OREANDA-NEWS. April 05, 2011. Vladimir Putin: Good afternoon, ladies and gentlemen.

In nearly two weeks, on April 20, the government will deliver a report on its performance in 2010, as required by the Constitution. I believe that such reports are very relevant and useful. As you know, ahead of its presentation, I've been holding consultations with the leaders of political parties in the State Duma. So far, I've had two such consultations, during which we discussed current problems as well as the challenges that Russia will soon face.

In addition to this, the government has initiated regular meetings with experts to discuss Russia's long-term development strategy and possible changes to it. I'd like to remind you that our report to parliament may include not only the results of our work but also new state plans and initiatives for the economy, social services, and public administration.

The drafting of the report is well underway, and it is almost finished. This is why I thought it would be appropriate to include it on the agenda of this meeting and invite members of United Russia, the largest party in the State Duma, and its leader and Duma Speaker, Boris Gryzlov, along with his colleagues, to attend. United Russia is doing a great deal of work in the regions and is probably aware of what is happening in the country better than the federal government. We rely on this party in the Duma, and we are accomplishing great things together. As I have said more than once, during the crisis we interacted very intensively with the Duma, which helped us execute many decisions of critical importance very promptly.

I am asking each member of the government to get involved in finalising the supporting materials for the report and to review again the issues and initiatives that need to be raised with the State Duma on April 20.

I believe that in 2010, we laid the foundation for moving forward and addressing the long-term goals of our development. There are, of course, still certain risks in the economy, but there are positive trends as well. The process of recovery in industry and the banking sector is gathering ever more momentum and force.

After a major downfall – I'd like to remind you that the economy fell by 7.9% in 2009 – our GDP rallied 4%, and industrial production grew by 8.2%. The highest growth rates were registered in the auto industry, which was hit hardest during the crisis. It has almost returned to pre-crisis levels. This was largely made possible through state programmes for the stimulation of demand, which received 44 billion roubles in funding. Investment in fixed assets grew by 6%, which also shows that the economy is reviving and that businesses have responded to positive market signals by investing in expanded production and modernisation.

Significantly, the economic recovery is having direct impact on living standards. In 2010, net wages increased by 4.6%, net incomes by 4.1%, and pensions by 45%. In addition to this, a total of 1.4 million jobs were created.

I'd like to remind you that in February 2009, unemployment stood at 7.1 million, whereas in February 2011, it was 5.7 million. This is no small figure, of course. But first of all, it's clear that progress has been made, and, second, we need to keep going. We are eager to continue to improve the situation on the labour market. In 2011, we will allocate 105 billion roubles from the federal budget for the social support of the unemployed and employment programmes.

During the crisis, we did our best to keep jobs and avoid the paralysis of the financial system and the real economy. One of our main priorities was certainly support of the elderly, for most of whom pensions are the single source of income. I believe we did the right thing by putting our focus on the interests of ordinary people. Everyone knows that we could not help every person who needed our support. We had to reconsider and postpone a number of socially important projects.

I'd also like to remind you that in late 2008, we increased the salary payment fund by 30%. In 2009, we had to refrain from indexing wages in government-funded sectors, but, overall, we managed to hold up well that year thanks to the increase we made in 2008. However, 2010 was a hard year on ordinary people. Very hard... It's understood that everyone faced difficulties during the crisis, but when living standards kept deteriorating, everyone wanted to know what would happen next, what the government would do for particular sectors, and what its social policy would be thereafter. We must lay out concrete proposals in our report to the State Duma. I would like the Ministry of Economic Development, the Ministry of Healthcare and Social Development, and the Ministry of Finance to submit them.

I would like to raise a few more issues today. First, there has been a lot of talk about measures to stimulate the economy, as well as small- and medium-sized businesses. We have recently reviewed these issues with experts working on a long-term development strategy. It is absolutely clear that the fiscal burden needs to be eased, which we have emphasised more than once. I would like the Ministry of Finance and the Ministry of Economic Development to submit their plans for reducing insurance premiums starting January 1, 2012.

