: someone was fired here, someone was laid off there. The answer is simple. Layoffs in Russia are now taking place at extremely slow doses, because there are other tools and factors influencing the labor market.
We have always entered crises through underemployment. This is our main way to mitigate crisis risks Natalya Zubarevich
The main factor is underemployment. This is an absolutely legal, legal form. Part-time work, downtime, leave by agreement of the parties. You work part of the time - and get part of the salary for it. And this, by the way, is the norm for Russia. We have always entered crises through underemployment. This is our main way to mitigate crisis risks for everyone, this is consensus.
We are used to thinking that we are a country where consensus is impossible: two people - three opinions. And in labor matters we have a consensus. It's good for everyone: business - because it makes no difference to them whether to fire or reduce salaries. It is good for the state - because people are not fired, there are no protests. People are also relatively normal - of course, the salary has become less, but then they didn’t fire me, the degree of uncertainty has not increased, and the day after tomorrow everything will be fine! We will be patient, we will wait.
Image copyright AFP Image caption Russians save themselves from the crisis to the last in individual or "small-group" survival strategies - and they consider it inappropriate to oppose the authorities, Natalya Zubarevich believesAnd generally speaking, considering our current demographics, we are wildly lucky. Now the generation of the 1990s is entering the labor market. It is one third less than the previous one. And the most numerous generation is leaving - the 1950s. If we grew and developed, we would have to shed crocodile tears. And so - everything is in order.
We have a huge informal sector, where 20% of the working-age population is involved - this is now about 20 million people Natalya Zubarevich
In order to somehow alleviate the problem of the retirement of the working-age population, we will need immigration of at least 600,000 people a year (now we have more than 200,000 people annually). In this scenario, by 2025 we will have a decrease in the number of working-age population by 8 million. In a bad scenario, the decrease will be 12 million people. These are the official scenarios of Rosstat. When we start to dust ourselves off and get out [of the crisis], we will have big problems. Who will work for us?
Finally, when we talk about what is a safety cushion for our labor market in a crisis, we must also remember such a kind of damper as a huge informal sector, where 20% of the working-age population is involved - this is now about 20 million people. They can officially be listed somewhere and at the same time make statistics for Rosstat - after all, according to the ILO methodology ( international organization labor), an employed person is one who works at least two hours a week during the last month.
On a downward trajectory
What is this crisis preparing for us? We will have a slow, viscous crisis, without mass layoffs. The regions with non-competitive economies will continue to fall, the industry will sluggishly adapt.
For the first time, we have a simultaneous contraction in both market and budget services. And a year ago, I thought that this is why the crisis will hit the residents of large cities especially hard, because there is a particularly large share of the service economy. But you know, I was wrong.
[Foreign] journalists ask me: everything is falling apart, why are there no protests? Answer: by the way! Natalya Zubarevich
I completely underestimated the ability of the educated, well-earned population of large cities to have downward strategies for survival. We are so ready to roll down the hill, even with a good education! If you understand that an exit out is not possible for you, you start looking for an exit in - and it always comes down to a downward strategy.
When I come to some countries, local journalists ask me: everything is falling down with you, why are there no protests? Answer: by the way! Because there is no linear relationship between the dynamics of the economy and the sociocultural perception of people. Because the business of people is to adapt to any changes. These people in adaptation choose either individual or small group strategies - to survive with the help of friends and relatives.
And to butt heads with this state is more expensive for yourself. The risks of collective action in Russia are monstrous, the result is not guaranteed at all, and there are always opportunities to get out of the situation through individual strategies. Our life experience has taught us this.
And now the whole country is quietly moving in the mode of downward adaptation. And as you know, this leads to degradation. And for me now this is the most infernal risk - degradation.
On November 17, 2016, Natalya Zubarevich, director of the regional program of the Independent Institute for Social Policy, became the winner of the annual Gaidar Prize in the category "Economy". We congratulate the unique expert on the well-deserved award and present to the attention of readers her lecture - on how the modern crisis works in Russia, delivered at the University " Novaya Gazeta».
- The lecture is called "How to survive Russian regions into a crisis,” and I gave it the following subtitle: “Federalism and Diversity Still Exist.” If we mean by “federalism” a wide variety of practices, institutions, and even development trends, then we really do have it. Therefore, there is bad news - a crisis. And there is good news- Regions survive in very different ways, and there are those that still feel quite well.
Before talking about a new, current crisis, it would be nice to put it in context. Our first crisis was the hardest, fatally deep and long. It was the transition from plan to market. It began at the very end of the Soviet period, we began to fall actively since 1992, and to make it clear what a crisis really is, just the numbers of the fall for 1991 and 1995: industrial production fell more than twice, 48% remained , incomes of the population at the very bottom, about 45% of what it was in Soviet times remained. At the same time, the unemployment rate was not monstrous - 9.5%, because the "replacement" of unemployment was non-payment wages.
Context of the current crisis
This first crisis- we call it transformational - our own, internal, we created it by moving from one political and economic regime to another.
What happened then? Economically, this crisis was most painful for regions with a developed manufacturing industry, especially machine-building and textile industries. They fell down very hard. Remained in many third, and even less than 30% of production.
The second group of those most bruised are the underdeveloped republics. The industry there, at the first test of the crisis, fell down - 25-30% of what it was in Soviet times remained.
And the third group is very interesting - these are cities of federal significance. Less than 30% of the industry remained there too, but it was a normal reformatting from the industrial type of development, through a blow, through a fall, to a gradual transition to a post-industrial one, which is typical for very large cities.
Who noticed this first crisis weaker? If we're talking about economic indicators, the situation was much milder in the oil and gas regions. Then, after two or three years, metallurgists quietly crept up to them, who in Soviet times worked for the country's market, and somewhere by 1995 they were already quite familiar with the global market, since we had cheap raw materials, and labor, and environmental charges are minimal. Russian metallurgy rushed to the global market.
Here is the first crisis. It began to stagnate in 1996, and then, literally 2 years later, we were hit second financial crisis. This financial crisis is induced, First of all, he is Asian He then went around the world. And secondly, we deepened this crisis with our own hands, accumulating debts and going into a severe default. This combination led to the fact that, first of all, the incomes of the population fell, they fell because of the devaluation, because the ruble collapsed six times, the incomes of the population fell by a quarter.
The industry did not fall much. Immediately after the crisis, it began to grow. It was not an industrial crisis, it was global, it was short, according to the "fall-wrung out" scheme. And during this crisis, we received the highest increase in unemployment, it reached 13% - this is a lot for the Russian Federation.
Who has suffered in this second global crisis, aggravated by their insane budgetary actions? Moscow. Banks flew, many people lost their jobs, those who were already in market services. But literally in the middle of 1999, everything began to rebuild. The periphery noticed this crisis only by price tags, in general, nothing terrible happened.
The third crisis is the well-known crisis of late 2008 and 2009. It is global again, but we were hurt. It started with the housing markets in the States and spread around the world. It was serious banking crisis, and then he moved into the economic. But we were hurt in a specific way.
What fell during this crisis? Since the situation around the world worsened, that is, demand decreased, this hit Russian industry hard. Because a very large share of our industry is occupied by export industries. And so, firstly, oil fell very, but briefly - somewhere up to 40 with a little dollars per barrel, somewhere from 80. The situation was very bad in metallurgy, it was hard to sell. And therefore, as a result of the crisis in 2009, the industry sank by 11% - this is a lot. And to scare you completely, I can say that by December 2014, when the crisis had already begun to actively unfold, in some metallurgical regions the decline was minus 35 - minus 40%. They stopped the blast furnaces, finally closed the antediluvian open-hearths. In metallurgy this crisis was the hardest, in oil and gas it was much easier.
In the second stage, as always happens, the sick Russian machine-building industry joined, and the machine-building regions also showed a fairly decent increase in unemployment, although in general, the average annual unemployment in 2009 was slightly over 8%, at its peak - 9%. Well, against the background of 13% in the last crisis in 1998, this one is softer.
This crisis - who did it hurt? The first, as I have already said, is the metallurgical regions, the second is the machine-building regions. A very strong decline in demand. Who flew this crisis like plywood over Paris? Elementarily, two types of territories, located in different places, but having a common property, are relatively highly subsidized. The republics of the North Caucasus are nothing to worry about, because they live mainly on transfers. And transfers to the regions during this period increased by a third. That is, the federal budget had a cash reserve, a bag, and helped businesses, banks, large companies and regions. At the same time, pensions were raised, which is generally surprising in a crisis, but it was done. As a result, there was practically no drop in the incomes of the population, the population did not notice this crisis in terms of incomes, but moderately noticed it in terms of unemployment. In addition to the underdeveloped republics, the Far East is feeling much better, which also has an increased subsidization, plus at that time preparations were underway for the APEC summit. A pipeline was being built to the East, and, in general, in all respects, the Far East looked much better than the country.
