Protection of Wages Convention, 1949 (No. 95) - Russian Federation (Ratification: 1961)

Individual Case (CAS) - Discussion: 1999, Publication: 87th ILC session (1999)

The Government has supplied the following information:

Information on the payment of wages to workers in the budget-supported sector of the constituent territories of the Russian Federation

On 1 May 1999, according to the State Statistics Committee of the Russian Federation, total wage arrears resulting from shortfalls in budget financing at all levels and in funding from organizations' own resources amounted to 16,348 million roubles. Of that total, 12,088 million roubles were attributable to shortfalls in budget funding at all levels.

In comparison with the previous month's indicators, total wage arrears fell by 1,578 million roubles (8.8 per cent). Of that total 1,401 million roubles (10.4 per cent) were attributable to shortfalls in budget funding at all levels.

The proportion of shortfalls in budget financing was 19.6 per cent of the federal budget and 80.4 per cent of the territorial budgets.

In the social sector, arrears attributable to shortfalls in funding from the federal budget fell in 57 constituent territories and from the territorial budgets in 68 regions.

On 1 May 1999, outstanding wage arrears paid from the federal budget had been liquidated in the Nenetsk, Evenkij, Aginski Buryatsk and Koryaksk autonomous regions, and virtually liquidated in the Republic of Dagestan, the Belgorodsk district and the autonomous regions of Tajmyrsk and Yamalo-Nenetsk. In the Republics of Kabardino-Balkarsk, Tyva, Marij-El, Altaj, the districts of Vologodsk, Bryansk, Kostromsk, Tambovsk, Orlovsk and Smolensk and the autonomous region of Komi-Permyatsk wage arrears range from 0.2 to 0.6 million roubles.

Approximately 46 per cent of the total outstanding wage arrears resulting from shortfalls in the federal budget are attributable to Moscow (239 million roubles), the Moscow district (152 million roubles) and St. Petersburg (146 million roubles).

On 1 May 1999, wage arrears in the social sector resulting from shortfalls in the territorial budgets were recorded in all the constituent territories of the Russian Federation. However, outstanding wage arrears fell in 68 regions. The greatest proportion of outstanding wage arrears resulting from shortfalls in the territorial budgets in the social sector are to be found in the Republics of Saha (Yakutia -- 462.2 million roubles), Krasnoyarsk Krai (675.5 million roubles), and the districts of Kemerovsk (647 million roubles), Tumenesk (454.6 million roubles), Sverdlovsk (419.8 million roubles) and Irkutsk (464.2 million roubles).

The federal Government, in collaboration with the Executive of the constituent territories, is implementing measures to ensure the payment of current wages and wage arrears to workers in the budget-supported sectors. In the first quarter of 1999, timely transfers and temporary financial assistance disbursed from the federal budget reduced outstanding wage arrears to these workers from 16,517 million roubles to 12,088 million roubles. At the same time, over half the regions met current wage payments from their own resources.

Report of the Russian Labour Inspection Services (1998)

In 1998, the Russian Labour Inspection Services (Rostrudinspektsiya) carried out supervisory and inspection visits to ensure compliance with labour legislation, employment protection and workers' rights.

As a result of 264,000 government labour inspections carried out, over 2 million flagrant violations were discovered and eliminated and workers' rights restored to hundreds of thousands of workers. The severity of the problem of ensuring compliance with workers' rights has been corroborated by statistics issued by the Russian Ministry of Justice which show that, in 1998, over 1.4 million labour disputes were brought before the courts, approximately 97 per cent of which were recognized as founded and resolved.

In 1998, the Labour Inspection Service carried out more than 45,000 inspections of organizations following widespread wage arrears and the ensuing acute social repercussions. These inspections revealed more than 32,000 violations of wage legislation. Over 35,000 court orders were subsequently issued and the total sum of wage payments made to workers amounted to 9 billion roubles compared to 7.7 billion in 1997 and 6 billion in 1996.

One in four inspections took place in the budget-supported sector at all levels. As a consequence of demands made by the Labour Inspectorate and the implementation of other measures, workers in these sectors received payment of wage arrears amounting to more than 1.2 billion roubles.

The Labour Inspectorate together with the prosecutor's office, the tax inspectorate, the tax police, labour agencies, the federal treasury and the Russian Ministry of Finance carried out over 5,000 inspections during the course of which measures were adopted to halt the violation of wage legislation by employers and the misappropriation of funds allocated from the federal budget for the payment of wages.

These measures have led to the liquidation of wage arrears in Voronezh (61.4 million roubles), Kursk (85.8 million roubles) and Novosibirsk (93.2 million roubles) districts in Algarsk Krai (20.9 million roubles), Krasnodarsk Krai (81.8 million roubles), and the Republics of Karelia (11.7 million roubles) and Buryatia (12.4 million roubles).

The inspections have revealed that many employers resort to withholding wages as a means to resolve their financial problems at the expense of the government or their own workers.

The Labour Inspectorate fined over 6,400 employers and heads of organizations 4.4 million roubles for blatantly violating wage legislation and misappropriating funds allocated from the budget for the payment of wages.

Preventive measures and possible legal sanctions against those found guilty of violating wage legislation are practically non-existent in Russia since the Criminal Code in force does not envisage criminal or legal responsibility for these violations.

Wage arrears, low wages and underemployment have provoked a sharp increase in secondary and informal employment. Experts estimate that in 1998 approximately 8 million workers held second jobs with 7.5 million workers employed in the informal sector. For those employed in the informal sector this was their only source of income. This has led to widespread violations of labour legislation. Moreover, wages earned in the informal sector do not contribute to the budget or the social fund which has exacerbated the already difficult economic situation in Russia.

The fundamental reasons for the widespread violation of workers' rights are:

-- the absence of appropriate economic, organizational, and legislative mechanisms which encourage effective economic management and respect for legislation;

-- the extremely slow rate of economic restructuring, the modernization of enterprises to increase competitivity, the avoidance of bankruptcy procedures by enterprises who are no longer creditworthy, and the fall in production of enterprises and organizations;

-- popular social policies of several branches of the administrative and regional powers to increase wages and social benefits have been concluded with trade unions and are unrealistic in light of the economic possibilities of the constituent territories;

-- the delays in drawing up effective legal and administrative procedures to ensure realistic and responsible representation of government interests in joint-stock companies which receive government funding to ensure regular payment of wages by employers in these government and municipal joint-stock enterprises;

-- inappropriate implementation of internal agency and regional controls to ensure compliance of labour legislation and employment protection by federal, regional and local government; also, the overall absence of a conceptualized, developed and complete system of governmental controls in Russia;

-- the delay in introducing legislation to regulate working conditions in the changing economic climate. Many regulations within the existing Labour Code hinder the normal development of modern industrial relations while at the same time impairing its protective function. The time is ripe to: (i) introduce a new Labour Code which will optimize labour legislation; (ii) guarantee the coordination of individual agreements, collective agreements, and central government regulation of industrial relations; (iii) define objective and essential legal and economic guarantees for workers; (iv) strengthen sufficient and accountable legislation through international instruments to guarantee the compliance and respect of the rights and freedom of workers.

Bearing in mind the above, and with a view to ensuring compliance with legislation relating to labour, health, safety and improving protection of labour rights of citizens of the Russian Federation, the Government considers it necessary to do the following:

1. To speed up the process of enacting legislation relating to state supervision and monitoring of compliance with labour, health and safety legislation, the necessity of which was confirmed by Presidential Decree No. 850 of 5 May 1994 and Federal Act No. 109-FZ of 18 July 1995.

2. To examine and adopt without delay the new draft Labour Code which the Government has submitted to the State Duma.

3. To take the necessary measures to ensure effective administration of treasury-controlled and other state undertakings and financial control over their activities, to strengthen the regulatory power of the State in the matter of payment of wages and improving accountability of managers of state undertakings and municipal undertakings in which the State is involved.

4. To develop a system of effective monitoring of financial and economic activities and formulate measures to create a legal framework for the activities of state officials in management bodies of joint-stock companies, to ensure that they are accountable for poor management of any State-owned interest.

5. To take measures to ensure that owners of socially important facilities are legally accountable for any use of such facilities which is socially harmful (principle of responsible ownership).

6. To oblige State authorities at all levels, when formulating and adopting general sector (wages) and occupational agreements with trade unions at national (federal) and regional levels, to establish in those agreements only pay levels and social benefits which are not beyond the means available to the parties and do not result in a deterioration in the economic situation of individual organizations, branches, or the country as a whole.

7. To provide the necessary funding for the material and equipment required to: (i) implement manufacturing safety measures for the protection of workers; (ii) for the research needed for this; and (iii) to encourage the establishment and development of health and safety departments in executive bodies, local authorities and organizations.

8. To speed up the unduly long and drawn-out process of finishing and adopting a Public Service Code which is intended to systematize and improve provisions relating to the rights, obligations and accountability of public officials.

9. In accordance with international obligations arising from the ratification by Russia of the Labour Inspection Convention, 1947 (No. 81), and the Protocol of 1995, to decide as a matter of urgency whether to confirm the de facto status of the Labour Inspectorate Rostrudinspektsiya as the state authority responsible for carrying out special supervisory, monitoring, licencing and other functions relating to the implementation of labour, health and safety legislation, and whether to extend legislation concerning the federal public service to cover Rostrudinspektsiya employees.

The Government has included an appendix with the Report of the Inspection Service of the Russian Federation (Rostrudinspektsiya) concerning inspections carried out to ensure compliance with the legislation on the payment of wages (as of 1 April 1999).

In addition, a Government representative addressed the Committee on the question of compliance with wage legislation and wage arrears in the constituent territories in the Russian Federation. He stated that the social and economic situation in the Russian Federation remained acute. In the first semester of 1998 efforts had been undertaken to stabilize the situation facing the currency and stock markets to resolve the serious problems facing the federal budget. In August and September of 1998, there had been a severe economic crisis which had led to a sharp devaluation of the rouble, an explosion in prices, and a significant worsening of living conditions. From 1998 onwards, extraordinary measures had been adopted to overcome the results of the crisis, to stem the flow of the negative economic and social consequences resulting therefrom, and to partially compensate the population for loss of revenue. In March and April 1999, the Russian economy had begun to show signs of recovery. The most significant result of this period was that the Russian Government had avoided more serious developments in the economic crisis, such as hyper-inflation, trade deficits, panic-buying in the consumer goods market, a further drop in the rouble exchange rate, a deepening of the recession and social explosion. He said that following the crisis of August-September 1998, overall, the economy had adapted to the situation. This was the result of measures implemented to regulate the balance of payments, support the manufacturing sector, resolve the more acute social problems, and increase the stability of the rouble. At the same time, the consequences of the crisis had not been fully eradicated. There remained serious budgetary difficulties, particularly with regard to servicing the Government's foreign debt. There also remained a serious financial crisis in the manufacturing sector. The dependency of the economy on external factors was also perceptible and difficulties remained in resolving the question of servicing and liquidating the Government's foreign debt. In the social sector the situation was far from satisfactory. In 1999, the population's real disposable income had dropped 75 per cent on the previous year and wages had fallen in real terms approximately 60 per cent. The average per capita income and monthly wage was less than US$55 and the average pension was now less than US$20. In the first quarter of 1999, 55 million (38 per cent) of Russians received less than the minimum subsistence wage. The overall decrease in the real disposable income had led to a change in consumer spending and saving with approximately 85 per cent of revenue being spent on consumer goods and services. The Russian labour market had suffered significantly as a result of the negative consequences of the crisis, registering a gradual drop in the demand for labour. Overall, unemployment had reached worrying proportions. Almost 9 million workers (12.4 per cent) of the economically active population were unemployed (calculated according to ILO indicators). The number of unemployed registered with employment offices had now reached 1.9 million workers (2.7 per cent) of the economically active population. The Russian trade union organizations endorsed the Russian Government's serious concerns with regard to the situation facing employment and wage arrears. In this difficult social and economic climate, the Government representative said that every effort had been made to fight the negative consequences of the crisis on the Russian population. Wages in the budget-financed sector had increased 1.5 times, benefits had been paid to pensioners, and government pensions had increased 12 per cent. The Government had implemented significant measures to liquidate arrears in wages, pensions and benefits, and currently wages in the budget-financed sector and pensions were being paid on time. At the same time, existing resources had not enabled the full consequences of the crisis to be eradicated.

