Federation Council wants to introduce unconditional basic income for unemployed

2020-09-09

The head of the Federation Council Committee on Economic Policy Andrei Kutepov will send a letter on Monday to Assistant to the President of the Russian Federation Maxim Oreshkin with a proposal to introduce in Russia the payment of a basic income to the unemployed in the amount of at least three living wages of the working population. This was reported by TASS, which had at its disposal a copy of the document.

According to the senator, who is also a member of the Presidium of the General Council of the “United Russia” party, although unemployment benefits during the acute phase of the pandemic were raised to the level of the subsistence level,  not all unemployed who are registered with employment services got them. And even taking into account additional payments for minors and other payments to households, this still did not allow “to compensate them for the lost income and maintain an adequate standard of living.”

“According to the Ministry of Labor and Social Protection of the Russian Federation, we are about to have up to 5.5-6 million of unemployed people by the end of 2020. In order to more realistically meet the minimum needs of the unemployed, taking into account the family burden, they need to be paid an allowance in the amount of at least three living wages of the working-age population. This will require annual expenses for the maintenance of registered unemployed in the amount of 2.183 trillion rubles”, – said the senator.

This initiative has already been criticized by Sergei Stankevich, adviser to Russian President Boris Yeltsin, who acted as an expert in 1991-1993. His words are quoted by the FederalPress edition. Stankevich, referring to the experience of a number of countries “with developed economies”, in which experiments have already been carried out with the payment of an unconditional basic income to the unemployed, called this idea “poorly thought out and at least untimely.”

He noted that “in the Russian conditions, the negative effect of such payments may be even more significant” due to the imperfect accounting of unemployment and a large number of unemployed. He pointed out that, according to some estimates, real unemployment is already at least twice the official one, that is, it goes beyond 10 million people.  

An important point is that there are regions in Russia where one third of salaries are below the subsistence level. Under these circumstances, the idea of paying “benefits in the amount of at least three living wages of the working-age population” should inevitably lead to a significant increase in registrations at the labor exchange and the emergence of entire regions of “stagnant unemployment, in which benefit recipients will become the bulk of the population.” According to the expert, the Russians “will literally stand in line for free money.”

“In a word, the thought in the Russian Senate worked in the wrong direction. Instead of paying 2.183 trillion rubles for the absence of work, investments in the construction of new enterprises and the modernization of existing ones should be stimulated. … We need to form a dynamic manufacturing sector by limiting monopoly and creating conditions for the development of small and medium-sized businesses,” Sergei Stankevich wrote in his column.

 

It is difficult to disagree with these words even to those who doubt the possibility of modernizing capitalism as such. But it is surprising why he had not previously recommended that to President Yeltsin, as his adviser. After all, the foundations of monopoly capitalism, based not on the modernization of industry, not on the development of advanced knowledge-intensive industries, but solely on the division and consumption of the Soviet heritage and trade in resources in its most primitive form, were laid back in the days of his “advisory work”. 

And since then, little has changed, except perhaps the personalities of the advisers and presidents. Therefore – here we will also act as advisers, and even partly soothsayers – it is unlikely that Russians should count on “free money”. After all, sending a letter does not mean making a decision on payments. In addition, we should not forget about the upcoming elections on September, 13. As you know, such events often give rise to various “extravagant” initiatives among the deputies of the United Russia party. But after elections, they tend to regain a more pragmatic view of things.