This crisis was also on the “fall-wrung out” scheme, but not as superfast as the 1998 crisis. Because we started to fall in the late autumn of 2008, and, in general, recovery, or, as it is called in the economy, recovery, happened by 2012.
What is the difference between the crisis in which we live now and all the previous ones? First, by its origin it has no connection with global crises. He is our inner. This crisis is stopping the old growth model - it no longer works. It does not work for many reasons, one of them is prohibitively high uncertainties, costs for businesses that simply stopped investing, despite the then high oil prices. Secondly, this crisis did not start with a traditional recession, it started with stagnation, the economy actually stopped growing somewhere in 2013, investments since 2013 are practically zero, industrial production is zero, each subsequent year the situation has become worse. If we take the general figures for 2015, then everything is very tolerable, the industrial decline is only 3.5% - against the backdrop of previous crises - a kindergarten. Unemployment remains at a minimum level - 5.5-5.8%. This is normal, this is when there is actually a movement of labor from one place to another. In fact, we do not have a noticeable increase in unemployment. But during this crisis, the incomes of the population began to really fall. 2016 has not been completed yet, I can’t say for 2 years, but for 2015 - minus 5%. I think in 2 years it will be minus 10%. We are still leaving in terms of income somewhere at the level of the end of the 2000s. That's not fatal. So far, it's not deadly.
Who and how is the crisis going? If we take industry specifics and geographic specifics, then when the acute phase of the recession began, everything was more or less clear. The automotive regions were the first to fall - demand shrank sharply. And after them, the regions that produce railcars - demand has shrunk sharply. Then, in general, machine-building regions, but not all.
The other side of this crisis was those regions where the industry still feels good. These are three types. The first is the regions that lucky with anti-sanctions. All regions specializing in the food industry are growing moderately, but the market has become free, the population cannot buy expensive things, so Russian producers have raised prices on the free market, and are slowly increasing production volumes. The second group of regions new oil and gas. We invested in Eastern Siberia, invested for a long time in Sakhalin, the Yamalo-Nenets District, and production continued to grow there, the regions gave a positive trend in industrial production. And the third group of regions - for the first time in the post-Soviet period - is regions of the military-industrial complex. Their growth continues for two years in a row - in 2014, and in 2015 and 2016 they continue to grow (not all of them already). These regions have more orders driven by significant growth budget financing. And I must say that the export of Russian arms has also begun to grow.
The specifics of the current crisis. Abstracts N. Zubarevich
What is the specificity of this crisis compared to all the previous ones? Once again, it started as an internal one and during 2013 and until mid-2014 it went on as an internal one, and only from the second half of 2014 external factors were added to it. This is, first of all, of course, the fall in oil prices. This hits, first of all, the federal budget. For regional budgets, this is not so important, they do not particularly receive these revenues. I assure you that even for oil and gas companies this is not so important, because the higher the price of oil, the greater the share in the form of rent is taken by the state. And many companies do not care, oil costs 35-40 dollars per barrel, or 100-110, because the delta goes into the pocket of the state, goes to the budget.
Respectively, this crisis has been exacerbated external factors, the first of which is oil, and the second is Crimea, these are sanctions. But the sanctions worked for quite a short time, mainly in the autumn and December 2014, when the Russian business that was in debt could not raise money to pay the loans, it was a big problem, because it was no longer possible to borrow cheaply in the West. The ruble collapsed twice, and this added to the appreciation, because we are a country that lives on imports. Here is such a crisis. What is its specificity once again: internal factors are the base, then external bricks are added.
The second specificity of this crisis is that it is slow, it is very viscous. The third feature is
The next thing is what is specific in this crisis. I'll start with something “not” - this crisis is not industrial in nature, the recession is small and a small number of regions are relatively affected by it. Secondly, this is not an employment crisis, everything is going differently, according to the Russian model of the labor market, through wage cuts, but not through an increase in unemployment.
This crisis has three pain points.
- Point one - budgets. At first, these were the budgets of the regions, where incomes began to grow very slowly, then in 2015 the federal budget was added - this is already a pure consequence of the fall in oil prices. And now we are seeing acute problems for the regional budgets for the fourth year in a row, and for the second for the federal budget.
- The second group of problems is investments. They have been falling at an increasing rate since 2013, and there is no light at the end of the tunnel yet, the fall continues. Business does not invest, it shrinks its investments.
- And the third acute sore is income of the population. Their stagnation began before the Crimea. The first such monthly results to zero were already in January 2014. The economy stopped growing in all directions. These three problems are the most important for Russia.
If the last crisis was flooded with budget money, we have nothing similar in this crisis. In 2009, transfers to subjects were increased by a third, their share reached 27% of all revenues from regional budgets. In recent years, there have been no increases in transfers: “The guys are on their own. Adapt."
And if we take 8 months of 2016, then transfers to the regions decreased by 14% in nominal terms. In a very tough situation for the regions. Despite the fact that incomes are growing very slowly, and the spending obligations of the regions have grown quite significantly.
Before talking about budgets, I want to say what we have come to in this oil and gas life.
We had very large rental incomes of the federal budget, and it could redistribute them: weak - more, average - according to the average. As a result, we equalized the budgetary security — this is the per capita budgetary security of rubles per person — almost the same for the vast majority of regions, with the exception of seven rich regions, from which it is impossible to take away. Well, now they are trying - one percentage point of income tax, but still you can’t take away much. Legally, it's their taxes. It's over, Moscow, this is St. Petersburg and the four richest oil and gas regions: Khanty-Mansi Autonomous Okrug, Yamal, Sakhalin and the Nenets District. Nenets is already in the past, its revenues are now pouring in, Sakhalin has also begun to roll in, because these two regions - only two of them - have some piece of oil rent, now this rent has shrunk, their incomes are also shrinking. And finally, one more region - the Tyumen region - which has its own rent from the autonomous districts, receives a part, and not a small one, of the income tax that comes to its budget from these districts. Everything. All other regions are more or less aligned in Russia.
I showed this picture so that you can see the initial conditions under which the budgets of the regions meet this crisis. Move on. What are their spending obligations? On average, social spending in the regions makes up 60-61 percent of all spending, and for many - under 70 and over 70%.
There are less than a dozen regions that have funds to spend on something else. Or they may not have much money, but they save on social programs with all their might in order to invest in the economy.
The share of social spending has grown since 2012 due to the need to comply with presidential decrees.
This situation could not but turn out to be what it turned out to be. Regions had to choose or combine two algorithms. The first algorithm is cutting costs. Well, what if your income is growing slowly, but you need to increase your expenses in accordance with the instructions?
In 2015, the main victims of optimization were the costs of housing and communal services - they declined very decently. Do you know how many municipalities cut housing and communal expenses? They just don't get paid for a long time. And when the gas network, electricity networks come to you and they say: but now we are turning everything off, you have to pay. Counting the budgets of the regions, I was always amazed why such a roller coaster - sometimes a lot, sometimes a little? Arrived in Altai region asked. They laughed at me, they said: we save, save, save, we don’t pay, we don’t pay until they take us by the throat, and then we have to pay.
As always, culture suffers. Masters of culture will soon become louder, they have nowhere to go - last year minus 2.5%.
In 2015, education was at zero, health care was nevertheless added. Well, more or less increased funding for social policy. To deprive people of benefits is the last thing from the point of view of politics, they did not risk it.
Here is the first half of 2016. How is it here? And then the electoral cycle began to work, spending on housing and communal services increased, however, half of the regions could not do this. But all the same, they increased it in total, because, you yourself understand, raising housing and communal services tariffs on the eve of the elections is not a good thing, politically very dangerous - they will increase after the elections, so it’s calmer.
Secondly, benefits to the population were increased by 8%. Well, a dozen regions only ventured to cut them down, all the rest increased, before the elections it cannot be otherwise. What does it mean? The governor is standing in a rush - he does not understand: it is necessary both there and here. And what is Russian federalism? I will formulate ahead of time: everyone is already spinning in his own frying pan, everyone goes his own way, everyone somehow calculates his risks. And so far, from the point of view of optimization, it’s not working out very well - I think 2017 will be tougher, and in 2018 there will be elections again.