The Government member stated that the most important task facing the Executive would be to increase the effectiveness of allocating resources to social needs. In an acute economic climate, social policy should be developed to address a set of priorities and gradually to resolve social problems, in accordance with the Government's obligations and the real possibility of financing these obligations. The adoption of a series of measures had been envisaged to improve the form and methods of payment of wages, to stabilize and increase the living conditions of the population, and the purchasing power of the consumer. In particular, measures to fundamentally reform the payment of wages in the private sector and to introduce recommended wage scales were being drawn up within the framework of agreements between employers' and workers' organizations. The further improvement of the payment of wages in the budget-financed sector should take the following directions: the application of a uniform pay scale within an obligatory system of wage payments in the budget-supported sector at the federal and constituent territories' levels and within municipal education systems; the maintenance and development of a uniform pay scale, according to responsibility and profession dependent upon the complexity of the work involved and the qualifications of the worker; the definition of the principles of the scale and sub-scale sections, and the development of principles which establish a fund within the budget for the payment of budget-sector wages at all levels.

Such is the situation facing payment of wages in the budget-supported sector. On 1 May 1999, according to the State Statistics Committee of the Russian Federation, total wage arrears resulting from shortfalls in budget financing at all levels and in funding from organizations' own resources amounted to 16,348 million roubles. Of that total, 12,088 million roubles were attributable to shortfalls in budget funding at all levels. In comparison with the previous month's indicators, total wage arrears fell by 1,578 million roubles (8.8 per cent). Of that total 1,401 million roubles (10.4 per cent) were attributable to shortfalls in budget funding at all levels. The proportion of shortfalls in budget financing was 19.6 per cent of the federal budget and 80.4 per cent of the territorial budgets. In the social sector, arrears attributable to shortfalls in funding from the federal budget fell in 57 constituent territories and from the territorial budgets in 68 regions. On 1 May 1999, outstanding wage arrears paid from the federal budget had been liquidated in a number of regions. Approximately 46 per cent of the total outstanding wage arrears resulting from shortfalls in the federal budget were attributable to Moscow (239 million roubles), the Moscow district (152 million roubles) and St. Petersburg (146 million roubles). On 1 May 1999, wage arrears in the social sector resulting from shortfalls in the territorial budgets were recorded in all the constituent territories of the Russian Federation. However, outstanding wage arrears fell in 68 regions.

The federal Government, in collaboration with the Executive of the constituent territories, stated that measures were being implemented to ensure the payment of current wages and wage arrears to workers in the budget-supported sectors. In the first quarter of 1999, timely transfers and temporary financial assistance disbursed from the federal budget reduced outstanding wage arrears to these workers from 16,517 million roubles to 12,088 million roubles. At the same time, over half the regions met current wage payments from their own resources. The Government representative had once again stated that it intended to meet 50 per cent of all outstanding wage arrears from the federal budget and the remaining 50 per cent would be met through local government budgets.

The Government representative said that the Labour Inspectorate together with the prosecutor's office, the tax inspector and the tax police were continually carrying out wide scale inspections to ensure compliance of wage legislation and the appropriation of funds disbursed from the budget for the payment of wages. From 1 January 1999 - 1 April 1999, the Labour Inspectorate carried out over 11,000 inspections to ensure compliance with wage legislation, which resulted in over 7,000 violations being brought to light. Following inspections carried out in the administrative departments of enterprises and organizations, over 8,000 injunctions were issued to eradicate violations of wage legislation and, as a result of demands made by the Labour Inspectorate and other measures taken, workers received payment of wage arrears amounting to 2.2 billion roubles. Government inspectors, together with territorial sectoral trade union organizations, had also continued to carry out arbitrary inspections to ensure compliance with wage legislation. Employers who were found guilty of blatantly violating wage legislation and misappropriating budgetary resources were called to account by the Labour Inspectorate. As of 1 April 1999, the Labour Inspectorate had issued fines amounting to 1,246,000 roubles to 1,489 employers, including 178 employers in the budget-financed sector.

The Government representative stated that on 17 February 1999 an amendment to the Criminal Code of the Russian Federation had been passed by the Duma. Article 145 of the Criminal Code of 17 February 1999 relative to the non-payment of wages, pensions, grants, allowances and other benefits provides that:

1. The owner of any enterprise, foundation or organization, irrespective of the form of ownership, found guilty of withholding the payment of wages, pensions, grants, allowances and other benefits for the purpose of profit-making or self-interest for a period exceeding two months: shall be subject to the imposition of a fine ranging from 100 to 200 times the minimum wage or other form of wage payment or income for a period of one to two months, or barred from holding a particular position or fulfilling a particular responsibility for a period of up to five years, or imprisonment for a period of up to two years.

2. For the same activities, entailing serious consequences, the convicted person: shall be subject to the imposition of a fine ranging from 300 to 700 times the minimum wage or other form of wage payment or income for a period of three to seven months, or barred from holding a particular position or fulfilling particular responsibilities for a minimum of three years to an indefinite period.

The Government representative concluded by stating that the Russian Federation fully understood the importance of Convention No. 95 and was taking the necessary measures to ensure the respect of and compliance with this Convention.

The Worker members thanked the Government representative for the information provided. They recalled that this case had been discussed in 1995 and 1998, but that because of a representation made under article 24 of the Constitution, the case was not discussed in 1997. They noted that the Government had provided neither the detailed report requested by the Committee of Experts, nor the additional information set out in its conclusions. The written information supplied by the Government was fragmented and did not permit an overall view of the prevailing situation. While noting that the Government had announced different measures taken and laws adopted, the Worker members regretted that this information was provided so late since, as a result, it could not be submitted to an in-depth and detailed analysis. The Worker members recalled that detailed information of all measures taken and results obtained had been requested; this information should have included statistical data as well as a fixed schedule for payment of arrears. Moreover, the Government had not responded to the request for information on other provisions of the Convention such as Article 4 concerning payment in kind, the treatment of wages as privileged credit in the case of bankruptcy, sanctions, etc. Finally, the Government had not responded to comments made by the Russian trade union organizations. The Worker members considered that this lack of response was contrary to the statements made the previous year by the Government representative that had highlighted the willingness of his country to cooperate in a constructive manner with ILO supervisory bodies. The Worker members insisted that Russian workers, both in the public and private sectors, were confronted with major problems concerning arrears in salary. Although the ILO supervisory bodies had formulated their conclusions in this regard on several occasions, the problem was far from resolved. The Worker members were very concerned about the situation in which millions of workers and their families were found. According to information provided by various Russian trade unions and by the Government last year, the total amount of arrears had risen to tens of billions of roubles. Additional information had been received from Russian trade unions. For example, in January 1999 teachers had engaged in a strike in 6,218 schools and scientific institutions. More than 2,000 men and women had been mobilized on that occasion. It seemed that the amount owing to the workers concerned could be estimated at US$665 million. Added to this were arrears in pension and social security contributions amounting to US$243 million. In response to these measures, the Government had repeated its promises. The Worker members recalled that significant action had also been undertaken by workers in the mining, industrial, social and railway sectors. The Worker members, like the Committee of Experts, considered that the situation seemed to be worsening rather than improving. While taking into account the information provided by the Government representative, the Worker members insisted on the importance of analysing the statistics that had been presented in order to verify the situation precisely. However, it appeared that the amounts referred to were not very high if compared to the total amount of debts, estimated to be tens of billions of roubles. The Worker members also noted that the 75 draft federal laws concerning payment of wages had not yet been adopted by Parliament. They insisted that all of the Russian authorities, both at the federal and regional levels, should take decisive and concrete measures and action in this regard. Moreover, the Government should honour the commitments that it had made.

The Worker members recalled that the previous conclusions of the Committee had been very severe, and they insisted on the importance of making as precise and concrete conclusions as possible. They requested that the Government truly commit itself to put an end to significant contraventions of the Convention, and that measures be taken so that workers would be paid on time and paid arrears owing, both in private and public enterprises as well as in service sectors such as health care, teaching and government administration. The Worker members insisted that the Government implement effectively the recommendations of the tripartite committee adopted by the Governing Body following its recommendations made under article 24 of the ILO Constitution. The Worker members requested that the Government provide to the ILO, within the appropriate time period, detailed information on monitoring, sanctions, payment of arrears, legislation and measures taken to prevent the misappropriation of funds reserved for the payment of salaries. The Government should provide precise details of results obtained and concrete and specific measures taken in this regard. The Worker members also asked that the Government provide detailed information on the other provisions of the Convention such as prohibition of payment with promissory notes or coupons, payment in kind, etc. The Worker members concluded by insisting that the supervisory bodies should follow developments closely in this case. The Committee should be in a position to return to this case in a future session if no progress was noted in the meantime.

The Employer members noted that this case had been addressed by ILO supervisory bodies since 1995, including the Governing Body in November 1997 which had made appropriate recommendations. They fully appreciated the problem of remunerating workers within the context of the country's current economic difficulties. Notwithstanding the indications given by the Government representative of its efforts to address the problem, they noted that he had made no reference to the adoption of draft presidential decrees and orders that had been referred to before the Committee last year. For this reason, they asked whether there had been a subtle pull-back in efforts by the Government to ensure payment of arrears during the past year. Differences between the written information and the statement of the Government representative before this Committee highlighted the need for this Government to provide timely information so that there could be a full appreciation of the matter by the Committee of Experts. Moreover, they noted that there was still no definitive information regarding the number of workers affected by arrears in payment of wages, and that there had been no reference to any schedule for their payment. The Employer members stressed that this was a very serious matter, as nothing was more fundamental than payment of salaries to workers, which in this instance amounted to billions or perhaps trillions of roubles. In their view, the emphasis of the Government should be on its inspection system, penalties for non-payment and the need to indemnify workers. However, it appeared that the Government representative had addressed the problem as a matter of budget shortfalls. This indicated that there was a continued concentration on payment of workers by the public sector, and that part of the problem was that there had not been a rapid enough transition to a market economy. In this regard, they stated that no clear information had been given regarding the public and private sector share of the shortfall, as well as the exact sums involved. They stressed that what was needed was an effective labour administration and judicial system, so that workers would have appropriate recourse to both labour administration and to the courts.

