Report by Mr. Mikhail Shmakov at the 10th BRICS Trade Union Forum. July 14-15, 2021.
National report of the Federation of Independent Trade Unions of Russia
at the 10th BRICS Trade Union Forum
July 14-15, 2021
Dear colleagues,
First of all, let me express our gratitude to our Indian colleagues for their efforts that made it possible to hold the plenary session of the Xth BRICS Trade Union Forum.
In these challenging times, we wholeheartedly support Indian people and hope that together we will overcome the current difficulties. In April, the Russian Federation sent 22 tons of medicines and high-tech equipment to India to help overcome a new surge of the coronavirus infection. We wish our Indian colleagues, as well as our colleagues from Brazil, China and South Africa perseverance and success in overcoming the pandemic.
As BRICS celebrates its 15th anniversary this year, the theme for Indian presidency "Intra-BRICS Cooperation for Continuity, Consolidation and Consensus" remains relevant for Russian trade unions. We strive to strengthen cooperation among BRICS trade unions, to maintain continuity and, as outlined in the Provisional Rules of the Forum, to safeguard the rule of consensus.
I will not dwell on the historical aspect of our joint work, Let me just emphasize that almost ten years have passed since the founding of the Trade Union Forum. During this period, we have become much closer, we better understand each other's specific nature, interests and capabilities, and we see the resources and prospects of our cooperation more clearly. Less than nine months have passed since the last BRICS Trade Union Forum, but this period, short by historical standards, was filled with significant processes and events.
Let me begin with an assessment of the domestic situation on the Russian labour market and in our economy.
It has to be admitted that Russia's economic development has slowed down. And this is not only due to the difficulties of the last two years caused by the pandemic. Russian trade unions have been sharply criticising the structure of our national economy which makes us dependent on the world prices for hydrocarbons; the growing inequality of income distribution; high tax and "quasi-tax" burden on the workers' incomes, as well as insufficient efforts by the employers in both private and public sectors to ensure increase of wages and salaries of the working population. The pandemic has only amplified the negative consequences generated by these and other problems of the Russian economic life.
In our national reports to the Forum, we have always emphasised the important role of social partnership in our country as a tripartite mechanism to coordinate the interests of workers (represented by trade unions) and employers with direct participation of the government. After voting on the amendments to the Russian Constitution in March of this year, social partnership has been enshrined in its text as a condition for the country’s sustained economic growth and the well-being of its citizens. This was a major achievement. However, we still have a lot to do to make social partnership an effective and reliable mechanism for protecting the workers' interests.
Although in recent years we have succeeded in achieving an annual wage increase for the economy as a whole by about 3% through negotiations and other actions, the actual growth of workers' incomes has been fluctuating around zero for many years. We believe that the steps on wage increase taken both by employers and the government of Russia as the country’s largest employer should be more determined and systematic. Wages have been and will remain the main source of growth in the well-being of union members. The illusions that some "unified social payments" or "guaranteed income" can have an impact on the family budgets of the working population are dangerous and even harmful. The effectiveness of such distribution of budgetary funds under the "social" pretext is doubtful and has not been proven.
The growth of consumer prices for food, non-food items and services over the past two years amounted to almost 5%. This year we see that prices have been rising even more. By the middle of this year, annual inflation is more than 6%, which is almost twice the level last year. We are also concerned about excessive borrowing as people take out more loans during the pandemic. The accessibility of banking services, the aggressive imposition of loans by microcredit organisations and mortgage concessions have played a mean trick on many family budgets.
I wish to reiterate that Russian trade unions consider wage increase as the only correct way to increase workers' incomes. We also believe that increasing wages in all sectors of the economy should be a national priority. It is through the wage growth that it is possible to achieve an increase in labour productivity, reduce the brain drain, eliminate the pension fund deficit and to address other challenges to the country's development.
During the pandemic, remote work has been used by many employers as a means to protect their employees from the spread of the coronavirus. Over the last year, the number of employees working remotely increased 20 times to 6 million people. There was a slight decrease this year to about 6% of the total workforce, but it is still a very large group of workers – about 3 million people. Given the prevalence of this type of work, the Labour Code of the Russian Federation was amended to define more clearly the most important aspects of remote work and increase the level of employee protection. However, trade unions are wary of this type of work, since many aspects of it remain unclear, ranging from the organisation of formal communication with the employer to the nuances of time tracking, inviolability of the time for rest and more.
Restrictions applied by the authorities to businesses and employees in the context of the pandemic have led to changes in the informal sector. Although the Government has taken steps to make the self-employed come out of the shadow economy, we consider these measures insufficient and one-sided. The fact is that the status of self-employed is legally established only in the sphere of tax payment, but in terms of protecting them as the actors of the labour market, as well as from the point of view of social protection guarantees, including social insurance and pension provision, the position of self-employed remains unenviable.
Some employers saw a loophole in the new tax regime for self-employed workers to reduce taxes, social funds and labour guarantees, leading in some cases to the illegal termination of existing employment contracts and the transfer of workers to self-employed status.
Problems have also worsened for the workers employed on service platforms. Mobility and social contact restrictions one day imposed and another day lifted due to the pandemic lead to sharp fluctuations in passenger flows, the number of delivery orders, etc. Instability of the volume of work carried out makes an employer to try play it safe, which results in increased workload on platform employees and, as a consequence, in sharp fluctuations in their incomes.
Until 2020, the unemployment rate in our country remained relatively low for many years — within 4-5% (about 700 thousand people). But following the imposition of the pandemic restrictions, the number of unemployed sharply increased to 3.6 million people (6.4%) and to date, despite all efforts made, the unemployment rate remains high at 2 million people, or 5.8%.