Three recent years 75,76, 77 regions are in deficit, it has nevertheless decreased somewhat in volume, they have learned to tighten their belts a little, but in general, the deficit remains. What does this lead to? When we have such a deficit, we have to make ends meet somewhere - and the regions go to borrow.
You can borrow in three places, but I will talk about the two main ones. First, you go to the bank and ask for a loan, and you already understand the rate for this loan. And secondly, you go to the Ministry of Finance, cry, tear your clothes apart and ask for a budget loan, which now has a chic rate of 0.2% per annum. Would you like to take such a loan, right? And me too. But you won't get it, and neither will I.
There are certain rules, they should generally stand out according to the rules, but life is more complicated than the rules. And so when you look at the structure, you see two funny stories. The first funny story is the Republic of Mordovia. Its total debt burden has already exceeded its own budget revenues by 1.8 times. It's like Detroit! But, as you can see, the governor is in place, nothing is happening to anyone, everything is quiet and peaceful, and now she is getting more and more cheap budget loans,. Chukotka has a debt problem, but almost all of it consists of budget loans, if you were given free money - how good, you don’t have to bother much, you can even put this money in the bank for a while, you can still earn a little on it.
That's how it's done. This is done really wrong, because the federal center promoted the whole thing with its decisions, and the regions had to take the rap for them, and, in general, this led, in addition to the fact that the distribution of budget loans to help the regions, it, unfortunately , is opaque. There is a lot of lobbying here from above and below from the governors, and in general the budget system in Russia is unbalanced.
Does this mean that the regions will die? I beg you, don't wait. Everyone spins as best they can. Although the risks of the system are serious. If we take all the regions and spread them out horizontally, this is a deficit, vertically, this is a debt load, then you will see that two-thirds of Russian regions are in an acutely problematic zone, that is, everything is bad for them.
So far, the federal budget, the federal authorities, manage to throw in right time someone something, and someone hit on the head, demanding to cut costs - everyone except Chechnya. Chechnya - her head is not intended for this, they do not beat her.
And accordingly, while the system is more or less controlled, but the risks in it accumulate - this must be clearly understood.
And these risks will be resolved in a simple old-fashioned way. Example: Road construction cannot be reduced for two simple reasons:
and b) you probably understand the size of the kickback in road construction. Well, who will hurt themselves - there are none. Therefore, the social sphere will be cut down more intensively, step by step.
Not yet, I emphasize: for 8 months everything is in the pluses, even the housing and communal services are now decently in the pluses, and health care, and education, and social security. But this is a pre-election story, it has already ended, we are waiting for new statistics.
There are three patients who are still falling. This is the income of the population, real, that is, taking into account inflation. The decline in investment has not yet ended - the retail trade continues to fall, well, to the heap - since investment, then construction continues to fall. There is no normality here, stagnation has not yet set in - we are rolling downhill, not so cheerfully, but minus 5% of income in real terms - this is noticeable for the wallet, I think everyone will agree with this.
What happens to investments? The most severe decline was in 2015 - 8.%. This is a lot, this year about 5% so far is also a continuation of the decline. What does it mean? If you make a checklist - which regions are falling - you will be surprised to find that almost all developed ones are falling, and investments are jumping up most often among dystrophics. So you had little money, they threw you a little - well, everyone remembers arithmetic: the smaller the value, the higher the percentage, if you added a little.
Therefore, investments are falling not just in 50 regions - these are 50 more or less developed regions, in which investments used to be plentiful. Where do investments continue to go no matter what? There are unbeatable competitive advantages. And business - and in our country, it is mainly business that invests, because now less than 20% falls on the share of budget investments, it chooses indestructible competitive advantages. There are two of them in Russia. You know the first very well - this is our everything, our oil and our gas. The second indestructible advantage is that they are side by side - the capital of our country, Moscow and the Moscow Region - 11% + 4%, a total of 15%. This is the advantage of the agglomeration effect - a gigantic concentration of people, consumption and effective demand, and business, of course, also invests, first of all, where it sees that it will make a profit.
What does this mean? This means that in times of crisis, inequalities are even worsened. Because we are talking about a decline in investment, and when investments are concentrated in such places as oil and gas and the capital, this indicates that the rest of the territory is most likely lagging behind. Although, I must tell you, even in the "fat years" the share of Moscow rarely fell below 10%.
Move on. Let's try to understand where else investments are going in Russia. The share of regional capitals in all investments in cities has grown steadily from about 40% in the post-Soviet period to 60%. That is, the main recipients of money are regional centers. They are developing the fastest, they have the most opportunities, and this trend is also long-term. It is not connected with the political regime, it is connected with competitive advantages. There are no fools in business - they invest where they see a return.
What's happened modern Russia? During the post-Soviet period, we have already reached the Latin American level of inequality, if we count the country as a whole .
40% of the population have not reached the level of the average Soviet income, that is, they still live worse than in Soviet times.
The median has just approached the Soviet level of income.
And so, if we do not understand the full power of our inequality, which has formed the most during the period of economic growth, then we will not understand the reaction of the population to what is happening. I have this standby bike: I didn’t live well - and there’s nothing to get used to. A person has survived before, he continues to survive, but he does not care about everything else.
What happened to income? In 2015, our revenues fell by an average of 5%, and in some regions by 8% and 10%. Now the picture is worse. In the Volga region, in the Urals, in Siberia and in the Far East - there the drop in income in 2016 is stronger, and the center is recovering a little. But as soon as you remember where the Russian defense industry is concentrated - the center, partly the Volga region, and here there will be regions where the industry continues to grow - apparently, this also stimulates incomes a little. Now, look, there are no fools here, everything is clean - this is the decline in wages in 2015. It amounted to 10% in real terms, this is a strong story, we all lost a lot. Geographical differences - you can spit on them, because the quality of these statistics is not high, but the very power of going down is, of course, impressive.
Now let's try to figure out how our people react to these troubles.
What happened in December 2014, everyone remembers well? Moscow went crazy and took out not only Ikea, but the entire village of Mamyri. Moscow had money, she could.
I am coming to Yaroslavl. I am being driven by a taxi driver - it was the beginning of 2015 - and of course I ask him: how did you survive December 2014, how much did you run? The answer was this: well, they ran for a day, but on the second and certainly on the third the money ran out. Yaroslavl somehow passed this madness more gently. My colleague went to Stavropol and I asked her: ask around, please, how is it? She started this conversation at the department where she came to lecture. They looked at her a little and returned to the conversation about the methods of pickling tomatoes. Understandable, right? There was not much money there to arrange these races. And it turned out that the most unreasonable were the most educated residents of Moscow, and, to a lesser extent, residents of St. Petersburg. With which I congratulate you all. Have worked.
And then common sense began, because in 2015, when incomes fell, they fell by 5%, and consumption, retail decreased by 10%. We tightened our belts with reserve - we got scared. And now in 2016 for the first half of the year, because incomes are measured by quarters, we have an ideal balance: minus 5% income, minus 5% consumption. We went into a harmonious state: how much beer, so many songs. That's how we live. Therefore, we are now adequately adapting to the situation.
But all this is very sad, and it means that city services are shrinking, because trade is the main service, especially in large cities. Jobs are shrinking, at first girls from neighboring countries were kicked out of the cash desks - now Russians are already sitting, our guest workers are still in the back rooms, because it is very hard and poorly paid work.
The bottom line is that what we are seeing now is, first of all, the shrinking of the economy of the largest cities,
because it is in it that services are most developed and concentrated, primarily market, paid, of all possible forms and types, and the risks in this crisis for large cities, in my opinion, are very high. Another thing is that large cities can adapt - they have the resources, a margin of safety, but the risks are concentrated here.
Now about the industry. Now, as of September, 29 regions in general are in decline, in the manufacturing industry - 34. Approximately 35-40%, the rest are growing, but if last year I very clearly called which groups of regions were growing - it was just visible by industry specialization - now I already hard to say. Here is the dynamics: it grew a little, then got hooked, grew up again, got hooked again, there is no stability of growth, to say how many regions have been continuously growing for two years in a row - well, less than half of those who are growing strongly now. Such a shaky dynamic is not growth, it is the adaptation of the industry to worse conditions. Although I can say that in some defense regions, well, all the flowers just bloom - both in the Bryansk region and in the Tula region they feel very well, until recently in Mari El, where rockets are made. But then Mari El began to sag - apparently, the volume of the one that was, the defense order, ended. We are waiting and watching.
