OREANDA-NEWS. September 20, 2010. In his speech, Mr Putin expressed confidence that the positive trends in the economy would continue to develop.
"Over this year, nearly a million new jobs were created, and unemployment fell to 7% of the economically active population," he said. "At the end of 2009, this figure was 8.6%. Real wage growth was 4.9%, and industrial production was 9.6%."

Mr Putin promised that pensions would again be indexed in 2011, and he stressed that there is less of a delay in the payment of wages now than in the prosperous pre-crisis year of 2007. The prime minister announced the plan to intensify administrative responsibility for violations of labour protection legislation: the penalties for such violations will be increased from 200% to 1000%.

Vladimir Putin, in general, praised the cooperation that has been happening between the government and the unions. He noted that the government is interested in the swift conclusion of a new general agreement between the associations of trade unions, employers and the government, which outlines specific plans for joint work in 2011-2013.
Vladimir Putin's opening address:

Esteemed colleagues,

First of all, I would like to congratulate you on the twentieth anniversary of the Federation of Independent Trade Unions of Russia, the country's largest public association.

The Federation of Independent Trade Unions of Russia (FNPR) was established in 1990 as a national trade union center, independent of the government and business and political organisations.

The FNPR is made up of 25 million people, 95% of the total number of the members of Russian trade unions.
Our meetings with the trade union's members have always been conducted in a traditional, business-like and open manner.

Mikhail Shmakov has taken part in almost every meeting of the Russian government. And I can assure you that he doesn't do it for the sake of appearances. Mr. Shmakov is a particular person, and it is not always easy for the government to negotiate with him because he often has his own opinion, which rarely coincides with that of the different ministries and agencies.

For instance, we have been implementing the International Labour Organisation's (ILO) standards in legislation on the proposals of trade unions. We have done this even when some agencies considered these actions economically inconvenient.

This year we have ratified three ILO conventions, which deal with rights to the paid leave, protecting workers' representatives and promoting collective bargaining. Work on another eight conventions is in progress.

Esteemed colleagues,

I would like to remind you that we argued a lot back in 2001. I believe that these disputes were heated, but very useful and substantial at the same time. And, in the end, we reached an agreement, which was adopted through the State Duma.

This core document is really important. I would even call this basic law for labour relations a constitution in its own right.

By adopting this code, we have ensured a reasonable balance between the interests of both employees and employers in the context of the modern and rapidly developing economy.

Now we see that the compromise we came to has passed the test of time, including the economic downturn, an extremely difficult period. In 2008, Russia, as well as the rest of the world, was affected by the downturn; it experienced negative consequences such as production decline, rising unemployment and the reduction of wages at many businesses.

But despite that fact, we managed to prevent the most severe consequences that could have occurred in the midst of the downturn. We managed to avoid the worst case scenario. I am confident that we managed this thanks in no small part to the responsible attitude of out trade unions, thanks to our joint work and the support you gave to workers, as well as the government's actions.

In fact, trade unions were some of our main partners, and were literally the co-authors of the anti-crisis measures.

Because of it, we were able to preserve basic social standards and constructive relations between all parties of the social partnership. The country never returned to a massive and humiliating delay of wages. Of course some wages were held up, but I can say for your information, even though many of you have probably heard of it themselves: the amount of wages held back in the entire country stood at 3.35 billion roubles as of September 1, which is less than in 2007, a prosperous pre-crisis year.

We promptly launched employment assistance programmes. Those programmes assisted more than 3.5 million people, the absolute majority of which either remained employed or acquired new professional skills and found new jobs.

What is more, we have continued carrying out system changes in the field of labour despite the downturn.

As you may know, in 2009, new compensation plans were implemented in the federal budget institutions, with the labour compensation fund increased by 30%. We have been permanently monitoring this process and correcting it whenever necessary. We just discussed this topic with Mikhail Shmakov, and there are a lot of issues to be solved so we will continue this discussion. We have been constantly discussing the issue of the wage reform.

And of course I cannot refrain from saying a couple of words about modernising the pension system and social insurance. Let me remind you, esteemed colleagues, that the trade unions not only supported but initiated the return to insurance payments from state extra-budgetary funds.

There are certain difficulties, we realise this. We understand the anxiety of entrepreneurs, and we have been constantly responding to them, by the way. This particularly deals with high technology enterprises; we make exclusions for them and so create transition periods, which, in general, proceed without any major interruptions.