As we faced a new increase in the incidence of coronavirus in May, the job prospects for the unemployed remain negative. Due to this, there remain acute concern about the level of unemployment benefit, which was increased by the government decision for the pandemic period. It means that at the end of the year the unemployed may find themselves with the same amount of the benefit that would not allow them to meet minimum requirements while seeking a new job.
To sum up, during the past year, the situation in the Russian economy and the living situation of workers have continued to deteriorate owing to the problems caused by the new coronavirus pandemic. Our actions, which we referred to in our previous national report, have been reactive, systematic and have produced some positive results, but the overall situation is getting worse.
The natural question would be: What's next? What scenario could we build on to more effectively carry out our tasks? I believe that the last six months, at least in Russia, have shown that the end of the pandemic cannot be expected soon. The appearance of new mutations of the virus, causing a more severe course of the disease and reaching a wider range of vulnerable groups including young people, makes it necessary for the time being to set aside the thoughts about returning to the "pre-pandemic" state by next autumn, or even by the end of this year. The appearance of new mutations and the beginning of new waves of the pandemic is not just possible, but likely to occur.
This outlook is markedly different from the forecasts made at the beginning of the year, when the ILO review on the prospects of the labour market in 2021 was published. The aspiration for a sustainable, long-term and equitable recovery is fine in itself, but what if the recovery measures run into a new wave of the pandemic which is not over yet?
A new vision of the future is gradually coming on the agenda, when emergency interim measures to support the economy and various spheres of entrepreneurship and steps to save jobs can turn into a "new normality", a common practice. Spontaneous changes in the structure of the economy may begin, caused by the decline in employment in those sectors that are particularly vulnerable to the new virus; types of employment that do not imply personal communication may start to develop more intensively and extensively; there may occur a profound transformation of collective work methods, basic forms of communication of trade union activists, and so on. I do not wish to paint a picture of the future in black, but the reality gives us hope that the recovery scenario will give way to an adaptation one, which implies other measures and actions. I think that we need to discuss and address these risks.
I'm sure that roughly the same questions arise for other BRICS unions, so I would be keen to hear the assessments from other speakers.
Despite these and other difficulties of the pandemic period, Russian trade unions are optimistic about the future. We continue to actively improve labour legislation, work towards improving the pension system, strive to introduce principles of insurance, develop social dialogue and social partnership.
Now, as regards the draft Declaration of our Forum, I would like to thank our Indian colleagues for the work done and support its text as a whole. We have proposed an amendment to the first thematic section on social insurance, and hope it'll be reflected in the final text.
Turning to the topics of the ministerial meeting and the related draft documents, the FNPR adheres to the following points of view:
The Social Security Agreement. In general terms, we support efforts to improve the level of social protection of migrant workers being citizens of BRICS countries by preventing double liability for payment of social security contributions within BRICS using the instruments and tools offered by the International Social Security Association.
In our opinion, such instruments and tools can be a subject of both bilateral and multilateral agreements, provided that the level of social protection of workers on business trips abroad, or who has concluded a contract with foreign employer, will not decrease in their countries of residence, and that workers in the countries of their current employment will not incur non-recoverable or unjustified insurance costs in those countries.
As for the Thematic Document on formalisation of the labour market, the FNPR position has always been based on the desire to maximise formalisation of labour relations at enterprises of all sizes and forms of ownership. We generally agree with the sectoral structure and quantitative estimation of informal employment in Russia outlined in the document, as well as with the assessments of the changes taking place in that area, and measures proposed to solve the problem. Incidentally, some of those measures, such as the admission to state contracts of employers who have fully formalised their businesses and labour relations, are also applied in Russia, yet only at the regional level.
However, we see how efforts to formalise the self-employed in the Russian tax legislation system have led to an increase in informal relations on the labour market, when individual employers rapidly began to terminate employment contracts replacing them with service agreements with the self-employed. This way, such employers not only save money, but also undermine the system of social and labour guarantees for workers in Russia. Therefore, we stand for an integrated approach to the elaboration of regulatory legal acts in this sphere and the engagement of social partners at all stages of the development and implementation of measures aimed at formalisation of the labour market.
Concerning women's participation in the labour force, Russian trade unions have no particular objections to the materials submitted for discussion on this issue. We can agree with the assessments and conclusions formulated by the working group. And for the record, according to the most recent report on membership in the FNPR affiliated unions, 60.5% are women, whereas among union activists of all levels women account for 74.5%. We clearly understand that discrimination against women in any form is unacceptable, and we intend to continue to support all initiatives to involve them more widely into formal work in all sectors of the economy.
Now, as regards the topic on platform employment, reflected in the thematic document "Gig-workers and digital platform workers: the role in the labour market": indeed, the new coronavirus pandemic has shifted the problems of those employed in the gig economy and the difficulties in structuring relations between platform workers and their business agents to the current agenda.
In Russian working practices, we have encountered monstrous deformations of the rights and guarantees of contractors on taxi and delivery e-platforms. The pandemic has clearly shown that the lack of regulatory framework for platforms and aggregators, as well as the uncertainty of the status of people who work there, are the key unresolved problems that give rise to mass protests and strikes.
We can agree with the main approaches formulated in the document and the issues for discussion in this area, although the quoted data on the number of people working in this sphere in Russia looks overestimated.
Dear colleagues,
Concluding our report, I'd like to emphasise that co-operation of BRICS trade unions over the past decade has proved its value and usefulness. We've succeeded in finding common language that allows us to talk, jointly discuss and develop common understanding of the problems reflecting fundamental concerns of hundreds of millions of workers united by our federations.
I wish you all good health and continued success in your difficult trade union work. I hope that our decisions today will serve as another step towards bringing our points of view closer together in understanding the present and future world of work of the BRICS countries.
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