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Monday, August 24, 1998 Published at 13:53 GMT 14:53 UK

Getting paid in bicycles

Begging in the streets is not uncommon

In some parts of Russia workers have not been paid their wages for years. BBC correspondent Max Easterman sent this report from the Ekaterinburg region in the Russian Urals.

Russia crisis
Ekaterinburg was Sverdlovsk in the Soviet era. The city was the place that Stalin and his successors built their tanks and where Boris Yeltsin built his political reputation.

In the past decade, it has gone back to its traditional name. It is trying to throw off its dark image of a closed and forbidden city where the last Tsar was murdered here in 1918 by the Bolsheviks.

Ekaterinburg has attracted enviable amounts of foreign investment - names like Coca Cola and its rival Pepsi. It even boasts a British Consul-General, who makes much of his ability to deal with visa applications more efficiently than his colleagues in Moscow.

If only the Russian economy were as efficient. For Ekaterinburg's success is under threat from the sclerosis that blocks the national arteries.

Getting to grips with taxes

Coca Cola, I was told by its general manager, has to pay eighteen different taxes every month.

These include a tax on the original amount invested - which was several million dollars - and a snow tax, and a thaw tax. It is only his deeply held conviction that it's all worth it that keeps him signing the cheques.

But while foreign investors don't dare not pay tax, Russians are another matter.

"Local companies" says Greg Sundstrom, an American investment-fund manager, "expend a huge amount of time and energy on tax evasion.

"They don't keep double books, they keep triple books - one for the taxman (which always shows a loss); another for the likes of me, the investor, which will indicate a modest profit; and the real accounts, which show that most of them are making real money".

Catch-22 for the economy

A lot of this money is being re-invested, as well as paying, by local standards, high wages to the lucky few who work for them.

Official statistics, of course, are based on the falsified tax returns which suggests that the Russian economy may not be as big a basket case as the prime minister claims.

That makes tax reform something of a Catch-22: push it through, and the economy may suddenly look like it doesn't need all that IMF money after all. Leave it be, and the IMF may refuse to pay up.

None of this cuts much ice with the average Russian worker, who has neither the education nor the opportunity to work in a private company.

Lucky to be paid in bicycles

Most Russians' jobs are in the old, still largely unprivatised state factories. Many are so strapped for cash that they barter in order to get raw materials and supplies, and pay their staff months later - if at all.

Sometimes, the pay packet comes as product. One factory in the city of Perm regularly pays its workforce in bicycles - which they then have to try and sell on the streets in direct competition with their employers.

Not even that stratagem is open to public servants, most of whom haven't seen a full salary on time in years.

Teachers on hunger strike

Such is the case with the teachers of Polyevskoy, a small town about forty miles south of Ekaterinburg.

They have lost patience with the local administration, and some six weeks ago, they occupied the offices of the director of education - and went on strike: hunger strike.

This was, as they admitted when I talked to them, an extreme reaction.

"But we have no choice," explained one woman.

"They've been spending money on celebrating the town's 280th anniversary but they won't pay us.

"They've humiliated us, they've trampled on our human dignity".

'We just want our money'

These women - and they are all women - are not firebrands. They are not politically motivated. They are quiet, competent, caring people and they have been tried beyond endurance; now they're determined to sit it out.

They have refused the local authority's offers of food parcels and holiday vouchers for their children.

"We don't want bribes, or charity or cheap, inferior goods," explained Tania Botalova. "We just want our money".

When, I asked mildly, had they last been paid in full, the room reverberated with hoots of derision.

"We don't remember, we don't remember," they said. After a great deal of discussion, they decided it was three years ago.

Since then, what they have been paid has come about six months late. And the salary itself - about 100 a month - is little enough for people who have to teach up to forty classes a week.

One of the hunger strikers was lying on a blanket against the wall; how did she feel? "Well, I've not eaten for 17 days; I've got hypertension, and I've been unconscious twice. And I'm going deaf. But I won't give up".

'At least we're talking about the problem'

As I left, the deputy prime minister for the region was getting out of his car. He had come to try and reason with the good women of Polyevskoy. Thrusting the microphone at him, I said: "How could you let this happen?"

He sighed: "Look, things have changed here, more than you realise. We don't make tanks anymore, so we don't have any tax income from the tank factories. But I have managed to get money from the regional budget for these teachers."

Enough to pay them in full? It appeared not; only about 40% of their salaries. "But look things have changed; at least we're talking about the problem. I'm even talking to you about it. We couldn't have done that ten years ago".

But you're still spending milllions on the Polyevskoy Anniversary and the teachers do not have enough to eat, I said.

"Look, this town is the work of generations of men. We have to celebrate that."

I genuinely do not think he was callous or uncaring, but I know he did not understand the terrible irony of his words.

In Russia, tradition is a powerful thing.

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