Now the last story that I want to analyze is about the labor market.
Russia has its own model of adaptation to crises, which was already formed in the 1990s. It is very simple: it is not so much employment that flies into the crisis, but wages. In the 90s, it was simple to disgrace - they simply did not pay wages for six months. And that's all. Well, if you want - well, go away, if you want - wait. Now the prosecutor's office is on the march, you cannot repeat this story. And there is an absolutely legal format allowed by labor laws, it is called “part-time employment”, when the car assembly plant sends you for a walk for three weeks, now Ford is going to rest until the post-New Year holidays, this is legal, it is possible. You get a bare tariff - most likely, they will not leave you without a salary. Although there is another format - you may be asked to sign a vacation without saving content, this is already a completely sad story. And if you look at which regions have higher rates of underemployment, everything is absolutely clear. First of all, the regions of the automotive industry - there was the most difficult situation, the plants were standing for a long time, we have been declining car sales for the third year in a row - it is already very strong, production has decreased by 40 percent, because there are fewer sales. Therefore, in these regions, the instrument of part-time employment is used.
The Russian model of the crisis is a reduction in business costs not through layoffs, but through wage cuts. This is generally a rather infrequent thing, although the Germans also had this happen in the automotive industry, but usually in developed countries laid off to cut costs.
We have people sitting as glued as a fifth point to their jobs. Why? There is no need to explain that this suits the authorities - there is no unemployment, no protests, everything is quiet and calm. This also suits business - how do you like it - with a carcass, whether it’s a scarecrow to lower costs - it doesn’t matter. The main thing is that you save in a crisis. Why does this suit people?
But because our Russian man is a man who is mortally afraid of uncertainty: I kind of work, I kind of get paid.
Do you remember this proverb: as long as there is no war. And somehow we adapt to the rest. This is a consensus of government, business and the population. We are all ready for this and agree to this.
Are there any local problems? There is. There are small towns, if I call you Minyar, Sim, Nyazepetrovsk - you have not heard such words, these are single-industry towns where even registered unemployment will be 5-6%, but they are 15-20 thousand people each, what do you know about them. Benefits will be paid, little by little they will be solved - this is something that can be solved on the spot, these are local problems.
There is a second factor, and this second factor is softening the situation on the labor market: it is called the Russian gender and age pyramid. The generation born in the 90s is now entering the labor market - it is tiny. And my generation is leaving and will continue to leave the labor market - the 50s, the baby boom, there are a lot of us. Of course, we don't want to leave the labor market — to retire or what? But firing people of retirement age - it's not for me to explain to you - is an order of magnitude easier than able-bodied people. There is much more room for maneuver here. And this is a very important mitigating factor of the crisis.
We will soon return to a situation where our population will be rapidly declining. Because we will begin to age rapidly again. Not in protest against the political regime. Just a tiny generation born in the 90s will give birth, and large generations will die, and the acceleration of depopulation will begin again.
On the one hand, this is good for those who need to pay benefits for a family with a child, and on the other hand, what will we do with the pension fund, how many more of us, what requests will we present to the state? And he, as always, "no money."
Can the population respond to the crisis with mobility? Yes. If there are at least some institutional prerequisites for this, if the barriers are not very rigid. IN crisis conditions There are two different trends: someone will increase mobility and an additional number of people will go to Moscow looking for employment, while someone, on the contrary, will sharply reduce their claims, dig up more potatoes and settle in their relatively small city. The volume of migration as a whole has slightly decreased, so, most likely, part of our Russians will be in favor of potatoes, a vegetable garden and a quiet seat with a tightened belt.
What else is to be expected and what is going on? Another model of adaptation. This is the same “gray” economy, informal employment, in which at least 20, and according to honest estimates, 25 million people are already sitting in Russia. And the “fork” fluctuates in the number of these employed somewhere in the region of 17-18, or even 19 million people. The most desperate are already talking about 20. This means that our labor market is adapting not only to the crisis, but also to everything else and through the expansion of the zone of informal employment. It's not a crime. These are people who don't pay taxes.
Have you noticed how much noise there is now about payments for the non-working population, medical insurance ... Well, pepper is clear, if almost every fourth employee is already there! I can hardly imagine... A shadow cab driver. Or a woman sitting with elderly Muscovites, who came from the Stavropol Territory. How they will go together to the tax office, register themselves and immediately pay these 20 thousand, it doesn’t fit in my head, especially in a crisis when there is no income. But the state thinks they should. These people are, in fact, forced into the "gray" economy, because there were no free places in the white economy. And some do not want to, because the costs of being in the "white" economy in the form tax payments for them is higher than the costs of sitting in the "gray" economy.
This is a very powerful alternate zone. The people who sit there, that's honest pioneering, they talk about what you read, listen to, what you worry about, think about - it's all for them, like on Mars. Their daily task is to survive, find a job, find a client. And now our intellectual troubles are deeply indifferent to them. They just have a different type of life.
I try to explain all the time, look, 40% live even worse than in Soviet times. About 20 million sit in the informal. What do you want from this country? Why are you presenting the Hamburg bill to these people? They just live a different life.
What's next, what's to come? By the looks of it, the revenue squeeze is not over yet. It will slow down, but the process continues. To all appearances, the investment decline will also continue if the state does not spin a new spiral of large and, as always, inefficient investments from the budget. This is a bigger risk than just slow contraction of investments. Then there is the destabilization of budgets on the march, nothing changes there, the situation is frozen, and I have a feeling that there are still enough resources of the authorities to control the situation in manual control mode and prevent an explosion. While it turns out with a stick and a carrot to sort it out somehow.
Further, I have already told you, the first geographical risk is the risks of the largest cities. In industrial cities, the situation may worsen, and in some places this is happening, but these are local risks. But in all the largest cities, cities-regional centers, the situation has worsened noticeably for the entire population, but most importantly, for that part of it, which we, of course, so pathetically, called the “middle class”. He already felt these risks, because his lifestyle is changing. He tried to develop, tried to invest in recreation, in the education of children. Now those opportunities are shrinking. And psychologically this crisis is the strongest for the middle class. He is collapsing what he rebuilt - partly developing a way of life.
What will happen next? Now this already concerns everyone, and it is more painful for the poor. The state will save on us. Oil has already run out, it is necessary to find (and it has already been found) another source for the budget. This is us, these are our taxes, these are our property payments, these are our overhauls. Right now, social benefits are being optimized, but with a clearly fiscal purpose. The regions themselves will have to choose how to get between Scylla and Charybdis, and save money, and not bring people to the streets. Yes? This will be a big task for them.
Industry risks for me, you know where they lie? When and if the federal budget simply won’t do what it continues to do now… Well, just two numbers for you: the share of national defense spending in the federal budget last year was 20.4% and plus another 12.5% for national security. Total - a third! This year, the share of defense spending will be 22%. That's it. But this cannot go on indefinitely. Because last year the federal budget deficit amounted to 2 trillion. rubles. And this year will be about the same story. Well, let's start printing money, drive up inflation, and wages, benefits, and pensions will again depreciate. All the same, these costs will have to be squeezed.
For me, the risks of an industrial crisis, first of all, in the future, not now, lie in the defense industry. When the money is bad, the factories, which are now working as much as three shifts, will really start to feverish. Let's see then. Because there was no need to untwist so. And now it's very hard to squeeze it all. Although the defense industry itself, if it is for sale, is not so bad. Our orders have really increased. Then I have a childish question: sorry, why then so much budget money it threatens to go there, if you are such a market, if you sell like that, then where is the money, where is your income? This is the first, and the second thing, which is connected with the entire defense industry ... How to say it politely? Well, we overestimate the importance of the factor of modernization of the defense complex, based on the current paradigm "Enemies are all around." It could have been done more slowly. See how carefully I phrase the phrase? Because not everyone agrees with this, but I think so.
How will we survive in the proposed circumstances? A lot depends on how the authorities will behave now. I discard everything that we observe, all this slight madness, I try to talk about rationality now.
If the authorities can maximize reliance on competitive, real advantages of the regions, something will work. Because even in crisis conditions, Moscow's advantages are obvious, they work - this is a gigantic cluster, a huge labor market, a huge variety of firms, products, it still works - under Ivanov, Petrov, Sidorov. It cannot be killed, it is rational.
