Helsinki (13.03.1999 - Juhani Artto) "Before the August 1998 economic collapse the Russian trade union movement warned of the threat", said Yevgeni Makarov, president of the St. Petersburg and Leningrad region trade union federation, speaking on a recent visit to Finland as a guest of the three central trade union confederations SAK, STTK and Akava.

"What the government did was a bit like building a financial pyramid which was bound to collapse sooner or later. It financed its debt servicing by issuing more and more government bonds, but then on 18 August it suddenly stopped the spiral and announced its inability to manage the debt. The bond market stopped operating and is still out of service", Makarov explains.

The exchange rate of the rouble fell sharply. In three days the dollar became three times more expensive. As a result, prices of imported goods grew rapidly, causing a dramatic fall in the standard of living of workers.

In the St. Petersburg and Leningrad region 70 per cent of consumer goods are imported. "Over the last five years Russia has lost the ability to feed its population."

"Now the gap between real wages and the cost of basic necessities is much wider than it was before the August collapse. The large number of teachers and health care employees on the payroll of the impoverished State are in an especially difficult situation."

Worse things may yet lie ahead: "This is a typical situation in which inflation begins to rise rapidly", Makarov warns.

What kind of alternative do the trade unions offer to current government policy?

"Domestic manufacturers must be given better opportunities to compete with foreign companies and products. To make this happen we demand changes in the tax system and lower interest rates for productive investment credits."

Makarov also urges tighter State control in the corrupt raw materials sector. "In a crisis there must a State monopoly in alcohol, tobacco, coffee, sugar and several other sectors", he adds.

In a few industries the weakening of the rouble has already given a boost to domestic companies. "Our meat, milk and dairy products have displaced most foreign competitors."

The general prospects are very uncertain, however. Makarov describes the depth of the prevailing economic chaos: "Only 18 per cent of business-to-business deals are paid for in cash. Everything else is barter trading".

The latest crisis cycle has not boosted union activism, Makarov notes. In St. Petersburg and in the Leningrad region the organising rate has remained high, at some 80 per cent. More than 10,000 local union organisations have a total of 1.3 million members, 200,000 of whom are students and pensioners.

Many small and medium-sized companies, however, have no local union branch at all. "Industrial relations are often bad at such workplaces and employers have no idea of trade union affairs."

Union membership dues are usually one per cent of pre-tax wages or salaries. There is no consensus on how union incomes should be allocated between the various levels of the union structure. Makarov criticises the present procedure, whereby the share of local union branches is 70 per cent. "It leaves the central organisations with inadequate resources to organise companies and workplaces where there is no union representation."

In the 1990s the St. Petersburg and Leningrad region union movement has signed several tripartite agreements with the employer organisations and the city and regional authorities. The parties have common special commissions and accept the idea of a social partnership. Within the city itself, unions have city-wide collective agreements in 18 industries. However, local agreements within companies play a central role as company financial situations vary widely.

Next year Russia will have presidential elections. Of the potential candidates, Moscow's mayor Yury Luzhkov is closest to the trade unions. "To some extent Luzhkov is the trade unions' favourite. At least he has adopted the trade union lexicon. Some others, including President Yeltsin, cannot even pronounce the words which are important in the union movement. As Russia's President he has spoken only three or four times about union affairs and has stumbled on each occasion", Makarov observes.