And the most important thing, after the valorisation of the pension capital and the additional increases made in April 2010, the average retirement pension has totalled 8,169 roubles a month. This year the increase will be about 45%, and next year we will index pensions once again.

* * *

Esteemed colleagues,

I believe that even today, at this anniversary meeting, it is necessary to mention the problems which we face these days and which the government and the trade unions have to solve hand in hand.

The national economy has been gradually recovering after the downturn. It has been recovering steadily, but not at the pace we would like it to, though still ahead of some expectations. In any case, it has exceeded the expectations of both Russian and foreign experts.

This year about one million jobs were created, either new jobs or restored positions. The unemployment rate has dropped down to 7% of the economically active population; the figure stood at 8.6% in late 2009.

Real wages have grown by 4.9% (excluding inflation). By the way, during the downturn, when almost all countries cancelled adjustments, reduced wages and so forth, we managed to slightly increase real wages in the entire country. Today it stands at 4.9%, as I have already said.

Industrial production has grown by 9.6%. Let me remind you that during the downturn it literally collapsed down to 10%, and the manufacturing industry experienced a decline of up to 15.3%. And today the manufacturing industry has been developing more rapidly than the entire industrial sector.

We hope that such positive trends will continue to develop.

The main issue today is the development of our economy.

It is in our common interest to make progress by modernising production, creating efficient and higher-paying jobs as well as enhancing labour productivity.

Incidentally, this year we have seen a growth in labour productivity, not a record one but still a stable one.

And we must maintain such quality of industrial development by all means. Otherwise, Russian businesses will not be able to remain competitive, and new jobs will be created abroad rather than in Russia - similar things are happening in Western Europe.

And I believe that the trade unions should implement the plans of developing production units in connection with the creation of qualified and high-paying jobs. The modernisation of businesses and the adoption of new products should logically create an increase in wages.

The trade unions also have to make a contribution to such an urgent problem as defining a just wage structure. It should obviously be different for various professions and fields, and it is necessary to find a precise balance between the constant rates and the incentive payments. I believe that the majority of those present here will agree with me: there must be no wage levelling, those who tend to improve their skills should be encouraged.

The second major problem deals with improving working conditions.

You must have heard of the recently adopted programme for developing the Norilsk mining and smelting company, the Norilsk Region and the city of Norilsk. Some 27 billion roubles will be allocated to solve social and environmental issues as well as improve working conditions.

Of course, Norilsk is a special case. The problems there have been accumulating for decades both in the city and in the company, that's why we had to adopt a separate federally supported programme for Norilsk.

But I think the demand to improve occupational safety and health conditions will be justified. Neglecting the matter will cost the people and the government far too much. We have already witnessed this at the Sayano-Shushenskaya hydro-electric power station, the Raspadskaya coal mine and many other enterprises.

On my part, I can say that we have supported the adoption of the law on insuring dangerous production facilities and provided for suspension of the operations of enterprises that violate safety rules.

By the way, I have already spoken about this, and find it necessary to repeat it in public once again: I believe that during the implementation of such approaches, the role and the importance of trade unions has increased immensely. That is why we need to provide anti-corruption mechanisms, which are unfortunately possible only if the officials dictate their decision on suspending the operations of the business. And union leaders must be on alert; they must clearly understand what is going on and make their voices heard.

We will also prepare amendments to the legislation which will increase the worker's economic interest in following safety standards. In addition to that, we will introduce tougher liability standards for violating labour protection laws.

I would like to add that the amendments to introduce tougher liability standards will include making the fines for different violations 2 to 10 times greater than before.

I would also like to raise another issue.

Russia has been working toward the formation of a civilised labour market, which includes attracting workers from abroad. We are well aware that this is especially important for Russia. I mean our relations with CIS countries, with which we have no visa regime and practically no borders. This is a difficult social and political issue, a labour issue, an issue of international relations, and an issue of striking the balance between different areas of our national interests.

We are extremely interested in labour migration being absolutely legal, so that there are no gray areas that give rise to crime and corruption.

We need to help law-abiding people who came here to make a living; we need to help them adjust to life in Russia as well as protect their labour interests. And we can see a new field opening up for those trade unions that are highly experienced in settling labour disputes and that have good professional lawyers.

* * *

Esteemed colleagues,

In conclusion to my speech, I would like to assure you once again that the government considers trade unions reliable and constructive partners.

We are hoping for the swift conclusion of the new General Agreement Between the Government and National Associations of Trade Unions and Employers. This agreement will define the specific plans of our joint work for 2011-2013.