If we will wisely use our oil and gas advantage. I am not afraid of this raw orientation. The problem is not in it, the problem is in how this rent is used, for what. The Norwegians have the same rent, but in other institutions it is used in a completely different way. But if large companies with modern technologies and modern management practices start coming to us, they will change our oil and gas market. I always say: do you imagine a conversation about gender inequality in Rosneft or in Gazprom? Well, everyone understands everything, right? Of course, these are male industries. But management companies, in oil and gas managers, they are not monogender.
What will our budget policy be like, how quickly will we recover? The first thing to do - postpone the execution of the May decrees. Well, we are not in a position to fulfill them now, we must honestly admit this. Purely political priorities - they break the economy very much. If they decrease, we will somehow taxi out. Because there are no eternal crises, eternal stagnation.
But so far, the amount of reasonable decision-making is so small that, apart from stagnation, I don’t see any special way out for the next few years. So increase your personal competitive advantage and don't just work in a "belt-tightening" mode. This is good for the figure, but unhealthy. It is necessary to adapt not only through worsening strategies, there may well be alternative ones.
Good luck everyone, thanks!
Natalya Zubarevich
Both Novosibirsk and Yekaterinburg, where many people took part in the protests, are macro-regional centers with a modernized population that has a request that the authorities take into account their interests. These cities always show great progress in social and political processes.
Makhachkala is another story. This is almost a million-plus city, if we take into account the densely built-up suburbs, but it cannot be called a major macro-regional center. The peculiarity of Makhachkala is that there are many interest groups operating there. Yes, there are still relatively free media, young people are very actively involved in the political process, but the city is simultaneously undergoing intensive urbanization and a return to religious values. In addition, over the past few years, with the advent of Ramazan Abdulatipov, the dialogue between the authorities and the population has collapsed: the former prefer the forceful suppression of all alternative points of view. Therefore, if Novosibirsk and Yekaterinburg are just advanced centers that follow Moscow and St. Petersburg, then Makhachkala is a sore point, where an alternative opinion is still preserved, and the degree of pressure is higher than the average for Russia.
The separation of power from the population has reached unthinkable proportions. Fighting corruption has just become a suitable euphemism
Vladivostok is a special place on the so-called “contact border”: people there see the world more, which contributes to the formation of critical thinking. In this sense, it is surprising that Kaliningrad has not shown itself so actively. Usually, it is difficult for the population of these two cities to sell something, the regions were formed by several generations of migrants, and these are people who are able to make decisions and tear their fifth point away from their usual place. So this is in a sense a slightly different culture: people are more independent, with their own point of view. Vladivostok's participation in the protests is good news, but Kaliningrad's non-participation is bad news.
Perhaps the passivity of Kaliningraders is due to the fact that in 2011-2012 they actively took part in the protests - people were brought to the streets by a very tough reform of the social sphere. Obviously, after these manifestations, the local authorities behave more carefully, establish a dialogue, and this to some extent relieved tension.
In fact, all the largest cities participating in the protests: Moscow, St. Petersburg, Yekaterinburg, Novosibirsk - showed a general resolutely negative attitude and expressed dissatisfaction with the fact that the separation of power from the population had reached unimaginable proportions. The fight against corruption has simply become a suitable euphemism. The dissatisfaction stems from the lack of feedback and the complete unwillingness of the establishment to see the problems of the country.
We found ourselves in a very interesting situation: problems cannot be localized - they are everywhere
Now regional centers are saying this, because people there are more educated, more reflective and less afraid. Therefore, for the first time in Russian history we got such a geographical scale of the protest. And this is not a question of Navalny's good work, I assure you, he and his associates are not so popular in Yuzhno-Sakhalinsk. It's just that the process has matured, the right time has come. People told the authorities: "You don't have to live on Mars."
The crisis began in 2013 and is gaining momentum. Now there are no geographical points on the map of Russia where the situation is “especially critical”, because it is like that everywhere. The income level of absolutely the entire population of the country is declining - in 2016 this process was even faster than in 2015 - the decline in consumption and investment continues. If lying on the bottom is a good trend, according to the authorities, then the population will not pretend that everything is in order. The industrial recession has stopped, there seems to be no big unemployment, but people agree to worse conditions, salaries and positions. In the periphery, people increasingly go into informal employment, where there are no social guarantees and you can lose your job at any moment. All this does not add optimism.
It's a federal issue local authorities only slows down the fall, but more often even accelerates it. There is a nationwide trend, and we find ourselves in a very interesting situation: problems cannot be localized - they are everywhere. And oddly enough, this crisis is no less felt in the regional centers than in the periphery. This is what distinguishes the current crisis from all previous ones.
Conferences 2017
- Traveling strategic session of the Ministry of Economic Development "Preparation of a strategy for the spatial development of the Russian Federation". Plenary report "Regional development: inertia and change. The role of competitive advantages and regional policy". Suzdal, 20 Jan. 2017.
- Sochi Economic Forum. Performance at round table"Strategy for the development of the Krasnodar Territory". Sochi, 28 Feb. 2017.
- XV int. economy conference "Western Siberia: region, economy, investments". Friedrich Naumann Foundation. Report "Socio-economic development of Russian regions: is there a way out of the crisis?" Barnaul, 6 Mar. 2017.
- Int. conference "Comparative Analysis of Social Issues and Economic Institutions". Report "Regional Development and Inequality in Russia: Factors and Trends". Institute economic research University of Kyoto. Japan, Kyoto, March 8-9, 2017.
- XVIII April International Conference of SU-HSE. Head of the section "Regional development". Moderator of the session "Income and consumption, social infrastructure". Moscow, 11-12 Apr. 2017.
- IX Forum of the Future "Persistence in Change". Speech in the discussion. Konrad Adenauer Foundation. Germany, Saxony, June 8-9, 2017.
- Eastern Economic Forum. Presentation at the sessions: "The fight against social inequality and polarization of society in the Asia-Pacific countries" and "Far East: demographic development, new quality of life, new opportunities". Vladivostok, September 6, 2017.
- Moscow Financial Forum. Session "Inclusive the economic growth and social policy of the future". Report "Socio-economic inequality in large post-Soviet countries: factors and dynamics". Moscow, 8 Sept. 2017
- Fraternal Economic Forum. Plenary report "Socio-economic development of regions and cities of Russia. Irkutsk region and Bratsk against the background of the country". Bratsk, 15 Sept. 2017
- School-seminar of young scientists of the Russian Geographical Society. Report "How to measure regional development? Methods, data and results for Russia". St. Petersburg, 21 Oct. 2017.
- Minsk Economic Forum (KEF-2017). Discussion panel "Who will find Russia (on its path to sustainable growth)?". Minsk, 2 Nov. 2017.
- International Conf. "The Vienna Prosess 2017: In research of a new balanced relationship". Session "Business climate in Russian regions". Report "The main drivers and dynamics of Russian regions development: does business climate matter?". The International Center for Advanced and Comparative EU-Russia/NIS Research. Vienna, 4-5 Dec. 2017
- XVII International Scientific Conference "Modernization of Russia: Priorities, Problems, Solutions". Institute of Scientific Information on social sciences Russian Academy Sciences (INION RAS), Russian University of Economics named after G.V. Plekhanov, Free Economic Society of Russia. Report "Socio-economic and innovative-technological development of the Russian North, Siberia and the Far East, the Republic of Crimea". Moscow, 14-15 Dec. 2017.
February 2015 - 2nd Tyumen Investment Forum "Investments. Industrialization. Regions. Breakthrough Logic", Tyumen. Panel discussion. Speech at the plenary session. Report: Opportunities and Barriers to Development Tyumen region in changing conditions.(Organizer - Administration of the Tyumen region).
February 2015 -Krasnoyarsk Economic Forum -2015. Plenary session "Crisis or Time of Opportunities: Domestic Russian Agenda" economic development", Krasnoyarsk. Speech at the plenary session. Report: Opportunities and barriers for the development of regions.
February 2015 - Krasnoyarsk Economic Forum-2015. Session "Megacities of the East of Russia", Krasnoyarsk. Report: Large cities of the East of Russia: the potential for the development of agglomerations.(Organizer - Administration of the Krasnoyarsk Territory).
April 2015 - XXVI April international scientific conference "Modernization of economy and society", Moscow. (Organizer - National Research University Higher School of Economics).
Plenary discussion "Priorities of social policy". Speech at the plenary session. Report: Crisis in the regions: social projection.
Round table B-05. Russian economy: diagnostics of problems. Report: Regional projection of the crisis.(Organizer - National Research University Higher School of Economics, ANCEA).
Public lecture. Report: Socio-economic development of regions and regional policy.
