KTR: Russian capitalism and coronavirus

An article by Oleg Shein MP, Vice-President of the Confederation of Labour of Russia (KTR), in which he presents an analysis of the situation in Russia’s social-labor sphere in pandemic conditions and coronavirus (COVID-19) infection.

Favorable starting conditions

Coronavirus is not a worldwide conspiracy. Quarantine measures have been adopted both in totalitarian (not communist) China, where living people were welded up behind sealed doors, and in democratic Europe. Everywhere huge losses have been suffered by economies and the big capital that lies behind the media and the governments of the world. Separate experiments in Sweden, Belarus, and especially Brazil that endeavored to ignore the problem have demonstrated the public danger of ignoring the pandemic.

Russia had a number of beneficial advantages that allowed it to go through the epidemic with fewer losses:

— poverty and lack of mass external tourism;

— low population density and low frequency of communications between regions;

— a fairly responsible population ready to follow instructions (in this we are psychologically closer to the Germans than to the Italians);

— anti-epidemic traditions, built back in the period of the Empire and especially the USSR.

The outcome turned out to be a number of cases that is second in the world as of May, but more importantly, an inescapable, serious decline in incomes and a deep political reversal in the mood of society that the authorities had obviously sought to avoid.

Why did this happen?

Unemployed people

With the introduction of quarantine measures, household incomes collapsed. The working class has lived on credit in recent years. Salaries have not keep pace with rising prices and people had to go to banks to maintain their already low consumption levels. By January 2020, the debts of the population reached a ridiculous level of 17 trillion Russian rubles (about 215 billion euros). The vast majority lived paycheck to paycheck, without any savings. According to official statistics, no more than a third of households had savings.

Therefore, the introduction of “non-working days” posed for many families a literal question: how can we buy bread? This is not an exaggeration. The author received dozens of message by personal mail from voters and helped them himself.

Under these conditions, Vladimir Putin’s speech and his promise to introduce unemployment benefits in the amount of a living wage (12,200 rubles or about 155 euros) brought some solace. However, the reality turned out to be different. This benefit went only to people who officially lost their jobs after March 1, 2020. Meanwhile, the Russian labor market is characterized by high fragmentation and a huge share of unofficial labor contracts. Builders, sellers, and service workers who were unemployed received from the state an allowance of 1,500 rubles per month (19 euros), from which income tax was also deducted. According to the numbers, 25% of the unemployed received a benefit of 12,200 rubles, and 60% received a benefit of 1,500 rubles.

Small business

A sufficiently large list of measures turned out to be provided for small businesses – tax exemptions, payment of employees’ salaries from the state budget, soft loans. However the government introduced restrictions here too. Support measures were severely limited by OKVEDs (Russian Classification of Types of Economic Activity). As a result, no more than 12% of all individual entrepreneurs and small enterprises were able to take advantage of the benefits.

Doctors and medical staff

All the officials’ love for doctors ended where the question of money arose. Although Vladimir Putin from the first days of the “isolation regime” announced extra pay for doctors and nurses, when April paychecks arrived doctors cried out across the country. People received incomprehensible payments, very often not exceeding the symbolic amounts of two to three thousand rubles (25—40 euros).

Tepid investigations at the highest level revealed that the Ministry of Health recommended paying doctors for work on the basis of the time they spent working with those infected by the coronavirus. Accustomed to the regime of “strict budget savings,” the governors understood everything correctly and began to calculate per-minute schedules. It took the president’s personal intervention and the involvement of the Prosecutor General’s Office to change this practice.

However, the salary cheating has not disappeared at all. The most striking example is the 415th government decree. In accordance with this decree, co-payments from the federal budget should have been received not only by those working with coronavirus-infected people, but also high-risk groups (pensioners, pregnant women, asthmatics, etc.). However, those who work with high-risk groups received nothing from the federal budget.

Support for families with children

The only actions that can be called quite successful have been in support of families with children. The demography and future of the country is obviously a personally sensitive topic for Vladimir Putin. Therefore, a cascade of measures was adopted here, which followed one after another: payments to families with young children entitled to maternal capital; payments to families with young children not entitled to maternal capital; payments to low-income families with children aged 3 to 7 years; payments to all families with children aged 3 to 16 years.

One fact testifies to the relevance of these decisions for citizens: the number of requests to the website of the State Services has reached 40,000 per minute.

A distinctive feature of these actions was the rejection of targeting. Neoliberal schemes were set aside because they contradicted the very logic of Vladimir Putin’s desire to support families with children. Unfortunately, this example was the only one.


