Agency Predicts Russian Unemployment of 15% : Reforms: Conversion to a market economy may cost 15 million workers their jobs, U.N. organization says.

By NORMAN KEMPSTER

March 31, 1992 12 AM PT

TIMES STAFF WRITER

WASHINGTON — Unemployment in Russia, once so small that authorities insisted it did not exist, will reach 15% or more by the end of this year and produce severe hardships in a country that lacks adequate jobless benefits, the International Labor Organization said Monday.

The United Nations agency said that unemployment is expected to be a little lower in the other republics of the former Soviet Union, but even there it will be massive in comparison to previous years, when the Communist regime kept workers on the job even if they were unproductive.

Now, as a result of the effort to convert to a market-oriented system, as many as 15 million workers may lose their jobs across all of the former Soviet republics, and 30 million more may be reduced to marginal work that is far below their abilities, the agency said.

So far, Russian employers have sheltered their workers from the impact of the country’s crumbling economy, keeping them on payrolls even though there is no work for them to do. But they cannot afford to continue doing so much longer, the ILO said.

“The crunch is coming, one way or the other,” Michel Hansenne, director general of the Geneva-based organization, said in a written statement that accompanied the report, which was released in Washington. “From our surveys and secondary evidence, we know that over a quarter of the currently employed are surplus. We go to factories and ask managers about their ability to cut workers; all say that they have 25% more workers than they really need, even though they’re producing at only about 70% of capacity.”

Soaring levels of joblessness could undermine the government of Russian President Boris N. Yeltsin and touch off nostalgia for the Communist past.

“You have to remember that under the Communist system, no unemployment officially existed,” Hansenne said. “Therefore, to become unemployed in the Commonwealth of Independent States is extremely depressing and ruinous for the individuals and their families.”

Guy Standing, an ILO expert on the former Soviet Union, said in an interview that Russia’s factories have been overstaffed for years by Western standards. But the situation is far worse now than it was previously.

“Factories have been doing everything they can to avoid mass layoffs,” Standing said. “They’ve run out of options.”

He said that the country’s embryonic unemployment compensation system is almost totally useless. To obtain benefits, a worker must register that he is unemployed. This is nearly impossible, Standing explained, because there is only one employment office staffer for every 30,000 workers. (In Sweden, it’s one for every 15.)

“Last December, about 8% of the registered unemployed were receiving benefits,” Standing said. “The percentage of the total unemployed was far lower.”

He said that the estimate of 15% unemployment is based on the assumption that not all of the surplus workers will be laid off, and some who are let go will find new jobs. But he said the figures may be “very conservative” and that unemployment may go far higher.

About 70% of those currently unemployed are women, Standing said. He said there seems to be no rational reason, other than sexism, why the burden has fallen so hard on women.

Standing called on the international community to provide economic and technical support to establish an adequate system of unemployment compensation and to create a labor market of the sort that exists in the West. Under communism, there was no system other than state control for matching workers with jobs.

He also called on the West to assist Russian management and labor associations in creating a system of collective bargaining over wages and job conditions.

Last year, Standing said, national income in Russia fell by at least 17% when calculated in rubles. If the plummeting value of the ruble is taken into consideration, Russian national income, figured in dollars, dropped by 90% or more.

“If you had anything remotely equivalent in the United States, you’d have the equivalent of the Great Depression,” Standing said.