April 2015 - Conference of the Perm Polytechnic University "Modern city: society, power, management". Plenary report: Largest cities Russia: development and competition.(Organizer - Perm Polytechnic University).
April 2015 - Center for EU Enlargement Studies (CENS) of the European University "Russia in global politics – driving values and interests", Hungary, Budapest. Report: New Crisis: Factors, Trends, Regional Perspective.(Organizer - Center for EU Enlargement
Studies (CENS).
May 2015- II Symposium named after T. I. Zaslavskaya “Social challenges to economic development”. Plenary discussion "Socio-economic development of the Western territories of Russia", Kaliningrad. Report: Socio-economic dynamics of the development of Russian regions: Kaliningrad region against the backdrop of the country.(Organizer - RANEPA).
May 2015- International seminar "Eastern vector of Russia: a chance for a green economy in natural resource regions", Irkutsk region. Report: Socio-economic development of the eastern regions of Russia.(Organizer - Institute of Geography SB RAS, Ebert Foundation).
October 2015- International Investment Forum Sochi-2015, Sochi. (Organizer - Administration of the Krasnodar Territory).
Session "The Budgetary Situation in the Regions in Conditions of Economic Contraction: Risks, Opportunities and Prospects". Report: Regional budgets and regional policy: opportunities and risks.
Session "Drivers for the development of shrinking cities on the example of single-industry towns". Speech: Single-industry towns: diagnosing problems and choosing support tools.
October 2015- Moscow Urban Forum 2015. Panel discussion "Cities and territories of Russia: new challenges - new answers", Moscow. Report: Development of large Russian cities: opportunities and crisis risks.(Organizer - Government of Moscow).
October 2015- Seminar of the Russian Institute "The State Of Russia: What comes next"?, Great Britain, London. Report: Russian regions development prospects.(Organizer - Russian Institute, Kings College London).
November 2015- Conference of the Higher School of Economics and Management of UrFU and Expert-Ural magazine "Russian regions in the focus of change", Yekaterinburg. Plenary report: Territorial development and regional policy: regions and cities.(Organizer - Higher School of Economics and Management UrFU and Expert-Ural magazine).
November 2015- NUPI&NORRUSS Program, Research Council of Norway "Today's Russia – and where to next", Norway, Oslo. Report: Russia’s regions: crisis trends and prospects. (Organizer - NUPI&NORRUSS Program, Research Council of Norway).
November 2015- Conference of the New Economic Association (NEA) "Economic Development Strategy and the Future Russian economy", Moscow city. Report: Spatial development strategy after the crisis: from "big projects" to institutional modernization.(Organizer - New Economic Association (NEA)).
November 2015- "Mosaic of urban spaces: economic, social, cultural and environmental processes", Moscow. Plenary report: Socio-economic development of large Russian cities in the 2010s.(Organizer - Faculty of Geography of Moscow State University, Russian Geographical Society).
https://www.site/2016-11-10/ekonom_geograf_natalya_zubarevich_o_tom_kak_regionalnye_elity_idut_po_minnomu_polyu
Governors have become scapegoats
Economic geographer Natalya Zubarevich talks about how regional elites are “walking through a minefield”
Dmitry Azarov/Kommersant
Natalya Zubarevich, regional economist and professor at Moscow State University, is one of the leading experts on the development of Russian territories. In the regions they love her and are a little afraid. They love for a lively mind, for a thorough knowledge of the material, for the ability to easily talk about complex economic issues. They are afraid for the ability to tell the truth, no matter how bitter it may seem. On November 19, Natalya Zubarevich will participate as an expert in the work of the All-Russian Civil Forum. In an interview with the site, she spoke about how Russian regions are trying to cope with the growing budget crisis, and explained why it is difficult for the constituent entities of the Russian Federation to agree to defend their interests together.
"Cutting is hard work"
- We are talking at a time when the regions are in full swing budget process. There is not enough money, especially this year. Some regions, such as Chechnya, have the political opportunity to ask the federal center not to reduce support, while other regions do not have such an opportunity. What are the main recipes used today by the regional authorities to maintain financial stability, what strategies do they have, what typical mistakes do they allow?
- It is not easy to answer this question, because this is a “Brownian motion”. Everyone gets out as best he can, goes his own way through the "minefield", and it is still impossible to systematize this.
In any case, all regions have already understood that it is difficult to attract investors today, this is not the time. And since you can't increase tax revenues, it remains to cut spending. But here, too, everything is very difficult, because no one has canceled the requirements from above. It is necessary to raise salaries on time in accordance with the “May decrees”, and to carry out a program of resettlement from dilapidated and dilapidated housing, and to build roads, for which we also have to report. Subsidies from the federal budget are allocated for programs for the development of the agricultural sector and infrastructure, and there are no fools here: if money is given, then it must be taken. And you can take them only by adding your own, because subsidies are allocated on the principle of co-financing. And the region's budget is torn to pieces, because it is impossible to finance everything - something has to be cut.
- What are they cutting?
— Logic of the first two years budget crisis was pretty simple. In 2013, they tried to reduce support for housing and communal services and spending on the national economy - this is mainly the cost of road construction, transport, and agriculture. But as soon as we entered into a clinch and began to engage in import substitution, the federal center increased subsidies for the agricultural sector - and they also need to be co-financed, and no one canceled reporting on roads and housing. In 2015, the turn of social spending came, the total regional spending on culture went negative in nominal terms - by almost 3%, there was an increase in spending on education near zero, and spending on housing and communal services fell again.
Sergei Chernykh/RIA Novosti
But cutting is hard work. For example, in the first half of 2016, utility bills went up again. After all, how to reduce budget spending on housing and communal services? The system has not been upgraded. Heat, water, electricity supply is provided almost everywhere by local monopolists, as a rule, at inflated prices. I know quite a few cases when municipalities have optimized the cost of housing and communal services in a "simple old-fashioned way" - they accumulated non-payments. But then the service provider reported that tomorrow they would turn off the electricity or gas - and I had to pay. Therefore, when you look at the dynamics of spending on housing and communal services in the regions, the graph is like the teeth of a saw - up and down, up and down. This is how they optimize. I can't call it rational optimization. What else remains if the reforms are not carried out? Raise tariffs for households and businesses?
The costs are shifted step by step to the population: it pays for everything: for monopoly, for the high cost of services. But now there is a crisis, people's incomes are falling, and people's reaction to the growing amounts in receipts is becoming more and more painful. "Minefield" for the authorities. Therefore, the question “how do regional authorities get out today” can be answered in the following way: in different ways and with non-obvious results.
Let me remind you that there were elections in 2016. And the social spending of the budgets of the regions began to grow again: in the period from January to August of this year, compared to January-August of the previous year, spending on social protection of the population increased by 6%, because it is politically dangerous to cut benefits to the population before the elections. True, the regions are trying to optimize the system of social protection, to reduce the number of recipients of certain types of assistance. Spending on education and healthcare also increased, although minimally - by 1-2%.
What will be the dynamics at the end of the year is still unclear. The elections are over, but the need to optimize budget spending has not gone away. The regional authorities need to go between Scylla and Charybdis - both optimize costs and keep the population calm. Wherever you throw, everywhere is a wedge. As a result, everything is reduced a little bit: step by step, chicken by grain. This is the basic principle.
— Can you manage to reduce the cost of maintaining officials?
- I always carefully look at the dynamics of expenses under the item “nationwide issues” - these are expenses for bureaucracy. In January-August 2016, 25 regions reduced them, although more could be done. In the previous couple of years, they tried not to offend their loved ones. Not everywhere and on the sly reduced the administrative apparatus and even the wages of officials. There are regions where all this is cut harshly, but these are isolated cases. For example, Nenets autonomous region, where budget revenues fell catastrophically after the fall in oil prices, while spending was inflated. Therefore, now they are cutting hard spending, including on public administration.
But in the vast majority of regions, budgets do not depend on oil and gas revenues. It also helps that personal income tax is still growing (by 7% in January-August this year), and personal income tax - base tax for most regions. Increased income tax revenue - by 6%. However, transfers to the regions decreased by 14%, and there is less and less assistance from the federal authorities.
In general, the picture is mosaic, and for the time being I would refrain from highlighting trends. But I can name one thing - the regions will have to get out on their own, scrape through all the bottomholes. In a crisis, the importance of the quality of management, the adequacy and activity of regional authorities increases.
“Regions have realized that this is a harsh story”
- There is another way to quickly solve the problem of budget imbalance: to build up debt. Many regions occupy very actively.