I would like to thank you for your attention and congratulate you once again on the anniversary. Thank you.

Vladimir Putin's closing remarks:

Unfortunately, I have to leave now, to work on my own programme. But before I leave this hall, I want to say that we are faced with very complex problems. They are complex because these challenges always require finding a compromise which would lead us to development, as our colleague just said.

We were just talking about the defence industry. Of course, there were good things to say. It has its problems, but nevertheless it served as a good social safety net in those conditions when it was established in Soviet times. Strictly speaking, mostly labour unions and companies carried the burden of social programmes.

"But what is a company? It's the state," said Mr Putin. "In those circumstances, a company was the state. In today's, it's not. As a rule, it is not. And today, it's not the defence industry that's in crisis, but the automotive industries. We have helped VAZ by taking on its community facilities, and this is extra help and support for VAZ. Otherwise, it would have to spend billions of roubles for the maintenance of these facilities (it's just that in a crisis it becomes more understandable), and so it simply had to sack a certain number of employees in order to stay afloat and not shut down completely. Simply sack them. And we went with the fact that these hundreds of millions of roubles had just given been given to the company from the state budget through various channels, but, in essence, the funds simply came from the federal budget."

And what about those companies where the state is not present at all? And we have so many of those, it's the majority now. This rule, of course, may not be currently universal - all or nothing. Moreover, if something is given to the municipalities at the regional level, this should be accompanied by adequate regional or federal. Funding. Everything must be done gradually, calmly, to ensure that the minimum level of service is maintained, but it may be desirable to increase the level of service. And of course, both the state and trade unions should monitor this very carefully.

The same applies to the minimum wage and the indexing of wages and various benefits, including unemployment benefits.

When the crisis began, we - and I say specifically you with us, because we did this in close contact with the unions - agreed to a sharp rise (relatively sharp), but nevertheless for those standards that we operate on, and according to those figures that we operate on, it's a significant increase in unemployment benefits.

I will not hide the fact that many regional leaders, the governors said, "We had people who had never worked, but came straight away for this allowance." I, by the way, do not think that this is bad; let people at least get that. But constantly increasing this allowance automatically - we need to think about that. How do we stimulate the labour market? How will we work here? What goals do we achieve? Or maybe we should work out other ways? Ways that are not any less effective and less expensive, but which produce a positive result for the citizens. Where should we send this money - funds from the federal budget in this case? And the situation is the same in many other areas.

When I said that if we do not develop such a mechanism (actually, we have developed one, it just needs to be improved), the mechanism of interaction with the trade unions in determining the most effective ways to solve certain problems, then surely we may find ourselves in a situation similar to what is happening in Western European countries. They are transferring more and more manufacturing abroad, and there's no way to stop the process. Soon, all manufacturing will be in China and India, even high-tech manufacturing. Because labour costs there are incomparable to those of Europe and America, and the workers there are becoming more skilled..

And here we need to find a good balance and place some restrictions on businesses. I totally agree with this. Give them an inch - and Mr Shokhin, (Alexander Shokhin, the president of the Russian Union of Industrialists and Entrepreneurs) don't be angry with me - and they'll take a mile. We need to approach this more carefully but avoid creating a dependency. This is a delicate question.

In general, we have developed a well-functioning mechanism for the coordination of issues. And I hope that we will continue to move forward with this.

Let's get back to the defence industry - because many issues in this industry have been resolved by working with the trade unions. And not only for security reasons, although that is very important, and defence capacity, but also bearing in mind that this is exactly the government's responsibility. During the crisis, we gave the defence industry even more funds than other sectors.

The general decline in actual production was almost 10% (9.8%), and the defence industry grew 7% and rocket production even grew by 17%, as far as I know. I am afraid I will make a mistake in the figures, but these are very close. This is the result of government support. And precisely because the issue is not just, as I said, defence, but is also the government's direct responsibility.

In any case, we're natural partners because, as it was rightly said here, our common goal, the government and the trade unions' duty, is to improve the lives of our citizens, improve the quality of life of each individual Russian citizen.

I want to thank you for working together in recent years, and I wish you success. Thank you very much.

You know, Mr Shmakov gave me an album. I'm looking here and it says,"May Yeltsin and his government resign!" And this upset me somehow.

Mikhail Shmakov: This did happen.

Vladimir Putin: Then I looked and saw the year 1997, and I calmed down.

All the best. Thank you very much!