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2.7. Social Services and Culture

The expenditure appropriated under the 1999 consolidated budget for social services and culture amounted to 6.1 per cent of GDP as compared to 6.5 per cent in 1998. Expenditure on education fell by 6 per cent in real terms. Appropriations for health care actually did not change in real terms, and those for culture and the mass media went up by 10 per cent and 16 per cent, respectively.

Table 1

Government expenditure on social and
cultural services (1991 = 100 per cent)

1991

1992

1993

1994

1995

1996

1997

1998

1999

Health care

Of which

100

80

108

98

72

71

81

67

67

Government budget

100

80

91

81

59

57

65

51

51

Mandatory corporate insurance oremiums

-

-

17

17

13

14

16

16

16

Education*

100

79

79

76

56

58

64

52

49

Culture, arts and mass media*

100

91

81

87

63

54

60

46

51

*government budget expenditure.

Source: estimated from RF Statistics Agency data using GDP deflators.

Table 2

Government expenditure on social and cultural services
(in per cent of GDP)

1991

1992

1993

1994

1995

1996

1997

1998

1999

Health care

of which

2,9

2,5

3,7

3,9

2,9

3,1

3,7

3,1

3,0

Government budget

2,9

2,5

3,1

3,2

2,4

2,5

3,0

2,4

2,3

Mandatory corporate insurance oremiums

-

-

0,6

0,7

0,5

0,6

0,7

0,7

0,7

Education*

3,6

3,6

4,1

4,5

3,4

3,7

4,3

3,6

3,3

Culture, arts and mass media*

0,5

0,6

0,6

0,8

0,6

0,5

0,6

0,5

0,5

* government budget expenditure.

Source: estimated from RF Statistics Agency data.

Budgetary Arrears in Social Services and Culture. Budgetary arrears in wages paid from budgets of all levels in social services were reduced by a factor of above 2.7 through 1999, including 2.7 in education, 2.9 in health care, and 2.5 in culture. While the government cleared its debts in education from the budget by February 1999, arrears of regional and local budgets continued to be high. To resolve this problem, the government persuaded regional governments to allocate at least 40 per cent of their territories’ own revenues, including federal transfers, to pay wages to employees in budget-dependent industries. This option allowed wages to be paid monthly and accumulated arrears to be cleared in education. In June and July, however, the budget fell deep into wage arrears again, because, in the first place, of the regions having started at exactly that time to repay the loans they had received from the budget, as was provided for in the agreement with the IMF. Beginning in July, the Russian Ministry of Finance began gradually to reduce its transfers to the regions by deducting the loan sums due for repayment. This move had an immediate effect on the payment rate of budgetary arrears. Some other forms of budget loan repayments (such as set-offs or prolongation of loan repayment terms) had, probably, to be used to sustain the emerging trend toward reduction of arrears in wages. The situation improved in the second half-year, when budgetary arrears in wages paid in social services from budgets at all levels decreased by Rb1,480 million, or by 42 per cent.

On the results of 1999, however, social services remain the main sore point as far as wage arrears are concerned: they account for 61.2 per cent of all arrears, which amount to 32.5 per cent in education and 16.4 per cent in health care. Insufficient receipts of territorial budgets, lack of legislation on earmarked federal transfers, and the left-over principle used in financing social services are still the principal factors behind the continuing budget wage arrears in social services and culture.

Table 3

Dynamics of budgetary wage arrears for social
and cultural services 1999

Budgetary wage arrears

as at

1.01

as at

1.02

as at

1.03

as at

1.04

as at

1.05

as at

1.06

as at

1.07

Total, in Rb millions

of which:

20051

19371

18998

16958

15288

14571

14605

Social services

16675

15611

15135

13485

12088

11477

11555

o/w:

Education

5522

4794

4638

4008

3444

3250

3437

Health care

2920

2537

2346

1944

1663

1558

1610

Culture and arts

776

685

636

547

482

461

475

Budgetary wage arrears

as at

1.08

as at

1.09

as at

1.10

as at

1.11

as at

1.12

as at

1.01. 2000

Total, in Rb millions

of which:

14995

13753

13692

13369

12358

10165

Social services

11881

10726

10683

8302

7725

6223

o/w:

Education

3506

2628

2641

2777

2597

2026

Health care

1825

1775

1795

1620

1412

1023

Culture and arts

502

458

450

436

400

312

Source: RF Statistics Agency

Strike Movement in Social Services and Culture. The strike movement in social services and culture peaked in January 1999, when more than 134,000 people employed in 5,000 educational institutions participated in strikes (or 98 per cent of all strikers). Their chief demands focused on economics and were precipitated by the continuing practice of delays in wages and by the vast backlog of wage arrears. The worst affected in this respect are the Altai Krai and the Bryansk, Smolensk, Chita and Orenburg oblasts.

Table 4

The strike movement in social and cultural services

.

.

.

.

.

.

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