— The debt of regions and municipalities slightly decreased from 2.66 trillion rubles in January to 2.61 trillion in October. Moscow is repaying its debts at a faster pace, but it has no problems, the budget surplus is such that no one could even dream of - 183 billion rubles, which is practically the entire budget of the Sverdlovsk region. But 47 regions continued to increase their debt, including the most indebted Mordovia, Khakassia, Oryol, Saratov, Astrakhan regions. Again, there is no trend, the regions are “creeping” into different sides.
- Someone is building up debt through budget loans, and someone - through commercial ones. What explains this?
- Good question. Someone got lucky, they gave out more cheap budget loans. Some people don't, they have to apply to commercial banks. The structure of the debt improved slightly by October, and the share of budget loans increased. But at the end of the year, it always gets worse, the regions again take bank loans to pay off their budget obligations. There is another risk. It has already been announced that in 2017 the volume of budget loans will not be 310 billion rubles, but 100-150 billion. There will also be tighter control over how these loans are used. Most likely, the regions will have to tighten their belts ever tighter.
- There is most likely a political motive in obtaining budget loans, because, according to statistics, the Caucasian republics have 100% of budget loans, and, for example, the Kurgan region has 70% - commercial loans. What explains this? Different lobbying opportunities?
- On the one hand, yes. But at the same time, it is more difficult for the Caucasian republics to borrow money from commercial banks. The federal budget also has other favorites: for example, Chukotka, whose large debt consists almost entirely of budget loans. The procedure for issuing budget loans is not transparent. There are rules: in order to get cheap budget loans, you need to reduce the number of people employed in public administration and budget spending. But Mordovia has been given and is being given, it is increasing both expenses and debt. Therefore, of course, there is a lobbying component.
Said Tsarnaev/RIA Novosti
- There are still methods of borrowing that are exotic in modern times. For example, in Yamal they are going to issue bonded loans for the population, that is, to borrow from the Yamal people themselves.
- Why not? Regions have been issuing bonds for a long time, act as issuers to the market valuable papers, and market players buy them. Another thing is that this bonded loan specifically for the population strongly reminds me of Stalinist loans. The question is, will the purchase of this loan be voluntary? Or will it be, as in Stalin's times, voluntary-compulsory? As usual, the devil is in the details.
“Considering how many employees of oil and gas companies live there, how dependent they are on the authorities ...
Yes, it's a huge addiction. This is indeed a mono-economy: the oil and gas sector and state employees with a small addition of the market services sector. Will this loan be an additional burden for state employees and employees of oil and gas companies? We'll see.
- If we talk about the regions of the North Caucasus, how will this discussion about reducing support end?
- In the first half of 2016, Chechnya received 14% more budgetary transfers. True, Ingushetia added more than 20%, so Chechnya is not a champion. In total, transfers to all regions were reduced by 12%. According to data for eight months, transfers to Chechnya grew by only 1% compared to the same period last year, while in general they decreased by 14% across the regions. This means that in the first half of the year, Chechnya was simply allocated transfers earlier, and by the end of 2016, it is likely to receive about the same amount as it was last year. But all regions will receive significantly less than last year. Now there is a competition not “to whom they gave more”, but “to whom they reduced less”.
“May decrees are a good idea, but dishonest in execution”
- The "May Decrees" have become a heavy burden for the budget of the regions. In 2018, the next presidential term of Vladimir Putin will end and the time will come to sum up the results of the implementation of these decrees, which were the realization of his election promises. Tell me: is there more harm or good from decrees?
— Difficult question. From the point of view of the basic goal - to raise the wages of those employed in the sectors of the public sector - the decrees are, of course, a boon. The idea itself is wonderful. But there is a first hitch: how does this compare with an increase in labor productivity? Simply distributing money, in this case oil rent, without increasing labor productivity is wrong.
Secondly, the idea was poorly calculated, because in the economy, as they say, “stretch your legs according to your clothes”: if incomes stop growing, then there is nowhere to get money for additional expenses.
The third point: it's good to be white and fluffy at someone else's expense. According to the Center for Development of the Higher School of Economics, 70-80% of the expenses for the "May Decrees" fell on the budgets of the regions, and only 20-30% in the form of transfers was added by the federal budget. Judging by the way the regions began to increase borrowing since 2013, the burden of the decrees was unbearable.
Dmitry Astakhov/RIA Novosti
The fourth point: after all, the goal was not only to raise wages, in addition to the carrot, there was also a stick. Spending on the "social program" has risen sharply over the years of oil rent, they had to be optimized. The federal government does not do it with its hands, it is “white and fluffy”. The regions had to raise salaries, and if there were not enough financial resources, then it was necessary to optimize the number of institutions and the number of people employed in social sectors. Indeed, the “social program” was inflated during the 2000s, no one argues with that. But it turned out that the regions turned out to be “extreme”, and the federal center receives political bonuses for raising salaries. This is the main thing I don't like about this design. It may be good in idea, but dishonest in execution. Moreover, this construction violates Budget Code RF, where it is clearly stated that any additional obligations imposed on a particular level of government must be accompanied by the allocation of sources of financing for these obligations.
And finally, fifth: in the context of deteriorating economic dynamics, salary decrees were a mistake. Since 2013, the economy has slowed down, the budgets did not have the financial resources to carry out the decrees, and in 2015 a recession began. Under these conditions, the most reasonable thing would be to correct the May decrees and to postpone their implementation for several years. Alexei Kudrin spoke about this, and I fully agree with him. If a decision is made that creates risks of destabilizing the budgetary system, it must be canceled or at least postponed. But it was said that the presidential decrees for the next presidential elections must be implemented. It seems to me that the unwillingness to admit mistakes is due to the dominance of political goals over economic ones, and this is dangerous.
“They will painfully think about who to touch first”
— Looking back at the 2018 presidential election, what steps do you think the authorities will have to take to improve the budgetary situation?
— I think they will take the path of increasing the fiscal burden. First of all, we can expect the abandonment of the flat taxation scale and the transition to a progressive personal income tax scale. The second is decisions to raise the retirement age. With a high probability, they will limit the payment of pensions to working pensioners. It is unlikely that they will be deprived of their pensions - too many pensioners work, this is a large electoral group. Rather, indexation will be canceled in order to reduce budget spending.
The rules of the game will change social sphere. In healthcare and education, they are already happening, more and more services are becoming paid. This process will continue.
In social protection, a difficult transition has begun from assistance on a categorical basis to targeted support. Categories are "deserved" people (veterans of labor, Chernobyl victims) or groups with health problems (the disabled), they are provided with assistance regardless of income. It is necessary to switch to the principle of targeted support, first of all, to the poor, but this will require improving the system of accounting for the income of the population. So far, attempts to reduce the number of beneficiaries have prevailed. Judging by changes in regional laws, the optimization of benefits will affect families with children more than pensioners. Child benefits received by low-income families are very low and hardly indexed. It is possible to close the maternity capital program.
Alexey Malgavko/RIA Novosti
Elderly people can also wait unpleasant surprises: in 2017 the subsistence minimum for pensioners will be reduced. Statistical games are always aimed at optimizing budget spending. For example, “salary” decrees became easier to implement after the methodology for calculating average wages in the regions was changed in December 2015, as a result, its level decreased by 13%. Even a slight reduction in the living wage for a pensioner will make it possible to reduce additional payments to the living wage, which are required to finance the regional budgets and, to a lesser extent, the federal one. There are many such perks.
Not a single professor has the brains to predict all the tricks of the Russian bureaucracy, which is trying to optimize costs and increase budget revenues. Creativity gushes, we do not have time to dodge. And this process will continue. The diagnosis of this crisis is simple - the costs are borne by the population.
“The goal of each region is to pull the blanket over itself”
- In the State Duma, half of the composition is now occupied by single-members. Can we expect that this will strengthen the lobbying capabilities of the regions? Will the new Duma, for example, be able to raise the question of changing the principles of budgetary policy?
“I am not a political scientist. On the level of common sense, I can say that in the Russian political atmosphere, no single-members, except for Chechen ones, can speak out loudly. And they will also not be able to unite to defend the interests of all regions. There is no horizontal interaction, every man for himself. Undercover lobbying practices will remain dominant. In order for the situation to change, there must be an opportunity to defend common goals for the regions. Today this is not the case, each region has the main goal - to pull the blanket over itself. So I have no illusions about the deputies. Single-mandate members as an institution are better than party lists. Probably, in the next electoral cycles they will become more active, but not now.
If they don't cancel...