The Employer members noted that the written information referred to 250,000 labour inspections, only 5,000 of which involved wages. However, before this Committee the Government representative had stated that there had been 11,000 rather than 5,000 inspections concerning payment of wages. This was an example of the need for more timely information so that this Committee could have a better understanding of the extent of the problem. While the above-mentioned information indicated that 6,400 employers had been fined, no information was given regarding their accountability in terms of the amount of unpaid wages, and it appeared that a relatively low level of fines had been imposed. The law adopted on 15 March 1999 provided for fairly aggressive scales of fines, but in this regard the approach of the Government was incorrect, as it would be preferable for such money to go to the unpaid workers and not to the Government. They stated that much more was needed to address the situation and, in particular, that the Government should provide the additional information requested in the report of the Committee of Experts with respect to prohibition of payment with promissory notes or coupons, regulation of payment in kind, and treatment of wages as privileged credit in the event of bankruptcy. They agreed with the Government's statements in its written communication that "(t)he time (was) ripe to ... introduce a new Labour Code which (would) optimize labour legislation". In view of the fact that the Government would require technical knowledge in order to address this and other labour problems in a new Labour Code, they proposed that ILO technical assistance should be provided both for the drafting of wage legislation and its effective implementation. They were in agreement with the Worker members that many of the conclusions of this Committee in 1998 also applied this year. There was a clear need for the Government to provide additional information to assist this Committee and to enable the Government to find a solution to the problem. There was also no clear evidence that concrete and efficient steps had been taken by the Government. The Employer members concluded by endorsing the statement of the Worker members that the Government should fully implement the recommendations of this Committee and of the Governing Body.

The Worker member of the Russian Federation fully shared the conclusions made by the Workers' spokesman. He acknowledged that, in recent times, there had been a small reduction in wage arrears. He noted that, from November 1998 to April 1999, the wage arrears were reduced by 28 per cent. In addition, new standards had been introduced in the Penal Code in order to impose sanctions in the case of non-payment. However, he pointed out that the report of the Government did not take into account all the implications of the arrears problem in Russia. In this regard, he emphasized that wage arrears problem was not only connected with budgetary problems, since the arrears in the public sector only represented 25 per cent of the total. Indeed, 75 per cent of arrears were in the private sector. Thus, the Government should report not only concerning the public sector arrears, but also on those of the private sector. He then emphasized that the problem was not linked to the financial crisis which took place in August 1998. In his view, this crisis increased the possibility for the Government to pay salaries since the rouble was considerably devalued. Concerning the 11,000 labour inspections carried out, he mentioned that this figure was insignificant compared to the approximately 500,000 violations which had taken place. He also considered that the elimination of the arrears problem only took into account the nominal sum of arrears and not the real purchasing power of the Russian people following the devaluation of the rouble. In this respect, he considered that the sum of the wage arrears should be indexed. He also criticized the fact that the information provided by the Government had not been submitted to the workers' organizations. In conclusion, he acknowledged that the discussion on the violation of the Convention had helped to move forward toward a solution. While there had been positive elements, he still insisted that the ILO should continue to monitor the implementation of the recommendations of the Committee of Experts, and he supported the idea to enhance technical assistance in order to find a better solution. He pointed out again that the Government should provide more information on the whole of the economy and not just on the public sector. In this regard, he mentioned that if this information was not provided by next November, the possibility of a special paragraph on this case should be envisaged. Finally, he referred to several important strikes which took place in April 1999 to protest against the non-payment of wages.

The Worker member of Norway, speaking on behalf of all Nordic countries, expressed her full support for the statements made by the Worker members as well as by the Worker member of the Russian Federation. She declared her solidarity with Russian workers and the Federation of Independent Trade Unions of Russia in their struggle for the basic human rights of all workers to be paid for work performed. She regretted that Russian workers had faced decreasing wages, deteriorating living conditions, unemployment, late payment of wages and huge arrears in the wages owed to them. The situation in Russia following the August 1998 economic crisis and the subsequent devaluation of the rouble was extremely grave and there were no signs that the Government had been able to come up with solutions to the problem. She referred to the report of the Committee of Experts on the violations of the Convention as additional evidence of the Government's apparent inability to address the situation. There was an urgent need for the Government to take specific measures to ensure that wages were paid on time. She questioned whether the number of labour inspections was sufficient, as well as whether the sanctions for non-payment of wages were sufficiently effective to deter future violations of the Convention. Unfortunately, the Government had not provided the information requested by the Committee and, in fact, the new information provided by the Government representative caused her to question the Government's ability to resolve this problem. In addition, noting that the Government had not responded to comments made concerning the payment of wages in promissory notes or through payment in kind, instead of in cash, she stressed the seriousness of the matter. She also expressed her concern at the lack of information provided by the Government on specific measures taken to prevent managers of funds for the payment of wages from illicitly using those funds for other purposes, such as financial speculation. The Government should also have responded to comments made by workers' organizations in August and October 1998 concerning the application of Article 12 of the Convention. She considered it to be a matter of grave concern that the education and health sectors of the country were affected, pointing out that by not paying teachers and health service workers, Russia was undermining its own future growth. She stressed that workers could not wait any longer and that wages had to be paid now. Therefore, she pledged solidarity with the Russian trade union movement.

The Worker member of Croatia indicated that the statement of the Government representative was only a general promise to implement the Convention. In her view, workers and their families could not cover their expenses with promises. What Russian workers needed were wages paid in cash, not in kind, to enable them to pay for basic expenses, such as gasoline, electricity, medicine and schoolbooks for their children. She expressed her concern for all Russian workers in these difficult times.

The Worker member of Spain underlined the importance of Convention No. 95, stating that the extent of general non-observance of the Convention in the Russian Federation was scandalous. He expressed deep concern regarding the situation, particularly with respect to the Committee of Experts' comments on the misappropriation of funds owed to workers. In the vast majority of countries, such acts constituted crimes that were prosecuted as a matter of course. He asked the Government representative to indicate whether this was also the case in Russia and, if so, to indicate the number of employers prosecuted for committing such crimes.

The Worker member of South Africa initially expressed his support for the statements made by the Workers' spokesperson and by the Worker member of the Russian Federation. He also took note of the response provided by the Government representative. In spite of the elements of progress reported, he remained concerned over the situation. In particular, he questioned whether the new legislation which introduced penalties for the non-payment of wage arrears was an effective measure. He noted that existing tax legislation gave priority to the payment of taxes over payment of wages, and that non-payment of wage arrears did not allow for an attachment of the assets of employers. He emphasized the seriousness of the social problems for the workers caused by the non-payment of wages, which included serious difficulties in meeting costs for both health and education. Furthermore, the current situation also raised serious concerns regarding how to deal with products emanating from the Russian Federation, in particular he questioned whether it remained appropriate to continue trading with the Russian Federation as the goods traded were produced by workers who were not being paid. He strongly urged the Government to undertake the measures recommended by the Committee of Experts and to report on specific and detailed measures on what actually was being done to remedy the present situation.

The Worker member of India considered that the reply of the Government was inadequate as it consisted only of promises to this Committee. In his opinion, the steps taken by the Government did not show that it was keen to comply with the provisions of the Convention. He then referred to a report of the UNDP which showed that the life expectancy of Russian people had declined in recent years. He also referred to an information bulletin by independent trade unions which clearly stated that the job situation had seriously deteriorated in Russia. He pointed out the fact that, while the Government was talking of an improvement in working conditions, international agencies were stating the opposite. He considered that the adoption of legislation was not enough. Concerning the new provisions in the Penal Code, he asked the question of how many employers had actually been sanctioned so far. He also deplored the fact that the Government had not consulted with trade union organizations and reiterated that dialogue with the social partners was essential. Finally, he considered that full implementation of the Convention was urgent.

The Government representative thanked all the speakers and mentioned that he shared their concerns. He declared that he would be informing the Committee of further developments and would communicate to his Government the results of the debate and the need to meet the requirements for full implementation of the Convention. He stated that his Government would try to prepare the information required, including the trends on payment of salaries, in the near future. He welcomed the special programmes with the ILO and assured that his Government would do everything in its power to find a solution to this serious problem.

The Employer members noted that the current situation in Russia was extremely serious. In their view, the Government was only addressing the wage-payment issue on a small scale. They estimated that roughly 1 per cent of the wage-payment situation was being addressed by the Russian labour inspection system and that a far smaller percentage of the problem was being corrected. Referring to the Worker members' comments concerning wage arrears in Russia, they stressed that expeditious action was required, especially in light of the declining value of the wages owed. They acknowledged the Government's commitment to take the necessary steps and stated their opinion that the Government should do four things. First, the Government should provide the Committee of Experts with the concrete information that it required to assess the situation. Second, the Government should pursue implementation of the Convention aggressively in terms of providing for adequate legislation, labour inspection and penalties for non-compliance. Third, the Government should set up a timetable according to which workers could expect payment of wages. Finally, the Government should take advantage of the technical assistance that the ILO could provide in order to fully resolve all aspects of the situation.

The Committee noted the oral and written information supplied by the Government representative and the discussion which took place. The Committee noted the complementary information provided on the status of payment of wage arrears and the results of labour inspections conducted. The Committee noted with deep concern that no comprehensive report had been supplied containing the statistical data and information requested by the Committee of Experts, the Governing Body and the Committee in 1998. It also noted with regret that the Government had provided no response to the comments of various workers' organizations. The Committee stressed that, without the requested statistical data and information, it would be very difficult for the Committee of Experts to evaluate any substantial progress made by the Government in the settlement of wage arrears and with regard to compliance with the Convention. The Committee noted that the Government was in the process of examining a new Labour Code which had been submitted to the Duma. It also noted the enactment of a new law on 15 March 1999, which established a system of penalties. The Committee urged the Government to provide the Committee of Experts with copies of the new legislation. It emphasized once again the importance that it attached to the Convention which establishes basic rights and principles affecting the daily lives of workers and their families. The Committee continued to view the situation on payment of wage arrears as extremely grave and fraught with serious social consequences. The Committee strongly urged the Government to fully implement the recommendations of the Committee set up by the Governing Body under article 24 of the ILO Constitution, which were adopted by the Governing Body in November 1997. It also strongly urged the Government to supply the Committee of Experts with a detailed and comprehensive report containing the statistical data and information previously requested, including information on concrete and specific measures taken to bring the legislation and practice into full conformity with the Convention. In this regard, the Committee trusted that the Government would continue to avail itself of the technical assistance offered by the ILO and that it would, in consultation with the social partners, continue to take measures to ensure that all legislative and practical obstacles to the rapid and complete settlement of wage arrears and to the full application of the Convention were removed.

Individual Case (CAS) - Discussion: 1998, Publication: 86th ILC session (1998)

The Government has supplied the following information:

The Ministry of Labour and Social Development of the Russian Federation wishes to inform the ILO of measures undertaken by the Government of the Russian Federation to settle wage arrears in organizations financed out of the budget in connection with the representation submitted to the ILO by the Central Committee of the Union of Educational and Academic Employees concerning violations in the Russian Federation of the provisions of the Protection of Wages Convention, 1949 (No. 95).