At the same time, it's understood that there will be less extrabudgetary funding. I would like to stress that all our plans for pensions and healthcare modernisation must be fulfilled to the letter. We must find the necessary resources for them. However, as I have said before, we cannot shift the fiscal burden from businesses onto ordinary people, not to mention cutting funding for socially important programmes. We need to find optimal solutions. I understand that it's not easy and that our decisions will have to be non-linear and more painstaking than they may seem at face value, but we will certainly stick to the main targets set forth in the Development Strategy up to 2020, in particular our plans for improving quality of life and living standards.

The full-scale implementation of regional healthcare modernisation programmes will begin this year. By the time of our report to parliament, all pertinent agreements with the regions must be signed and plans regarding the repair of healthcare institutions (hospitals and outpatient clinics) as well as the purchase of new equipment must be drawn up. In addition, please provide a detailed analysis of the impact [of these programmes] on the quality of medical services available in each constituent member of the Russian Federation.

Furthermore, last week at the meeting of the Government Presidium, we discussed certain amendments to the current legislation. These amendments are aimed at creating a smoothly operating and clear mechanism for purchasing medical devices and equipment. In seizing this opportunity, I would ask State Duma deputies to consider this bill within the next few days. The same applies to major repairs. This problem can be solved at the level of departments. As we have agreed with the Ministry of Regional Development, please submit your proposals as soon as possible.

The amendments that I have just mentioned will enable us to purchase equipment efficiently and encourage leading foreign companies to launch equipment production in the Russian Federation. Such arrangements imply the use of offset transactions. However, if we are placing billions of roubles worth of orders with our partners, I think it would only be natural to gradually shift the production to Russia.

I ask the Ministry of Education and Science to formulate proposals on the further development of our educational system, above all in vocational schools. Vocational schools and colleges are, as a rule, under the control of regional authorities, but this does not mean that the federal government should pay any less attention to this issue. Please draft amendments with a view to improving vocational education and adapting it to a modern economy and labour market, so that we can discuss this matter with the deputies in detail.

Preparations for seasonal farm work are in full swing. In some southern Russian regions, the work has already begun. Our agricultural producers have lived through two droughty and very hard years, and we must help them harvest a good crop this year. We have already decided to reduce prices on fuel and lubricants and subsidised the purchase of fertilisers and seeds. The Russian Agricultural Bank (Roselkhozbank) and Sberbank have already provided a sufficient amount of credit to agricultural enterprises – 150 billion roubles.

Farms will also be able to purchase agricultural machinery via Rosagroleasing at a 50% discount. What I am talking about is more than 5,500 machines and other units of equipment. We need to contemplate also other steps in support of agriculture.

I want to remind you that we started a car utilisation programme as part of our anti-crisis measures. The programme worked well. We supported our manufacturers, and people could buy almost half a million cars on decent terms of purchase. I ask you to scrutinise the situation in even greater detail, weigh our financial resources, and provide your proposals on this programme and in some adjacent areas. We talked about it, and let's get back to it again.

Speaking recently in Bryansk at the United Russia regional conference, as you might recall, I suggested that deputies and government officials should declare their expenses. Judging from the discussion, society has reacted with clear support for such steps in fighting corruption. Let's see. I would like our State Duma deputies to formulate their proposals on how to legalise this idea in current statutes and regulations. I am sure that this measure will help us improve the state machinery and set more barriers against corruption and graft. I ask Mr Volodin to consult the deputies and prepare relevant amendments to the law.

There are a couple of questions concerning personnel reserves, but we will discuss them later in detail. This is what I wanted to say in opening our meeting. According to the agenda, first Ms Nabiullina will take the floor, then her colleagues will turn to other issues.

Boris Gryzlov: Mr Putin, please, before the minister starts speaking, allow me to...

Vladimir Putin: Yes, please.

Boris Gryzlov: I want to make one remark, with your permission.

Last year we did a great deal to address demographic problems. Now maternity capital is being paid in full, the amount of some benefits is substantially larger, and more is being done for children and youths in secondary, vocational, and higher education. However, it seems to me that one issue has been overlooked. You haven't mentioned it in your opening speech either. I am referring to the status of schoolteachers.