One topic extremely uncomfortable for the authorities, but that requires close public attention, is the story of community-acquired pneumonia. “Community-acquired” means to be acquired not at the hospital, but somewhere at work, on the street, at home, etc.

It is no secret that coronavirus infects the lungs and pneumonia is its usual companion.

The first questions arose in St. Petersburg. Speaking to deputies of the Legislative Assembly on May 13, Governor Alexander Beglov said that 8,485 people were infected with the coronavirus in the city, of whom 63 died. At the same time, 11,223 people were affected by community-acquired pneumonia, of whom 694 died. Mortality was respectively 0.7% and 6.2%.

Then in just three days, the situation in Dagestan exploded. The catalyst was the need to pay compensation to the relatives of deceased doctors. It was discovered that the official number of deaths from COVID was 27 people, but more than 40 doctors and nurses had died, and according to the Supreme Mufti – it was more than 50. And here the theme of community-acquired pneumonia reappeared. According to the Minister of Health of the Dagestan Republic, out of 3,280 patients with coronavirus, 27 (0.8%) died, and out of 13,697 patients with pneumonia—657 (6%).

Obviously, to understand the real mortality rate in the country one should study statistics on pulmonary diseases, although experience through previous years shows that Russian officials can cleverly hide it in “other reasons.”

Attack on social and political rights

The authorities and the large capital behind them have certainly succeeded in attacking the social and political rights of citizens.

On May 23, the State Duma voted to abolish the Labor Code, led by votes of the “United Russia,” “The Communist Party” and “The Liberal Democratic Party” factions. Only “The Just Russia” faction, which is closely associated with free trade unions, refused to vote for this decision. As a result, an act unique to world practice was adopted in Russia in which labor relations are governed by government regulations and, in the event of a conflict between the Labor Code and government decisions, the government’s decision supersedes.

The Union of Industrialists and Entrepreneurs promptly took advantage of the norm and suggested accelerating the process of employee dismissal by 4 times (now the employee must have 2 months notification of dismissal, it is now proposed to reduce that period to two weeks).

A decisive blow was inflicted to the electoral system. The country has virtually abolished the secrecy of the vote. This was done through the introduction of voting via the Internet or by mail. In the current Russian reality, this means that behind the backs of doctors, teachers and municipal workers, will stand a boss who will look at which button their employees press on their smartphones during voting.

It turned out to be more difficult to build a system of fines and electronic control. Quarantine measures themselves are absolutely justified and necessary in an epidemic. However, they often turned out to be completely arbitrary, overlooking real violators of the rules (so many officials who neglected masks were therefore infected) and ruining with murderous payments people who went to the supermarket for children’s products. Regardless of whether this was the intent or simply incompetence, it is obvious that electronic control measures tested during the epidemic can also be used to control society after the pandemic.


The Russian capitalist state has shown its low efficiency. A strong state is not one that can disperse its own citizens with the help of police batons, but one that can overcome serious challenges with minimal losses to society. In this case, the recipe was understood initially: a short hard quarantine to let the healthcare system adapt and curb the epidemic chains. Realization of such a scenario required that people have a full refrigerator.

At the same time, the authorities had no intention of feeding the population during the pandemic. The neoliberal methods of “targeting” its help to citizens quite expectedly came down mainly to an inconclusive PR campaign, which is clearly confirmed by the figures and examples above. It is only natural that people who find themselves without money began to massively ignore the “self-isolation regime” and to look for insidious machinations behind anti-epidemic measures.

A serious blow was dealt to the economy. The number of unemployed, according to Alexei Kudrin, will reach eight million. We’ve been reminded again of the robberies and street shootings that seemed to be in the distant past—so far in isolated examples, but everyone understands that crime is caused by the lack of unemployment benefits.

The consequences for the health of the population are difficult to assess and hope remains that the virus will expire on its own and that collective immunity will form.

The most important conclusion is also obvious, tht global threats such as an epidemic can only be overcome by socialist measures: a developed public health system and public funds that provide high unemployment benefits and help small businesses as a serious generator of jobs.

The alternative to this is not even a continuation of the status quo, that is impossible in a changing external environment. The alternative to democratic socialism is the Iron Heel according to Jack London, the dictatorship of the oligarchy. And the coronavirus epidemic explicitly confirms it.

Oleg Shein, Vice-President of KTR (Confederation of Labour of Russia)