- Anything is possible. So far, the State Duma is not the place where the regions solve their problems, but it's still better than it was before.
- The Ural economy is still being saved by the state defense order. In the Sverdlovsk Region, a 7% increase in the index of industrial production was recorded over nine months, but this growth was mainly due to the fulfillment of the defense order.
- The Sverdlovsk region is not alone, the Bryansk region is growing at a double-digit pace, the Tula region - at 10%.
The federal budget had a deficit of two trillion rubles last year, and this year it will be even bigger. The question is how much longer the state defense order will be financed in the same volumes.
“I wanted to ask you about it.
— In 2015, federal budget spending on national defense increased by 28%. Transfers Pension fund- by 31%. These are the main reasons for the two trillion dollar deficit. It seemed to me that the government is quite reasonable and understands the risks, so 2016 will be the year of at least some reduction in defense spending. But I was wrong. In October, it was decided that defense spending would increase by another 600 billion by the end of the year. As a result, the share of spending on national defense will reach 22%. In 2015, total spending on national defense (20% of total spending) and national security(13%) accounted for a third of federal budget expenditures. War budget. The question is when this trend will reverse. A slight reduction in spending is planned for 2017. It will spread unevenly among enterprises and organizations of the defense complex: some will be cut more, some less. It seems to me that Uralvagonzavod will not be cut so badly, this is a kind of symbol of our defense industry. But they still cut. After all, the main money goes not to the army, but to the state defense order.
Alexei Nikolsky/RIA Novosti
The authorities will try to make this process slow, but it will still have to be done. The situation is not hopeless: spending on national security began to be reduced already in 2015. Some adequate decisions are still being made, but terribly slowly.
The authorities are postponing the necessary decisions to optimize costs. Resources are still available. Apparently, until a brick hits the head, we will live by inertia.
"You can't help but violate by ruling the region"
- I recently saw your performance in the Vologda region. You said that in regions where there are no pronounced competitive advantages, the role of the professionalism of managers is especially important. At the same time: where to get them, these managers? The quality of regional elites is declining. I don't know if you have read an interesting article in the latest Kommersant-Vlast? It states a fact that has long been understood in the regions: the governor's chair has become far from sweet.
It's true, life is like a minefield. The feeling of power still warms, but there is no former security. It is not clear which of the governors will next fall under the distribution. Everyone has "skeletons in the closet"; it is impossible to govern a region without violating conflicting laws. The governors realized that they were becoming scapegoats.
“Moreover, you need to be both popular among the population and report to your boss.
— And at the same time have the financial resources to do all this.
- Where then in these conditions to take personnel for the formation of the governor's corps?
- Well, no one has canceled the feeling of high from power, so there will be personnel. The question is not quantity, but quality. The quality collapsed already in the "zero" period, during the period of appointments, because many people came to these posts who were simply not able to manage. Additional risks are borne by the second wave of security officials coming to governors. The first time it was in the "zero", and then not a single region under the leadership of a representative of the army or the FSB showed normal management and development. Other skills are needed to manage the region. The security forces know how to press, but this will make the region's economy stagnate even longer. This must be understood.
Yevgeny Zinichev did not work as the governor of the Kaliningrad region for 100 days. Not all security officials understand so quickly that it is too hard to lead the regionIgor Zarembo
The quality of governance in the regions is very different. There are regions where attempts to do something have been preserved. But they are becoming less and less, because the poor investment climate of the whole country and the existing system of relations “center-regions” are pressing on the regions like a heavy concrete slab. This is the vertical whose commands need to be executed. It is also necessary to take into account the economic situation: in times of crisis and stagnation, the efficiency of even professional teams and their skills play a lesser role. It's harder to pull yourself out of the swamp by the ears. But no one canceled the classic frog in a jar of milk - you still need to twist your paws.
It seems to me that now there are two basic directions for the regional authorities. The first is competent cost optimization, and this is a difficult job. There is no one or two easy ways. And the second is attempts to save at least some zones investment attractiveness based on the competitive advantage of the region is working with business.
— Are there regions that more or less succeed even today?
- The Tyumen region is still doing very well, but they have a corresponding backlog in the budget, more resources than most regions. The region has an accurate budget policy and a correct investment policy, the competitive advantages of its position next to the oil and gas producing autonomous regions are well used.
The Kaluga region did a lot in the 2000s, they have a good management team. But everything that they could do, they have already done, and new horizons are not visible. The Ulyanovsk region tried to attract investors, something worked, something didn't.
— What about Tatarstan?
— Tatarstan is doing a lot. First, there are financial resources, considerable the tax base. The last major regional oil company has survived in Tatarstan. Thanks to mineral extraction tax benefits, oil workers have more income tax, which mainly goes to the regional budget. In addition, in Tatarstan, since the time of Mintimer Shaimiev, a well-established management system. Yes, there are clans, there is corruption. But the control system is more efficient. In addition, Tatarstan is trying to diversify the directions of development. And the last (and perhaps the first in importance) is the special relationship with the federal center. In preparation for the millennium of Kazan, the Universiade-2013, the republic received significant assistance from the federal budget. I have great respect for what they do, but I understand that this is also done thanks to special conditions.
"Megaprojects are our problem"
— I know that you are not enthusiastic about the special economic zone "Titanium Valley" in the Sverdlovsk region. Are you skeptical about the "Titanium Valley" or about special economic zones in general?
— Special economic zones are a normal tool if they help to reduce costs. I would make the whole of Russia a special economic zone, because our costs are prohibitive - but who will allow it? But these zones should be different. There are two successful ones in the country. "Alabuga" in Tatarstan is a zone in the region, which is geared towards development and attracting investors. Therefore, the zone works in the general trend and adds an advantage. The second successful special economic zone is in the Lipetsk region, there is no such drive as in Tatarstan, but the zone is not bad. All the rest turned out to be fictitious. Because, firstly, they are tiny, and no one has canceled the agglomeration effect. As a result, the money that the budget gave for their development was not justified per unit of output.
I have nothing against special economic zones, as well as territories of advanced growth. Any tools that stimulate development are a good thing. I am against the fact that specializations are appointed in these territories, that investors are attracted there under the appointment of bureaucrats - or even scientists! - specialization. Always have to choose a business because he risks his money.
- As for all kinds of megaprojects ...
- This is our problem.
- We had such a "Ural industrial - Ural polar."
- How much I criticized him in Yekaterinburg at endless conferences! My prediction came true, this project will not be implemented.
- Now the head of JSC Development Corporation, which was involved in this project, has been arrested.
— What can I say? About the same thing I said about the state corporation "Resorts of the North Caucasus". What Dmitry Pumpyansky built in Dombai is already there without any state corporation. And what Chechnya will build will stand as a monument of the era, waiting for tourists. There will be no snow in the ski resort of Dagestan. Only the old Soviet resorts, which were in the best places, turned out to be viable: the Elbrus region, Dombay, they developed organically. Do not crush the local business, and it will gradually grow and become more modern. Organic growth from below is the most correct one. But no, we will do something global!..
"Megaprojects are our problem" Jaromir Romanov/website
- Well, "UP - UP" is different, no private business will build a railway.
— This project was stillborn initially. It didn't have any economic sense. It was lobbied by some Ural businessmen who came to United Russia. And she is ready to believe in the living water of Petrik, and in the “Industrial Urals - Polar Urals”.
- What about not infrastructure projects, but, for example, such as the World Cup? ..
- No comment. All the men of Russia will kill me, and the female fans will also kill me. The stadium is not the economy, the stadium is "bread and circuses". The economic return comes from investing in recreation when people relax, play sports and spend their money. Making a stadium open seven days a week, 365 days a year is impossible. In most cases, large sports facilities are unprofitable. If the region is lucky, the cost of maintaining these facilities falls on the federal budget. By the way, after the Universiade, Tatarstan kept all the hotels for itself, the campus became a university, and the unprofitable stadium was put on the federal budget. Already in Sochi, this number did not pass, no matter how hard the authorities of the Krasnodar Territory tried.
Big games are the times of the Roman Empire. Less capital-intensive facilities provide a much greater return, allowing them to be used on a daily basis for the population living around. In developed countries, large stadiums are no longer being built much, the needs have changed. And when they hold big competitions, they use existing facilities, so the costs are minimal. Or they refuse big competitions so as not to spend money inefficiently. And we are like Brazil. It is clear that this is a stage of development of the country. A show-free economy is not yet possible in Russia, because there are too many show-offs in power. Everything is interconnected.