Friday, November 6, 2009

Window on Eurasia: Moscow Urges Russian Businesses to Solve Company Town Problem by Sending Workers Abroad for Re-training

Paul Goble

Vienna, November 6 – Having tried and failed to shift responsibility for addressing the “company town” problem onto regional governments, few of which have the resources needed, Moscow officials have come up with a new idea: calling on Russian businesses to solve the problems of these depressed areas by sending workers from these places abroad for retraining.
Stanislav Naumov, deputy minister of industry and trade, told members of the Russian Union of Industrialists and Entrepreneurs (RUIE) that “business must invest in human capital. Where the government has no money, business must share its incomes, for example, by sending cadres abroad” for retraining (
Urging Russian businessmen to approach this issue with “the maximum degree of calmness,” the deputy minister added that “now is being sharply felt not the problem of unemployment but a deficit of qualified cadres for new investment projects,” a suggestion to which many in these company towns would find it difficult if not impossible to agree.
Naumov’s comments came at a roundtable entitled “The Company Town: From the Tactics of Survival to a Strategy of Development,” a meeting that simultaneously underscored just how serious this problem is and is recognized as being as well as how little agreement there is among those involved on what should be done to address it.
Speakers at the meeting made it clear that there is as yet no agreement on what a company town in fact is or on how best to deal with their problems. Grigory Marchenko, a specialist at the ratings agency Ekspert RA, for example, pointed out that Russian law does not define which communities fall into this category.
Marchenko is technically correct, but various Russian government agencies have compiled lists. And those lists underscore just how serious the company town problem is. The regional affairs ministry, for example, says that there are 17 “crisis” company towns, another 60 which are likely to face serious problems soon, and 250-280 which must be monitored.
Together, these company towns – or “monogorods” in Russian – were responsible for 40 percent of Russia’s GDP before the crisis which hit them harder than any other places, and even now are home to 25 million Russians – or more than one in six of the country’s total population (
The ratings expert stresssed that there is little or no agreement on how to address the problems of depressed areas. Local officials have one view, regional and central ones quite another, businesses a third, and the workers who are either unemployed, underemployed or suffering from not having been paid for weeks or months are yet a fourth.
Disagreements about what to do were very much in evidence at this week’s roundtable. Vladimir Rudashevsky, deputy head of the RUIE’s commission on industrial policy and the regulation of natural monopolies, complained that once again, Moscow is looking at Russian business as a source of funds instead of viewing it as a source of ideas.
And when Andrey Neshchadin, the director of the regional development ministry’s monitoring service, suggested that businesses in company towns should seek funds from the Development Bank, Rudashevsky responded that that would condemn them “to a long wait if not to dying out.”
Many of the problems of Russia’s company towns reflect outmoded technologies – participants pointed to an aging equipment stock – and a workforce without modern skills. But Naumov’s suggestion that firms send such workers abroad for training in order to be in a position to attract outside investment is certain to offend everyone involved.
Indeed, given its air of unreality – these firms seldom have the funds to keep these factories working let alone spend money on foreign training – Naumov’s remarks almost certainly will generate a new wave of anger in these depressed areas, exactly the reverse of what he and Moscow would like to see.

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