Following a meeting between representatives of the interested federal bodies of executive power, leaders of the Federation of Independent Trade Unions of Russia (FNPR) and the Central Committee of the Union of Educational and Academic Employees, the Ministry of Labour and the Ministry of Finance summarized the proposals of all interested parties aimed at settling the wage arrears in the sector financed out of the budget.

Taking into account these proposals, the Ministry of Labour and the Ministry of Finance have drawn up two draft Presidential Decrees: "On supplementary measures to ensure payment of wages to employees in the sector financed out of the budget and sanitation of state and municipal finances", and "On measures to ensure trade union control over timely payment of wages", and submitted them to the Government of the Russian Federation.

During the preparation of these draft Decrees, particular attention was paid to the fact that the process of payment of wage arrears is impeded by uncontrolled distribution of funds at the local level and by behind-the-scenes decision-making by regional and local authorities with a view to resolving this problem. In order to improve the control over the payment of wage arrears and ensure prompt payment of wages in the future, and also to ensure greater public accountability and transparency of this process, it is proposed to draw on the potential of the trade unions.

The draft Presidential Decree "On supplementary measures to ensure payment of wages to employees in the sector financed out of the budget and sanitation of state and municipal finances" contains provisions:

-- to ensure within one month the conclusion of an agreement on conditions for the allocation of financial aid from the federal fund of financial support of the constituent territories of the Russian Federation;

-- to allocate on a monthly basis the resources from the federal fund of financial support of the constituent territories of the Russian Federation to the territories that have signed and comply with an agreement, in the amount and on the conditions being determined by the federal law "On the federal budget for 1998";

-- to grant extensions to constituent territories of the Russian Federation that have signed and are complying with an agreement on the repayment of budget loans received in 1997 for the purpose of settling wage arrears in the sector financed out of the budget;

-- to consider applications from bodies of state power of the constituent territories of the Federation for temporary financial assistance from the federal budget in case of availability of materials that describe the forecast of performance of the budget for the corresponding period and the progress made in implementing programmes for financial sanitation in accordance with the form established by the Government of the Russian Federation;

-- to approve the procedure for the delivery of funds allocated from the federal fund of financial support of the constituent territories of the Russian Federation through the system of the State Treasury, excluding the possibility of using these funds for other purposes when there are wage arrears to the employees of the sector financed out of the budget.

The draft Presidential Decree "On measures to ensure trade union control over timely payment of wages" provides for the creation of trade union groups in enterprises, institutions and organizations in the constituent territories of Federation and municipalities for the purpose of control over timely payment of wages and provision to these groups of the necessary information.

For the coordination of the activities of the trade union control groups and for prompt gathering of information on the obstacles to the payment of wages, it is proposed that a Presidential Commission on matters relating to the timely payment of wages be set up. The draft Decree was preliminarily examined and coordinated with the FNPR.

In addition, the Vice-Chairman of the Government of the Russian Federation has approved a plan for ensuring the resolution of the problems related to ensuring the prompt payment of wages to the employees of organizations financed out of the budget. Specifically, the plan provides for:

-- the elaboration of a draft Presidential Decree on improving the control over compliance with the labour legislation of the Russian Federation;

-- conduct of a conference within the Government of the Russian Federation on measures undertaken by the bodies of executive power of the constituent territories of the Russian Federation to pay off wage arrears to the employees of the sector financed out of the budget.

In the opinion of the Ministry of Labour, these measures will contribute to the resolution of the problem of settlement of wage arrears to employees of the whole sector financed out of the budget.

In addition, a Government representative, First Deputy Minister of Labour and Social Development, stated that Russia was reporting on the application of Convention No. 95 for the first time since it had become a member of the ILO. This Convention had been ratified by his country in 1961. First of all, he pointed out that the new Russia had quite a normal attitude to the comments of the ILO supervisory bodies addressed to it, as compared to the times of the USSR, when even a direct request of the Committee of Experts used to raise a very negative attitude and any comments of the supervisory bodies were considered as a direct attack against the foundations of the State. Nowadays, his Government stood for cooperation with the ILO supervisory bodies and thought that it would be constructive. It was ready for a dialogue and intended to continue it with all supervisory bodies of the ILO.

The procedure under article 24 of the Constitution concerning the representation addressed against Russia under the Convention was closed by the Governing Body Tripartite Committee only in November 1997 at the Governing Body's 270th Session. His Government had also received the Committee of Experts' comments. The Government, in turn, had communicated a series of replies and information on this subject. The speaker hoped that the Committee of Experts had paid attention to the scope of this information and, above all, to its objectivity.

Unfortunately, the situation was very complicated. The country was undergoing a period of transformation from the centrally-planned economy to a market economy. It was a difficult period of transition from the society in which there had been a monopoly of power, monopoly of ideology and monopoly in the economy. The process of restructuring the society was going on in all directions. It was quite evident that in such a complicated process some drawbacks and mistakes were inevitable. In the past, the country had lived almost in isolation and was, to a great extent, oriented to the expansion of its ideology. Now it was returning to a common civilized way of development and was much more open to the world which was becoming more and more interdependent.

The Russian trade unions' concern about wage arrears was shared completely by the Government which had undertaken extraordinary efforts in order to remedy the situation. This could be confirmed by the fact that one of the first meetings organized by the new head of the Russian Government was that with Mr. Shmakov and other trade union leaders of the country.

At present, the total wage arrears stood at 62.8 billion roubles, including arrears due to the lack of direct financing out of the federal and regional budgets -- 9.5 billion roubles and the debts of the federal Government were not higher than 30 per cent.

The speaker recalled the basic reasons for a crisis in the sphere of wages. First of all, there was an unstable financial situation in the country which was due to the following: (a) poor collection of taxes; (b) increase in mutual non-payments; and (c) weak investment activities.

A critical situation with non-payments in relation to mutual obligations (53.3 billion roubles) was a result of the difficult financial situation of many enterprises and organizations. At the end of 1997, the number of non-profitable enterprises in main industries was as high as 47.6 per cent, in the transportation sector 58.6 per cent, and in construction 40.9 per cent.

A difficult situation existed in respect of payments among enterprises -- only 15 per cent of all payments were made in terms of money. Beside the objective reasons, in many cases the insolvency of enterprises, including their incapacity to pay wages, was due to the unsatisfactory management of industrial and financial activities of companies and to inefficient privatization, in the course of which economic stabilization and industrial activities had not become high-priority matters for the new owners. Unfortunately, for many managers of enterprises, it had become possible to use the non-payments to resolve their financial problems at the expense of the State and their own workers. This could be explained by the fact that the economic, disciplinary and administrative responsibility for such action was not adequate as compared with the profits made. In this connection, the Government was undertaking special measures: intensive training of personnel (including training abroad) in order to enable it to provide for effective enterprise management in the new economic conditions and elimination of drawbacks and shortcomings in legislative activities. Moreover, the Government counted on the effectiveness of the measures undertaken with a view to strengthening the financial and tax discipline and to reducing budgetary expenditures.

In this regard, it was appropriate to refer to the plan of draft legislation of the Russian Federation for 1998, which included the elaboration of 75 draft federal laws. Many of them were related to the social and labour fields and dealt with such issues as conditions of work, payment of wages and salaries, social security, occupational safety and health, guarantees for trade union activities, etc.

The Russian Federation continued to suffer economic losses due to the high number of officially unemployed persons. This unemployment had caused the Federation to incur losses amounting to 63.8 million roubles (the fund for the payment of salaries; reduced income tax revenues and contributions). If the methods of calculation of the ILO would be applied, these losses would amount to 128.6 million roubles, that is, twice the amount.

Although Russia did not yet fully take part in the world economy, it was already considerably and directly influenced by the evolution at the global level. The prices on the international market of a series of Russia's export products, such as petrol, fuel, iron ore and other metals, had fallen drastically, which had caused Russia to incur losses amounting to some 2 billion dollars in 1998. The level of the salary funds for the oil sector fell to 5.4 million roubles and in the coal sector to 1.4 million roubles. Substantial economic losses had also been incurred in the context of the provision of natural gas, wood and synthetic rubber.

In Russia, the economic situation had undoubtedly also suffered from the setbacks caused by the Asian financial crisis. Difficulties on the domestic financial market had forced the Government and the Central Bank to significantly increase the rates of private loans. Should Russia not have proceeded to do so, the national currency would have had to be devalued by 30 per cent. The measures undertaken had allowed for a return to a situation comparable to the one before the crisis.

The problems of wage arrears were directly related to the structural reforms in the economy which did not have any easy or quick solution, taking into account the specificity of Russian conditions. These reforms were being coordinated to a certain extent with the World Bank and the International Monetary Fund which usually downplayed the importance of the social aspect of the problem.

As regards the indebtedness of enterprises financed from the regional and local budgets for 1997, it was practically eliminated through financial assistance given to them for the amount of 20 billion roubles. In January 1998, only five constituent regions of the Federation still had wage debts.

What was the present policy of the new Government of Russia in the solution of the problem of wage arrears? Two ways were opened: the way of confrontation with social partners, mutual accusations and consequent departure from the democratic roots which were taking hold in Russia with many difficulties. The other way was that of cooperation, dialogue and joint efforts, the way which was advocated by the ILO and which was now followed by Russia. The way of cooperation had brought positive results, as reflected in the technical programmes carried out together with the social partners and the ILO, in the ratification of the ILO Conventions which have become the main sources for the development of the national legislation. At the end of 1997, a conference of the International Confederation of Free Trade Unions was held in Moscow together with the ILO and the Russian trade unions on the question of wage payment. In April of this year, on the same question, a meeting was held of the representatives of the government agencies (Ministries of Labour, Finance and Education) with the leaders of the trade union of workers in education and science and the Federation of Independent Trade Union of Russia. In both cases, recommendations were made to the Russian Government. In particular, it was suggested that trade unions might be used to intensify control over the payment of wages. Recently, on 5 May 1998, the President of Russia had taken the decree "On additional measures to ensure payment of wages to workers in the budgetary sphere and to improve the financial situation". This document determined the conditions of financial assistance from the federal budget to the regions constituting the Russian Federation; the Government was obliged to conclude in two months' time an agreement with them about the provision of such financial assistance. It was to be noted also that the problems of the timely payment of wages were reflected in the general and industry-wide tariff agreements and collective agreements.

Regretfully, in the Committee of Experts' report on the application of Convention No. 95 in Russia, the data supplied by the Government was not reflected in full. This concerned questions of supervision of legislation on wages by the labour inspection. In this respect, the speaker recalled that in 1997, the labour inspectorate, together with the prosecutor's office, the tax inspection office, Ministries of Finance and the Police carried out inspections in 45,000 enterprises and undertakings in Russia which revealed more than 27,000 cases of violation of legislation on wages which resulted in the payment of wages due to workers of the amount of nearly six billion roubles. During the first five months of 1998, over 16,000 inspections were carried out and 1.7 billion roubles were paid in wages. Those who were violating legislation on wages and misusing budgetary finances were subjected to administrative and disciplinary sanctions. The Government had also submitted to Parliament draft laws to modify labour, administrative and criminal laws in order to increase the liability for violation of wage legislation. While this draft law had been submitted over a year ago, it had not yet been adopted by Parliament; neither had Parliament adopted the draft legislation to put an end to the massive violation by commercial banks which was having a direct impact on the situation of wage arrears. Detailed information on these measures and inspections would be supplied to the ILO.

