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Moscow on $1 a day

In one of the world's richest cities, unemployment won't pay the bills.

Depending on previous wages, unemployment benefits in Russia range from a minimum of 850 rubles ($25) a month to a maximum of 4900 rubles ($147) a month, plus 850 rubles ($25) for monthly transport.

“If these people get the minimal benefit, of course they can’t live,” acknowledges Oksana Perelygina, deputy head of the office.

And once they get new jobs, they have to be prepared to accept lower wages, something many are unwilling to do.

Igor Davydov, 42, has been getting 3,000 rubles ($90) a month since being fired from his job as a driver for a furniture shop. “You can’t even live on that in one week in Moscow,” he says.

He’s been offered jobs, but the pay is too low — about half of the 40,000 rubles he was getting before. In the meantime, he’s taken his car to join the ranks of Moscow’s legions of gypsy cabs. “I can’t just sit around,” he says.

Analysts expect the unemployment rate to rise even higher. Following a calm March, when the ruble and stocks rose on the back of slightly higher oil prices, officials have begun warning that another downturn is in store.

“A certain growth on the world's stock markets and in oil prices should not leave us relaxed," Finance Minister Alexei Kudrin warned in a government meeting late last month. “This is a temporary improvement.”

The government says the economy will contract by 2.2 percent this year. International organizations are more sanguine, with the World Bank expecting the Russian economy to shrink by 4.5 percent, and the OECD projecting a 5.6 percent decline.

The government has worked hard to keep social unrest at bay, urging regional governments and oligarchs alike that they must do all they can to keep employees on the payroll.

“We haven’t seen social unrest largely because the government has put lots of pressure on Russia’s major companies not to fire hundreds of thousands of people. Rather than cutting down on unemployment, they’ve decreased working hours. That gives a different psychological effect,” said Vladimir Tikhomirov, chief economist at UralSib, a Russian investment bank. The longer the global recession continues, however, the more those companies feel the strain.

“We’ve moved to hidden unemployment. But wages are falling, incomes are falling, people aren’t happy,” Tikhomirov says.

And he, like other analysts, warns that the situation will worsen sharply if Russia’s economy — highly dependent on foreign demand for its natural resources — doesn’t pick up soon.

“Government finances are already stressed. If unemployment increases much more, the government won’t be able to provide benefits to a large number of people, and then social-political instability can arrive,” he says.

The World Bank warns unemployment will rise to 12 percent by the end of the year, accompanied by a poverty level of 15.5 percent.

The worst is to come far outside Moscow, warns Evgeny Gontmakher, a leading economist at the Institute for Contemporary Development, a Kremlin-supported think tank.

“In the regions unemployment will probably be a lot higher — 30 or 40 or even 50 percent. That will be tough.”

For more on the global economic crisis:Click here for the full report

http://www.globalpost.com/dispatch/russia-and-its-neighbors/090408/moscow-1-day