Window on Eurasia: North Caucasus Elites Profit from Moscow Errors on Unemployment Rates

Paul Goble

Baku, March 8 – The way Moscow’s statistical administration comes up with estimates on the level of unemployment in the North Caucasus is deeply flawed, one local official says, but republic leaders there are not doing anything about it because of the additional money the central government sends them on the basis of the false figures.
Inal’ Tammov, deputy head of the employment administration of the Karachai-Cherkess Republic, told the Regnum news agency on Thursday that his office has repeatedly told Moscow that the method Rosstat uses to project unemployment figures “does not reflect the real picture” (http://www.regnum.ru/news/968101.html).
Like most agencies involved in estimating unemployment rates, Rosstat surveys only part of the market and then uses its findings to project the totals for the region as a whole. But in the North Caucasus, Tammov said, it matters profoundly which districts the center selects for its studies.
“If the investigations are carried out in rural districts, where people officially work, then [Rosstat] comes up with a figure of 70 to 80 percent unemployed, [but if the areas surveyed are] in Cherkessk, then the unemployment rate is down to six percent,” the local official said. The actual rate of unemployment is somewhere in between.
“But even in rural districts,” he continued, “the real picture is different” than the one Rosstat paints. “Every morning, there are long lines of cars going from the villages to the republic capital where rural residents work off the books. Officially, they are considered unemployed,” even though they work and have incomes.
Tamm said his superiors in Karachai-Cerkessia were not unhappy with this situation. The artificially high unemployment figures Rosstat issues lead Moscow to send more money to the republic government which is then able to use these funds for other purposes.
That is not to say that there is not relatively high structural unemployment in the North Caucasus, Tammov acknowledged, but it is of a different kind. According to him, “the main problem” in this area is a gap between supply and demand: there are too many professionals and too few workers.
Given the reputation the Regnum news agency has for being close to the Russian security services, the question naturally arises as to why this report has appeared and what its content and timing may suggest about Moscow’s plans for dealing with the North Caucasus in the coming months.
Incoming Russian President Dmitry Medvedev and officials close to him have suggested that the republics must be given the resources they need to do their jobs but equally must be held accountable for the resources, including those from the central government, that they use.
The Regnum report thus may be the opening salvo in a new round in the fight between those who believe that the only way to improve the security situation in the North Caucasus is to send more money there and those who argue that corrupt local elites are misusing the funds, often exploiting Moscow’s own ignorance to do so.
If that reading of this news item is correct, then Tammov’s comments could lead Moscow to cut back on the resources it is sending to Karachai-Cerkessia and its neighbors, a step that would infuriate many regional officials and could spark a new and perhaps more serious round of violence against the center in that troubled region.