The Government valued active dialogue with its social partners and had the political will to resolve the crisis. In this process, it was important however not only to conserve the basis for social partnership and tripartism, but to give them an additional stimulus and development. The Government expected support and cooperation from the social partners, besides criticism which it fully accepted. It also expected technical assistance from the ILO which was expressly mentioned in the recommendations of the Governing Body concerning the representation made under article 24 of the ILO Constitution. These recommendations had been studied and the present Government would no doubt make use of them. The speaker hoped that the recommendations made by the ILO would lead to positive practical results. The new Government of Russia considered the solution of the wage arrears problem its first priority, which could be found only in dialogue with the social partners on a tripartite basis. In conclusion, he expressed the hope that this Committee would take into account the fact that the new Government had come to power only two months ago, as well as the fact that the problems of application of Convention No. 95 in Russia were not of a purely formal or legal character, but rather were due to the difficult economic situation of the country in a transition period.

The Employers' members noted the different climate in which discussions with the Government representative had taken place. Although this climate had changed for the better, this case was very serious. The Committee of Experts had made observations on several occasions in respect of this case which had been examined by the Conference Committee in 1995. Many representations were pending alleging the non-payment or delayed payment of wages. The Governing Body had adopted recommendations urging the Government to ensure that the Convention was fully applied and, in this regard, to ensure prompt payment of wages. The Government had also been urged to strengthen the supervision of payment of wages through the reinforcement of the activities of the labour inspectorate, and to prevent the diversion of funds, which should be used to pay wages, for illicit purposes. Referring to the figure set out in the report of the Committee of Experts, the Employers' members stressed the magnitude of the problem in practice. Although the Government representative had indicated that measures of supervision were being carried out and penalties imposed, there was a considerable delay in paying outstanding wages. The Employers' members were of the view that there was a lack of both planning and a set timetable to address the problem. Moreover, new allegations from national and international trade unions had painted a worrying scenario since the figures reflected in these reports affected the fate of human beings. The Government representative had referred to several presidential decrees and orders. However, these were still in draft form, therefore clarification should be sought on measures which would be taken to solve the problem. Turning to the written information provided by the Government in which additional information had been given, the Employers' members pointed out that this information once again related to draft legislation and projects and did not demonstrate that concrete measures were being taken leading to a speedy resolution of the problem. The Government representative, as well as the Committee of Experts, in its earlier comments, had stated that the problem of wage arrears was linked to the special situation of the country's transition to a market economy. The Employers' members were of the opinion, however, that the non-payment of wages was not illustrative of a market economy although this phenomenon could be due to the transition to such an economy. In the meantime, too many elements of a planned economy still existed in this country and a more rapid transition to a market economy would alleviate the problem. Moreover, the Employers' members indicated that, under a system of civil law, services and counter-services were mutually related. If workers provided services, it was not in conformity with the principles of contract law that the employer did not comply with his obligation to pay wages on time. Therefore a reliable legal framework covering judicial proceedings, if necessary, should be established in order to guarantee the payment of wages. As a result, the Government should be urged to elaborate, in consultation with the social partners, a legal framework in order to guarantee the prompt payment of wages.

The Workers' members supported the statement made by the Employers' members concerning the positive change in attitude of the Government of the Russian Federation towards the ILO. They thanked the Government representative for the additional information provided and the written information furnished. They recalled that this case had already been discussed in 1995. Last year the Workers' members had proposed to include this case in the list of individual cases. But, in view of the representation submitted pursuant to article 24 of the Constitution and the procedural rules providing that general and special procedures not be examined at the same time, this Committee was not able to discuss this case at the time. In the meantime, the Governing Body in November 1997, had adopted the report and recommendations of the Committee set up to examine this representation. The Committee of Experts, as well as this Committee, were now in a position to examine the implementation of the recommendations adopted by the Governing Body, and to discuss the developments in law and in practice concerning the application of the Convention in all sectors and regions of the Russian Federation. The Workers' members considered that the main problem was the wage arrears incurred, i.e. the delayed or non-paid wages. Wage arrears was a significant problem in the Russian Federation. There were millions of workers, including their families, who were suffering from the non-payment or the substantial delays in the payment of wages. The problem was actually even more serious than the figures provided by the Government and contained in the report of the Committee of Experts seemed to suggest. It affected all sectors of the economy and not only the educational or health sectors. The written information provided concerned only certain public sectors and not the private and semi-public sectors. The problem of wage arrears was only partially caused by the transformation of the economy. It was also caused by serious difficulties related to the efficiency of the national legislation, the efficiency and transparency of the decision-making procedures at the enterprise, as well as, local, regional and national authority levels, the tax and the legal system.

The Workers' members stressed that pursuant to requests by the ILO, the Government had already taken certain measures in spite of increasingly important social tensions. Unfortunately, the measures had not sufficed to ensure regular payments of wages. The information available did not permit the conclusion that there were any tangible improvements made. In the same vein, the Committee of Experts had noted that, in spite of the measures taken until present, there were no indications that the situation had improved. As an example, the total decrease in wage arrears did not fully amount to 2 per cent in July and August 1997. This was a cause for concern particularly against the background of the statement of the Government representatives in 1995. The Government had conceded that there were serious problems in regard to the efficiency of national legislation and the legal system. The Workers' members declared that they were extremely concerned by the gravity of the situation and its serious social consequences. The Committee of Experts, as well as the Committee set up by the Governing Body shared these concerns. The Workers' members therefore asked the Committee to take their serious concerns into account in the conclusions.

As regards workers employed by organizations operating under the state budget, including teachers and workers in the health sectors, the Government referred to two draft presidential decrees in the written information submitted. The Workers' members recalled that these decrees had elaborated a plan aimed at promoting the rapid payment of wages to workers. The Workers' members considered that the measures reported did not seem to introduce any truly new elements. In addition, the information provided was not as concrete and detailed as had been requested by the Committee of Experts and the Governing Body. While the involvement of trade unions in the supervision was in itself a positive element, care had to be taken that the Government and the employers did not use the presence of the trade unions as a means to evade or free themselves of the timely obligation to pay wages and to apply Convention No. 95.

They insisted that the Government should be requested to submit, without delay, detailed information on the number of affected workers and enterprises, on the type of affected enterprises, on inspections conducted, on penalties imposed, on the total amount of payments made, the impact of these payments on the arrears, and on a detailed timetable for the payment of wage arrears. Once again, they asked the present Committee to take these elements into account in the conclusions.

Concerning the problems of application of Convention No. 95 in general, in all sectors, the Government should undertake forceful measures in three areas: (1) effective supervisory mechanisms; (2) appropriate penalties to prevent and punish infringements; and (3) steps to make good the prejudice suffered. The Government should inform the Committee of Experts of all legislative and practical measures undertaken. This information should contain detailed information on inspections carried out, payments of arrears made and the damages paid for economic losses. The Government should provide detailed information to enable the supervisory bodies to follow the situation and concrete developments.

In conclusion, the Workers' members stated that the Government should respond to the questions raised by the Committee of Experts concerning the prohibition of payment with promissory notes or coupons, payments in kind and the treatment of wages as privileged payments in the case of bankruptcy. Convention No. 95 was an important Convention for workers. It provided for important rights and principles related to the daily life of workers and their families. Consequently, the Workers' members stressed that the Government, as well as the public authorities, should urgently undertake energetic measures to ensure respect of the Convention in law and in practice. They wished to be able to follow developments closely and would bring this case before this Committee again next year, should they not be able to record any substantial progress.

The Worker member of the Russian Federation, emphasizing the importance of the problem of the non-payment of wages and accumulation of wage arrears for the well-being of the millions of workers and their families in Russia, pointed out that violations of wage legislation happened not only in the budgetary sphere, but were common to all sectors of the economy. Under the terms of Convention No. 95, the Government was responsible for the non-payment of wages by all enterprises and not only those belonging to the budgetary sector. As regards the opinion expressed by the Employers' members, that wage payment problems were caused by the fact that the Russian economy still conserved many features of a centrally-planned economy and was slow in transition to the market economy, he considered that this was a distorted vision of the situation, which, on the contrary, was characterized by an absolute lack of any planning and coordination, which might have indeed contributed to the wage indebtedness.

Regarding the suggestion to involve trade unions in the close supervision of the payment of wages, the important issue that remained was the need to ensure the transparency of the financial documents of the undertaking in case it did not pay wages due to its workers, and it was in this respect that the involvement of trade unions in supervision might bring effective results. The Committee of Experts should pay attention to this aspect.

Concerning the overall situation with respect to the non-payment of wages, it was worsening with every passing day. At the time the Governing Body had considered this question in November 1997, the overall indebtedness amounted to US$9 billion, while in May 1998 it had already amounted to US$10 billion. Convention No. 95 was also being violated in that wages were paid in illegal forms such as promissory notes, coupons or in kind. The Committee had already considered the situation in Russia on several occasions, the first time being in 1995. A number of legislative measures were then adopted aimed, in particular, at protecting wages in case of bankruptcy. However, the constitutionality of these measures was questioned by some government institutions before the Constitutional Court of Russia which had, in December 1997, repealed the modifications which were ensuring increased protection of wages. This had led to the violation of Article 11 of Convention No. 95 according to which wages should be treated as privileged credit in the case of bankruptcy of an enterprise. In addition, the judicial system, including the Supreme Court of the Russian Federation refused to accept claims for compensation for moral damages because of the late payment of wages. This showed that the Government and other state bodies had ignored the decisions taken by this Committee in 1995 and by the Governing Body in 1997 concerning non-payment of wages in Russia. At the same time this problem had led to social upheavals and civil unrest as illustrated by the miners' recent action of blocking the railways and the legal proceedings instituted against the trade union leader in the city of Urga in Kemerovo region for such action in defence of workers' wages.

The speaker pointed out that non-payment of wages now concerned not only state and private enterprises, but also some foreign companies doing business in Russia, and cited an example of a Swedish company in the city of Segech in Karelia which had failed to pay wages to its employees since January 1998 amounting to US$6million. Consequently, Russian workers supported the conclusions of the Committee of Experts that the Government should complete its general observations on the subject by announcing very concrete and detailed measures aimed at the speedy liquidation of the accumulated wage debts. The General Tariff Agreement, according to which the Government took the obligation to liquidate all wage debts before 1 July 1998, was not being observed. Therefore the speaker urged the Committee to follow this case with much stricter control and not to hesitate to use all the instruments at its disposal in case the measures taken by the Government proved to be insufficient in improving the situation.