Regrettably, this profession, which was sufficiently prestigious for many decades, is loosing its social status, in part as a result of low salaries and the lack of proper promotion in the mass media. We are losing the teachers' corps. I believe that we cannot postpone the issue of raising teachers' prestige any longer. It would be very appropriate to consider this issue at today's meeting.

I grew up in a family of teachers: both my mother and father taught. They graduated from a teacher training institute where they met each other. And I know how hard the teaching profession is and how much heart and knowledge a teacher has to contribute to the education of our children. We must raise this issue today.

I planned to do it in the State Duma, but since you invited the United Russia group to this government meeting, I think it is appropriate to do so now.

Vladimir Putin: You are right, Mr Gryzlov. Indeed, we frequently talk about education and the waning prestige of the teaching profession because it is schools that form the basis for further knowledge and, in fact, the basis of for our nation's entire intellectual potential.

In previous years, we made certain favourable steps forward in the social sphere. Since 2007, we have introduced the concept of reform in service pay. In 2008, the Ministry of Defence started an experimental programme and has considerably raised the pay for certain categories of servicemen; and as of January 1, 2012, the pay of all servicemen will go up. It was declared that salaries for the personnel of the agencies of the interior would be increased. We have adjusted pensions and, last year, we raised them by 45%. We have actually indexed all social benefits despite the crisis.

In general, some steps have been made in education as well. I mean the establishment of federal universities, a system of grants, and the development of small businesses within the university framework. The situation there is not bad in general.

But as for schools, you are right, although, as we know, schools are under municipal and regional control. This is why I did not speak about it. Nevertheless, I agree with you that the problem is highly significant. So, in spite of the fact that this area is the responsibility of municipal and regional authorities, we should not pretend that it is none of our business. I have also planned to touch on this issue at the State Duma. I did not prepare to discuss it now, but I do have some proposals.

The regions spend approximately 620 billion roubles on education each year, 170 billion of which are spent by municipalities. Of the funds spent by the regions, about 560 billion roubles are provided to various institutions under regional jurisdiction for the payment of salaries. The remaining sum – about 60 billion roubles – is being used for major repairs and equipment purchases.

What are we suggesting? That we could help the regions repair these facilities, and they could use the amount they would save as a result to increase teachers' salaries. These measures are aimed at raising the average salary of teachers to a level consistent with the overall average of each respective region.

Due to the economic downturn, the average salary decreased quite significantly in 2009, falling to 18,000 roubles. Meanwhile, the average teacher's salary was about 13,000 roubles. The average salary has been increasing recently and currently stands at 21,030 roubles. The Ministry of Economic Development estimates that the average salary will be about 23,400 to 23,500 by the year's end, and next year will rise to about 26,500 roubles – 26,475, if I am not mistaken.

Teachers' salaries have barely registered growth, however. From the level of slightly over 13,000 roubles, the national average has increased to just under 14,000 roubles. Therefore, our goal is to raise teachers' salaries to the average salary level of each region.

If we provide these additional 60 billion roubles, however, the regions will also have to make a contribution – say 85, 90, or 95 billion roubles. We can work under this blueprint for two years. Alternatively, we could directly subsidise the regions, whereas under the plan I have just outlined, we would be responsible for doing the repairs.

This will allow us to strengthen and perhaps even create a single educational space throughout the country, creating major educational centres and affiliate institutions and, where possible, maintaining small schools. But of course, we will still need to pay particular attention to distance learning.

This requires appropriate equipment and training. Thus, we could create a programme similar to the one that we are beginning to implement in healthcare. Therefore, the Ministry of Education and Science will need to work with the regions to conclude the appropriate agreements.

If we proceed in this direction, and I suggest that we do, we would be able to increase teachers' salaries by about 30% in the near future. It will still fall short of the average regional wage, but not everywhere. In Moscow, for instance, it is close to the average wage, but in some regions, closing this gap will be a more difficult task to achieve. It is important to set a goal for us to strive for, however. This is the first thing I wanted to mention.

Secondly, the salary increase should not happen automatically, but in compliance with the existing certification procedures and with the involvement of the trade unions. I believe that we could develop and implement such a programme, and it could serve as an important contribution to all other programmes and initiatives that are being introduced in the education system, including the well known programme "Our New School". I suggest that we discuss this again at the State Duma.