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Analysis & Opinion
30.10.08 Tracking The Crisis
By Roland Oliphant

Importantly, the poll asked questions about the actual level of unemployment (how many people do you know who have lost their jobs in recent months?), and people’s perceptions (how high do you think unemployment is in your area?). The poll confirmed suspicions that rumors of redundancy are running well ahead of reality. Some 43 percent of respondents said that unemployment in their area was either high of very high. But when asked if they knew anyone who had been made redundant in the past month, 62 percent of respondents said they did not know anyone who had been laid off. A quarter said they knew two or three, and only one in ten said they knew of many.

“Current opinion polls show that a lot of respondents are saying that they have relatives or friends who have been somehow victimized by the crisis – which does not necessarily mean losing your job. That means that the crisis is going deeper, but it is not on the citizen’s level yet. It is felt, but in many cases the personal involvement will be much bigger than it is now,” said Nikolay Petrov, an expert who is tracking the crisis at the Moscow Carnegie Center.
The poll results come as Russia’s embattled Central Bank, already dealing with a two-pronged threat from rising inflation and the liquidity shortage, faces up to the possibility of a depreciation of the ruble. With falling oil prices and a strengthening dollar, many experts doubt that the bank can sustain the ruble’s current position against the dollar. So far these problems have not been translated into job cuts, but a palpable sense of concern has been growing in the capital, and rumors have circulated about layoffs. “At the moment the crisis is mostly felt through inconveniences, like paying more for something, or finding it more difficult to withdraw money from a bank. But that is qualitatively different from being fired,” noted Petrov.

The poll also found that half of Russians have recently discussed unemployment at home or among their friends, reflecting a growing concern about the state of the economy. That sense of apprehension is not yet a panic.
Anxious to avoid the kind of panic that could lead to a run on the banks, the government has done its best to suppress discussion of the crisis in the media. Although the Russian stock market has seen a drastic fall in value and trading has repeatedly been suspended, television reports have focused on the crisis abroad. The troubles on the RTS have registered only brief reports, low down the news agenda. Earlier this month, a State Duma deputy told Russia Profile that the reason there had been no panic was that the public no longer reads the newspapers, which have given far more comprehensive coverage to the country’s economic troubles. The true reason may be that the gathering storm clouds have not yet produced much rain. “It is still largely something that can be felt through the media but not in person,” said Petrov.

The poll suggests that of those who have been affected, the poor have been hit disproportionately hard: 42 percent of people who described their economic situation as “bad or very bad” said they knew people who had been laid off, and 15 percent of those said “many” in their circles had lost their jobs. Those figures fell to 25 and eight percent for middle income respondents, and eight and 18 percent for the well-off.

It is not entirely clear what parts of the country these respondents came from (though residents of the Far Eastern and Volga federal districts and rural areas seem to be the most pessimistic) or what industries they worked in, but evidence from other sources suggests this may reflect the hardship that has hit the construction industry. Many construction sites have been forced to shed workers or completely suspend operations as the lines of credit that investors relied on dried up.

That said, the centers of the construction boom, Moscow and St. Petersburg, do not seem to have been impacted as much as other areas. In fact, the survey found that nearly three quarters of respondents in the two capitals knew no one who had lost their job. Concern and discussion about unemployment was also lower in the “two capitals,” where only 25 percent thought that it was high or very high and only 22 percent said that they talked about it. Half of all rural residents (49 percent) said they talked about unemployment, and 57 percent considered unemployment in their area to be high or very high.

Petrov said this is surprising. “The big cities and the capitals with a global economy are the first victims. Later, in a year or two years, the turn of much weaker areas will come,” he replied when asked about how different areas would be affected by the crisis.

One reason for this surprise may be that the survey did not take into account cost-cutting measures other than outright redundancy. One of the rumors going around Moscow is of companies cutting working hours, rather than firing people outright. That, said Petrov, is almost certainly happening. “The crisis will go much deeper, and there is definitely hidden unemployment in the form of unplanned vacations, not being paid entirely, or working part time. These are measures companies are already taking to cut costs, but later we can expect them to take much more radical measures,” he said.

Petrov stressed that because the crisis is still very much in its infancy, it would be fruitless to make any specific forecasts. “It is too difficult to say for sure how, or when, the crisis will unfold. We can only be sure of very general trends. It will be felt in a much more negative way, and the regions dependent on commodities will have a tough time. But no one knows where it will be worst.”
The source
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