The Worker member of the Russian Federation thanked all the ILO bodies concerned for their attention given to the representation made by Education International and the Education and Science Employees' Union of Russia alleging non-observance by Russia of Convention No. 95, as well as for the absolutely correct recommendations which had been addressed to the Government. She agreed with the previous speaker that questions of violation of Convention No. 95 in Russia were not limited exclusively to the sphere of education because non-payment of wages had become a general problem extending to many other sectors of the economy. As regards the situation of payment of wages in the educational sector, it had become worse. In spite of all the measures taken by the Government, the wage debt had increased and amounted at present to US$1.5 billion, which meant that delays in the payment of wages lasted at least three months. As to the amount of the wage itself, it was very low: the average wage in education amounted to only US$90-100 per month, which meant that a young school teacher could not count on receiving more than US$30-50 per month, while a university professor would get US$100-150. The situation was aggravated by the fact that teachers were not certain to receive payments for the coming annual summer holidays. Trade unions were conscious of the fact that payment of wages and of arrears of wages was the responsibility of state bodies at different levels, but insisted that it was the responsibility of the Government to ensure full application of Convention No. 95 and to take such practical measures that would progressively eliminate wage debts. This had to be the constant responsibility of the entire Government, and the recommendations of the Committee of Experts and of the Governing Body were very clear in this respect. The fact that the situation was not improving showed that the position of the Government in carrying out consultations and negotiations with the trade unions could not be called constructive. Its good intentions expressed at the negotiating table did not result in the taking of concrete measures that were necessary in practice. It was the third occasion that the non-observance by the Russian Federation of Convention No. 95 was being considered in the ILO. The situation was not improving, it was in fact deteriorating, and deserved the adoption of a special paragraph in this case. It was to be hoped that this time the Government would pay full attention to the recommendations of this Committee and would not fail to take consistent and concrete measures to implement those recommendations in constructive dialogue with the trade unions.

The Worker member of Norway, speaking on behalf of the Nordic Workers' group, stated that the fact that workers in a country which could be among the richest in the world were not paid their fair wages for the work they were performing or were being paid very late was a tragic situation. The workers of the Russian Federation were previously used to relatively safe living conditions, getting their wages on time, and functioning social security systems. The trade unions in the Nordic countries had been following the struggle of their comrades in FNPR with the Government and with private companies to secure for Russian workers their most self-evident right -- the right to be paid for the job they were doing. The trade unions in the Nordic countries had been supporting this struggle, morally and financially, and would continue to do so. They were in full agreement with the gloomy analysis that the country was actually on the verge of a social explosion. Action had to be taken soon, meaning that workers had to be paid. No one could exist or function in society unless they had food to eat, could support their children, and care for their families. The trade unions were doing a formidable job in trying to save the country from social chaos. In Norway and Finland, trade unions witnessed this very well. They cooperated with their comrades both in the Murmansk Arkhorgelsk and St. Petersburg regions, and in other regions as well, and saw how the trade unions were both taking action vis-à-vis the Government, as well as taking care of the daily needs of their members. They were in fact, in many places, the only security network that the workers had. But the problem of non-payment of wages could not be solved by anyone else but the Government through more effective supervision, appropriate sanctions, etc. The non-observance of Article 12 of Convention No. 95 had to come to an end. It was the responsibility of the Government to ensure payment of wages and these wages had to be paid on time and it was the responsibility of the Government to collect sufficient taxes in the public sector. All possible measures had to be taken in the other sectors, especially in the production sectors. The violation of this important Convention, the implementation of which most people in this Committee took for granted, had to be stopped. She recalled that the workers of a country were its most important resource and that the Government of the Russian Federation could not afford not to treat the workers decently; decency meant in this case: paying them the wages they were entitled to. The Russian Federation could not afford a development leading to social chaos.

The Worker member of the Ukraine recalled that two years ago this Committee had considered the same question and that, in the meantime, notwithstanding the measures taken by the Russian Government, the overall wage debts had increased. The wide practice of not paying wages on time, in violation of the labour legislation and collective agreements had turned into a main factor of social tension in the majority of enterprises, industries and regions. In April 1998, the Federation of Independent Trade Unions of Russia conducted a nationwide action of protest calling for the full payment of wages in accordance with the General Agreement for 1998-99. This action was supported by the Federation of the Trade Unions of Ukraine which conducted the same kind of action in their own country where the problem of non-payment of wages, pensions, scholarships and other social payments was not less acute. This problem emerged in 1992 and since 1995 had become a standing feature of the national economy. In 1996-98, Parliament, the President and the Cabinet of Ministers of Ukraine had adopted more than 40 laws aimed at ensuring the timely payment of wages; the majority of these Acts, as well as the time schedules of payments approved by all social partners, had not been fulfilled. The ultimate agreement in this respect set 1 November 1997 as the date of full payment of wage arrears, but since then these arrears had been steadily increasing. The chief reason for this was that in the Ukraine, as well as in Russia, the process of the primary accumulation of capital took the most outrageous forms of appropriating the results of labour of workers by other economic agents. He emphasized that non-payment of wages had resulted in a decrease of the consumption capacity of the population and, ultimately, had led to the need for more foreign credits. The international agreements concluded to this end by Ukraine with the World Bank, the International Monetary Fund, and the European Bank for Reconstruction and Development contained many unfavourable requirements. Last year, Ukrainian trade unions asked the ILO to take into account the magnitude of the wage indebtedness problem during the elaboration of the next Memorandum of Understanding with the International Monetary Fund, so as to lessen the limits on credits and the state budget with the aim of helping enterprises to reconstruct their productive capacity. This appeal, however, had not been heard. In conclusion, he supported the suggestions put forward by the Federation of Independent Trade Unions of Russia.

The Worker member of France considered that the wage arrears were not only related to a lack of funds or the economic crisis. In relation thereto, he referred to the observation in the report of the Committee of Experts which specified that according to the Russian Chemical and Allied Industries Workers' Union, the arrears in this branch alone amounted to 1,362 billion roubles. In certain cases these funds had been manipulated by the banks in the interest of certain persons, instead of serving the needs of the enterprises. He also referred to the paragraph concerning supervision measures further to which, according to the information provided by the Government, some 14,500 flagrant violations of wage legislation had been revealed by the Russian Labour Inspectorate. In this context, the speaker recalled that one of the basic principles of the ILO was that there could not be any civil or social peace without social justice. He considered that the non-payment of wages for efficient and productive work constituted the most serious of social injustices. The situation was aggravated by the fact that, as the Committee of Experts had emphasized in its report, funds destined for payment of wages often were inappropriately used to benefit certain persons. Moreover, this was a situation prevailing at the very instant when this country was considering joining the WTO and participating in G8 meetings. Finally, the Government should carry out enterprise inspections and amend its legislation to the effect that all those who violated wage legislation by non-payment of wages be, and remain, dissuaded therefrom.

The Worker member of Pakistan regretted the plight of Russian workers due to the non-payment of their legitimate wages for a considerable period of time. According to observations received from workers' organizations, the total wage debt amounted to over US$9 billion. This had caused much social and economic hardship for workers and their families. According to the information supplied by the Government itself to the Committee of Experts, around 96,700 enterprises owed wages. Moreover, some funds had been used for purposes other than for the payment of wages. In these serious circumstances, the Government should be urged to observe the conclusions of the Governing Body and those of the Committee of Experts relating, not only to the regular payment of wages directly made out of the federal budgets, but also to the payment of wages to all workers in the country to whom wages were due.

The Worker member of China indicated that Chinese workers and unions were deeply concerned about the non-payment and late payment of wages to workers in the Russian Federation. He wondered how workers could survive without the payment of their wages. Moreover, this phenomenon affected various other persons including the families of the workers. The Government should take decisive measures to solve this problem and the national economy should not be promoted at the expense of the workers. While he acknowledged that this problem was multifaceted, the Government had the major responsibility for solving it. The Chinese experience showed that legislation and legal supervision needed to be strengthened if this problem were to be resolved. He hoped the Government would take forceful measures in this area.

The Worker member of Spain emphasized the seriousness and urgency of the problem of wage arrears in the Russian Federation and supported the reasons invoked by the Employers' members in this respect. The amount of wage arrears exceeded US$10 million. The situation was becoming more and more serious every day, causing a deterioration in the working conditions and daily life of workers and their families. The alleged lack of resources stood in stark contrast to the frauds, the embezzlements and the lucrative activities of the Mafia that everybody was aware of. A social dialogue was necessary, but such a dialogue would be meaningless if it did not result in immediate payments of wages and the elaboration of methods to pay the wages. This problem should be resolved before the end of next year. He also expressed the wish to make this case the subject of a special paragraph.

The Worker member of Belarus noted that under the pressure of the trade unions the Government of Russia had been taking measures which permitted the reduction of wage arrears, which then started to accumulate once again and attained even higher levels. Common people were losing all hope that they would ever receive regular wages and be able to support their families in the normal way. This was why they resorted to blocking railways and manifested against economic reforms. Consequently, the political situation in Russia was deteriorating and was directly influencing the situation in its neighbouring countries, and in Belarus in particular, where the trend of late payment of wages had recently increased. For these reasons she urged the Committee to keep the question of the observance by Russia of Convention No. 95 under its constant and vigilant supervision.

The Government representative of Russia thanked all the speakers for their comments and criticisms, and in particular the Worker member of the Russian Federation, and emphasized that this dialogue had illustrated the recent nature of tripartism in Russia. His Government shared the concern of the Committee as to the gravity of the situation. All of the Committee's recommendations would be brought to the attention of the Government which intended to pursue dialogue and cooperation with the social partners and with the ILO in order to find a solution to the present crisis. The Government intended to regularly inform the ILO concerning developments in the situation.

The Committee noted the written and oral information supplied by the Government representative and the discussion which took place. The Committee noted that the measures mentioned and the preparation of various draft texts and rules including two draft presidential decrees, did not appear to have much novelty as compared to what had already been done by the Government. The Committee noted with regret that the Government had supplied no concrete and detailed information as requested in the observation of the Committee of Experts and also by the Governing Body (e.g. number of workers affected, inspections made, penalties imposed, time schedule of the payment of wage arrears). The Committee noted with deep concern that there was still no evidence of clear, concrete and definite improvement of the situation which was extremely grave and had very serious social consequences. The Committee strongly urged the Government to make a clear commitment to put an end to these violations of the Convention and to take, in consultation with the social partners, a package of measures, not only making rules such as decrees but also ensuring their effective enforcement in practice, in particular by the imposition of appropriate penalties in the case of violation, so as to ensure the payment of wages on time and the rapid settlement of wage arrears already outstanding. The Committee furthermore strongly urged the Government to supply full and detailed information on a coordinated package of measures taken and the results achieved. Such information should include all statistical data requested by the Committee of Experts, for instance, number of workers affected and the outstanding amount of wage arrears, inspections made, penalties imposed and the time schedule of the payment of wage arrears. Finally, the Committee also urged the Government to supply the information requested in the observations of the Committee of Experts on the other provisions of the Convention. The Committee firmly hoped to be in a position next year to note concrete and definitive improvements in the situation.

Individual Case (CAS) - Discussion: 1995, Publication: 82nd ILC session (1995)

A Government representative stated that, while it was the first time that the Government of the Russian Federation had to report before this Committee, it regarded this reporting as a normal phenomenon.

Payment of wages for labour performed was one of the most important prerequisites for normal labour relations; it must be regular and timely and in accordance with the labour performed. The problem of the late payment of wages in his country illustrated, above all, the fact that the situation regarding labour relations was far from ideal. The main causes of this were the continuing fall in production and in the services sector, the breakdown of the system of mutual payment between enterprises and the destruction of the technological and economic networks in the country. On the other hand, some directors of certain enterprises were taking advantage of this difficult economic situation by avoiding paying wages and thus using this money for the purposes of enriching themselves and their own families and friends.

The Russian authorities were undertaking measures in order to eliminate the problem of unpaid wages. In the report of the Committee of Experts mention was already made of decrees passed by the President of Russia on this subject. In addition to this, the public prosecutor's office had been asked by the President to increase its supervision of the compliance by enterprises and organizations, regardless of the form of ownership, with the labour legislation and to pay particular attention to the problem of wages. On the initiative of the Russian Government and the state Duma - the lower house of Parliament - a Bill has been adopted on the introduction of changes in the Labour Code concerning sanctions for violations of the Labour Code, in particular in case of unpaid or late paid wages. The Ministry of Labour of Russia had elaborated a draft law on the compensation of material loss because of late or irregular payment of wages, which contained provisions concerning the time at which wages must be paid, the mechanism for indexing unpaid or late paid wages and the liability of those managers who were responsible for violating these rules. The state Duma, in third reading, had adopted the law concerning the compensation for material loss for late paid or unpaid wages, pensions or other social benefits which should be paid to the citizens of Russia. On the instructions of the Government, the Ministry of Finance had prepared a draft Presidential Decree on the temporary possibility of using cash resources which were paid into the current account of enterprises. This draft allowed enterprises and organizations to allocate for the payment of wages up to 30 per cent of the resources paid into their current account or their foreign currency account.

The Ministry of Finance of Russia, on 20 March this year, approved a schedule for debt repayment on the Defence Procurement Financing Programme for 1994, with an allocation of cash resources for the payment of wages. Finally, in the draft law on protecting the rights of workers to the regular payment of wages, all the measures mentioned above were provided for. The adoption and the implementation of all these measures should help to a considerable extent to deal with the problem of late paid and unpaid wages.

However, the solution of the problem of unpaid wages or late paid wages could only be found once there was a complete reform of the economic mechanism in the country, the elimination of old debts, the improvement of the effectiveness of production, the acceleration of the turnover of cash resources and the increased responsibility and liability of directors and managers at all levels in solving these problems. One should bear in mind that this country was going through a very difficult period of state reorganization and reform of the economy as a whole, and this process was being accompanied by certain political complications. The Government was seeing the dialogue with the ILO and its supervisory machinery and, particularly the interest being shown in its problems by the Experts, as an effort to help it to bring about constructive solutions, and therefore it welcomed this interest and this dialogue.

The Employers' members thanked the representative of the Government of the Russian Federation for coming to the Committee and discussing the case of Convention No. 95, which was a normal case engaging the Government's constitutional obligation. In the Committee of Experts' report, certain specific issues had been mentioned and a general situation described of late payment or non-payment of wages, and sometimes the considerable period of time during which wages had not been paid at all, or only part of the wages had been paid. For the workers involved, it was a very difficult situation and for that reason it was appropriate to deal with the question here.

Of course, it was easy to imagine the reasons and origins of the problem. The Government in its report indicated, inter alia, that the country was in transition to a market economy, and it was not a typical feature of a market economy that wages were not paid, on the contrary. The Employers recognized, however, that there were many difficulties in transitional phases, and it would only be helpful if the transition to a market-based economy could take place even faster and was implemented in a more effective way. This would help with many of the aspects of this case, as it would also if the law, including fiscal law and all other forms of economic law, were upheld in all parts of the economy. There had to be some kind of stability, some kind of confidence, which was important in any economy.

As far as the wages problem was concerned, the Government was not trying to pretend that things were better than they were, and it had indicated certain measures that had been adopted, a decree passed by the President as well as pieces of legislation, including penal provisions to underpin the decree. Obviously, at the present time, there seemed to be enough legislation, at least a very good legislative basis for tackling these problems. Now it was really a question of the practical implementation of these legal provisions, on which things would depend in the future. The Government should further strengthen its measures along the lines recommended by the Committee of Experts and should enhance the supervision of their implementation, so that there were prosecutions for non-payment of wages, and so that the workers involved were given adequate opportunities to stake their claims and have their claims satisfied as quickly as possible. The Employers' members asked the Government to report on everything that happened in this area in the future, on what the Government was doing, and on the practical impact of these measures, and hoped to see considerable progress in the near future.

The Workers' members emphasized that the non-payment of wages was an important problem in the Russian Federation as well as in other, maybe in all, the countries in the Commonwealth of Independent States. There were many workers who suffered from non-payment or very late payment of their salaries having to support all the consequences of the degradation in the conditions of life for them and their families. Information provided by the trade unions and the observation of the Committee of Experts showed that non-payment or late payment was not only widespread, but contravened both the national legislation and Article 12 of Convention No. 95, which was a priority Convention.

According to the Government representative, these problems were caused by the transition to a market economy. However, the Government also admitted that there were serious problems concerning the effectiveness of the national legislation and of the judicial system. The Government mentioned, as reflected in the report of the Experts, the adoption of additional measures by Presidential Decrees No. 1005 of 23 May 1994 and No. 458 of 10 March 1994, as well as other initiatives yet to be taken. In this connection the Workers' group supported the Committee of Experts' request that the Government continue to inform the Committee on the measures taken to implement these new legal instruments.

In the context of the Russian Federation, and elsewhere, this problem was spreading partially due to the economic situation but also, and this was perhaps even more preoccupying, because of the weakness of the legal framework in establishing the state of law. Too many groups and persons were benefiting from those weaknesses to abuse workers who already lived in very difficult conditions. It was therefore absolutely necessary to reinforce the implementation of rights through the system of supervision and penalties. This was the reason why it was necessary to insist in the conclusions that the Government took effective measures to have a real impact on ensuring respect of the Convention. The Experts had underlined the three crucial elements to guarantee the application of the legislation: supervision, appropriate penalties to prevent and punish infringements and steps to make good the prejudice suffered. The Workers' members insisted, in full agreement with the Employers' members, that the Government provide to the Committee of Experts all the information on the practical application of the Convention, including extracts of the reports on investigations made, infringements observed and penalties imposed.

The Workers' member of the Russian Federation welcomed the effort being made by his Government to turn for assistance to the International Labour Organization and to continue this dialogue. However, in the Russian Federation, violations of the right to receive wages for labour, one of the most fundamental human rights, had become a chronic and widespread problem. There were many facts which had been confirmed in communications from trade unions throughout the country and in those sent in to the International Labour Organization, to the effect that many provisions of Convention No. 95 were not fully implemented in practice, that the Government did not provide for the observance of these provisions, and that the President and Parliament were slowing down the adoption of additional and supplementary legislation which would help to implement international standards.

The main thing was the violation of Article 12 of the Convention on the regular payment of wages. These violations happened in all branches and on the territory of all the republics of the Russian Federation. Wages for millions of workers were held up for several months in conditions of permanent inflation and were becoming worthless. In the Primorski Krai, for example, unpaid wages had doubled over the last year and were now about US$15 million. Throughout Russia, according to official statistics, unpaid wages at 1 June 1995, in round figures, amounted to US$1.2 billion, and had increased by 10 per cent in the month of May alone.

The real wages paid to workers were not in accordance with the concept laid down in Article 1 of the Convention. Not only the minimum wage, but very often the average wage in a particular branch was not even up to subsistence level. There were many cases when the payroll documentation was not kept properly, contrary to Articles 1 and 15 of the Convention.

Articles 3 and 4 of the Convention were also violated since wages were paid not only in cash, but also in prohibited forms, such as promissory notes, coupons and also in kind, which was undesirable and inappropriate for the individual consumer. The workers did not always get treated as the privileged creditor with regard to the payment of wages, which was required in Article 11 of the Convention. Despite Article 15 of the Convention, the Russian legal system did not contain the necessary sanctions concerning legal liability for violation of labour rights of workers, including for late payment of wages. A fine imposed would only be roughly 22,000 roubles which amounted to about US$4 now. Workers and trade unions had to wait a very long time in order to have their claims for unpaid wages met because the courts were overloaded. Even when a judgement was handed down by a court, often it was not implemented.

Much of the legislation remained in the form of pious projects. Much-needed legislation had been held up for more than a year by Parliament. To put it on the agenda, trade unions had had to organize national demonstrations of protest in October 1994 and in April 1995, but in May of this year the President of the Russian Federation had nevertheless still rejected one of these draft laws approved by the Federal Chamber which would provide for strengthening responsibility and liability for the violation of trade union rights. The proposals which were now being put forward by the President could only give rise to surprise. He suggested reducing the number of people who were responsible for supervising labour legislation, as well as to introduce sanctions against trade unions for their "participation" in collective bargaining. The authors of these proposals from the President's administration who were putting these measures in one package with measures which would strengthen responsibility for the timely payment of wages, or non-payment of wages, understood that this would give rise to extreme protests in the trade unions and give them an excuse to postpone once again the adoption of this legislation. This all proved the seriousness of the question which had been brought before the Conference. The Russian trade unions hoped that the measures taken by the Government following this decision would be re-examined at the next meeting of the Committee.

The Workers' member of Belarus expressed his full support and solidarity with the position of the Workers' group on this particular case and with the justified demands of the independent trade unions of the Russian Federation. When people did not get any remuneration for their labour for months, it concerned not just violations of Convention No. 95, but it was a systematic violation of the Constitution of the Russian Federation which enshrined fundamental human rights such as remuneration for labour. He recalled that the former Soviet Union had ratified this Convention more than 30 years ago, and that it had never been called before this Committee to give this kind of explanation.

The Government of the Russian Federation was explaining this problem by referring to difficulties in the economy and of the transition period. However, people whose social rights were being violated would not be likely to help the Government move on its path to a market economy. The violations of this Convention were having a negative impact not just on the workers of the Russian Federation but also on the workers of other countries belonging to the CIS, such as Belarus. Belarus was also experiencing late payments of wages, but of course not on the same scale as was happening in the Russian Federation. The economies of Belarus and Russia were very closely integrated, and if there was a systematic non-payment of wages to workers and trade unionists in Russia and they had to fight for their rights by work stoppages and strikes, this had an automatic impact on the economic and social position of the workers in Belarus. He considered that the information provided by the Government of the Russian Federation was not satisfactory and hoped that the Committee's conclusions would reflect this and would provide a possibility to come back to an examination of this case next year.

The Workers' member of Ukraine stated that the observance of this Convention on the protection of wages was extremely important because it concerned a fundamental human right for the majority of the population who were only living from one wage packet to the next, some of them well below the subsistence level. Non-payment or late payment of wages created a terribly difficult situation for the workers and the non-working members of their families. Therefore, he supported the demands of the trade unions of the Russian Federation that the Government should take on its full responsibility with regard to observing this Convention. A similar situation had also arisen in Ukraine, but under the pressure of the trade unions the Ukrainian Parliament had recently adopted a law providing for compensation in cases of non-payment of wages. In conclusion, he hoped that the measures which were mentioned by the Government representative to implement and observe this Convention would become effective and would provide a good example for other countries in the CIS to adopt similar legislation.

The Employers' member of the Russian Federation stated that the question of irregular and late payment of wages was a widespread phenomenon. The Government said that the managers of a number of enterprises were deliberately withholding wages, which was true. But it was quite obvious that they were tempted to do this because of the weak legislation which left them unpunished. The Association of Employers of the Russian Federation was in favour of increasing the liability and the responsibility of the managers of enterprises because it was in favour of the conscientious running of enterprises, but it was equally convinced that the radical reasons for late payment of wages could be found elsewhere in the crisis situation which pertained in the economy.

Of course, the reference to the transition period which had been mentioned on many occasions was obvious, but it was not necessary to have all these phenomena in the period of transition. There was a paradoxical situation in Russia: production had dropped by half over the last five years, productivity of labour had also considerably decreased but real monetary incomes were being maintained and in a number of cases were actually increasing in relative figures. This was because wages in Russia had become some kind of a social subsidy rather than real remuneration for labour and they were no longer operating as an incentive to work. To cope with this situation and to stabilize production, the Association of Employers of Russia considered that it was necessary to strengthen the role of the State in the transition period, in the legislative sphere as well as in the executive sphere, including strengthening responsibility for sustaining economic and legal environments which provided for decent labour relations. The State and the Government were also the biggest employers and the biggest buyers of a wide range of products and goods and they also were the largest debtors because they did not pay for the goods, energy, transport and other kinds of products and they did not pay wages.

In conclusion, he said that the problem of observing and implementing this Convention was one of the key problems and its examination by the International Labour Organization would hopefully stimulate the work of the Russian structures and, above all of course, the Government in putting an end to this crisis situation throughout the economy of the country.

The Workers' member of Côte d'Ivoire supported comrades of the trade unions of the Russian Federation. The family budgets of workers based on very low salaries did not permit workers to economize enough to face even the period of one month without wages. Thus, if one month of arrears in the payment of wages could be explained by the lack of conscience on the part of the employer, it was only by their criminal attitude that arrears for three, four and even ten months in the payment of wages could be explained. The dramatic situation in which numerous workers' families had to live was even more shocking in view of the fact that their enterprises often continued to function normally and to produce profits. The speaker drew attention to the fact that such practices were sources of grave tensions in the world of work, including his own country. In addition, he considered that when an enterprise was forced to have recourse, even for as short a time as possible, to the non-payment of wages, these arrears should bear interest as any other financial debt, as a right and from the very first day when the payment was due.

The Government representative of the Russian Federation thanked all the speakers for their comments and criticisms which would be taken into account in the future. With respect to the reference made by one speaker to the example of the former USSR which had never had to report to this Committee on this particular Convention on payment of wages, he reminded him that the USSR, on the contrary, had usually had to report on the Conventions concerning freedom of association, forced labour and discrimination.

The problems of late payment or non-payment of wages existed not just in his country but in a number of countries which were experiencing the same period of transition. Problems of non-payment had become a phenomenon which was characteristic of a country moving from one way of organizing its economy to another, and certainly all the comments which had been made in this room were right in that the country needed stability and an effective legal system. The Government was providing for legal reforms but the courts, for example, were still unfortunately too weak. There were also problems linked with retraining of legal experts in areas of human rights and economic matters.

Everything that was going on as far as the non-payment of wages was concerned constituted not only a violation of the Convention but was also a violation of the national legislation, and the measures taken were aimed at combating these violations, introducing increased liability and even including new articles in the Penal Code.

However, whilst the law might help, economic problems could only be solved by economic means. And, in fact, there was another way which existed in many countries of the world, and that was bankruptcy. Enterprises who were not in a position to pay their workers, and who were in a serious economic situation, stopped production. But in Russia that might mean even worse problems caused by increased unemployment. The Government was taking measures in order to introduce a more stringent economic policy and to put the economy back on its feet and to combat inflation. Had it adopted a purely legalistic approach, it would end up with lots of bankrupt enterprises, and then come up against much greater problems and more difficulties. The Government was fully aware of the need to fulfil its international obligations. It would take into account the comments which had been made here. It intended to continue this dialogue taking it as proof of a constructive approach helping the Government to overcome the very unusual, not to say unique, situation which the country was passing through at present.

The Committee noted the information supplied by the Government representative with regard to various measures taken to ensure the regular payment of wages and to reinforce payment obligations. While the Committee recognized that there did exist a sound legislative framework in the Russian Federation for tackling the problem, non-payment and delayed payment of wages for work done were matters of serious concern, particularly considering that what was contravened was not merely national legislation, but Convention No. 95, which was a priority Convention. The Committee also felt that conformity to this Convention would in fact strengthen the role of the State in speeding up economic transition.

In the circumstances, the Committee called for enhanced supervision for securing unfailing and prompt payment of wages. The Committee also urged the Government to furnish full information on legal implementation and on the practical steps taken against infringement of the law.

Direct Request (CEACR) - adopted 2018, published 108th ILC session (2019)

Article 7 of the Convention. Works stores. The Committee notes that the Labour Code does not regulate the operation of works stores. It notes the absence of information in the Government’s report on the measures taken to give effect to Article 7, which provides that where works stores for the sale of commodities to the workers are established or services are operated in connection with an undertaking, the workers concerned shall be free from any coercion to make use of such stores or services (paragraph 1) and that where access to other stores or services is not possible, the competent authority shall take appropriate measures with the object of ensuring that goods are sold and services provided at fair and reasonable prices, or that stores established and services operated by the employer are not operated for the purpose of securing a profit but for the benefit of the workers concerned (paragraph 2). The Committee therefore requests the Government to provide information on the measures taken or envisaged in order to give effect to this provision of the Convention.

Article 12(1). Regular payment of wages. In its previous comments, the Committee had requested the Government to take targeted action to address the issue of wage arrears. In this regard, the Committee takes note with interest of the Government’s indication that Federal Act No. 272-FZ (which entered into force in October 2016) introduced several amendments to the national legislation, including the Labour Code, with the purpose of increasing employers’ liability for breaches of the law, in particular with regard to wages, as follows: increase in the fine for breaches related to the payment of wages; increase in compensation paid to a worker for each day of delay in settling wage arrears; and lengthening of the period of time during which a worker may institute legal proceedings for the non-payment of wages. The Committee further notes that Federal Act No. 272-FZ amended section 360 of the Labour Code to allow unannounced inspections to control the full and regular payment of wages. Finally, it takes note of the detailed information provided by the Government on: (i) the controls carried out by the labour inspectorate in relation to these issues in 2016, showing in particular a decrease in the number of offences related to the payment of wages (compared to 2015) and an increase in the amounts paid at the demand of the labour inspectorate for the settlement of wage arrears; and (ii) the results of court proceedings and the sanctions imposed in cases of violations.

Direct Request (CEACR) - adopted 2013, published 103rd ILC session (2014)

Article 12 of the Convention and Part V of the report form. Regular payment of wages – The wages arrears situation. Further to its previous comments concerning the outstanding wage debt and persistent practices of delayed payment of wages, the Committee notes the Government’s updated account according to which in July 2012, the overall amount of wage arrears stood at 1.9 billion rubles (RUB) (approximately €49.3 million), as compared to 3.2 billion in June 2010. The Government indicates that despite a steady decline at the national level, wage arrears in a number of regions frequently increase. The Committee understands that problems of non-payment or delayed payment of wages are principally experienced in manufacturing and, to a lesser extent, in agriculture and the transport and construction sectors. The Committee observes that, even though significantly reduced in recent years, the total sum of unpaid wages remains a source of concern affecting thousands of workers and most branches of economic activity. The Committee therefore requests the Government to continue to closely monitor the wage arrears situation, to take targeted action for the containment and progressive elimination of wage arrears in those sectors mostly affected by back wages and to communicate detailed statistical information on any further developments in this regard.

Legislative developments. The Committee notes the adoption of Federal Act No. 382-FZ of 23 December 2010 amending the Criminal Code with a view to strengthening the penal sanctions for those failing to pay wages on time and in full. It notes, in particular, that persons liable for non-paying wages in full for a period of two months or more may be subject to a fine of up to RUB500,000 (approximately €12,200) or imprisonment for up to three years. Moreover, the Committee notes with interest the ratification by the Russian Federation in August 2012 of the Protection of Workers’ Claims (Employer’s Insolvency) Convention, 1992 (No. 173), which aims at enhancing the protection of workers’ service-related claims in the event of bankruptcy or insolvency of the employer. The Committee recalls that the acceptance of the obligations of Part II of Convention No. 173 providing for the protection of workers’ claims by means of a privilege involves ipso jure the termination of the obligations under Article 11 of Convention No. 95. Recalling that the Government had previously indicated that it was planning in consultation with employers’ and workers’ organizations to develop a system of economic measures to guarantee workers’ wage claims in case of insolvency of the enterprise, including the establishment of a compensation mechanism, the Committee requests the Government to specify any concrete steps which may have been agreed upon or taken for the establishment of a guarantee institution.

Supervision and sanctions. The Government reports that in the period January–June 2012, labour inspection services carried out approximately 26,000 verifications of employers’ compliance with legislation on labour remuneration, and as a result, outstanding wages exceeding RUB2.1 billion (approximately €51 million) were paid to 160,000 workers, fines were imposed on 12,422 officials and 3,439 legal entities, while criminal proceedings were initiated in 13 cases. The Committee requests the Government to continue to provide up to date statistics on labour inspection results, sanctions imposed and wage sums recovered.

Observation (CEACR) - adopted 2007, published 97th ILC session (2008)

The Committee takes note of the detailed information provided by the Government in reply to its previous comment.

The wage arrears situation

1. The Committee notes that, according to the latest statistics provided by the Government, in September 2006, the overall wage debt was 4,785 million roubles (approximately US$186 million), which represents a 52.2 per cent decrease (or a fall by 5,233 million roubles) compared to the corresponding figures of September 2005 and a 12 per cent decrease (or a fall by 650 million roubles) compared to July 2006. The Government indicates that due to enhanced supervision and control measures taken by executive and labour authorities at the federal and regional levels, wage arrears have been reduced almost fivefold from 23.4 billion roubles (approximately US$910.5 million) in August 2004 to 4.8 billion roubles in August 2006. The Government adds that the problem of deferred payment of wages has practically been solved in the public sector with no wage arrears reported in 84 administrative divisions of the Russian Federation and insignificant delays of one to three days in the remaining regions. In September 2006, the total number of employees experiencing delays in the payment of their wages was 600,000 persons. While noting with interest that the total volume of wage arrears seems to have been drastically curtailed in recent years – and practically eliminated in the public sector – the Committee remains concerned about the level of the outstanding wage debt, the number of workers concerned and the persistent practices of systematic and deliberate delays in the payment of workers’ wages on the part of certain employers and managers. The Committee asks the Government to keep the wage arrears situation under close and constant scrutiny, to pursue with determination its efforts for the elimination of such phenomena and the prevention of their recurrence and to report regularly on any progress made in these matters.

Supervision and sanctions

2. The Committee notes the Government’s indication that a Bill amending section 145-1 of the Criminal Code was introduced to the Russian Parliament in March 2006 with a view to strengthening the criminal and administrative liability of those managers who deliberately allow systematic delays in the payment of workers’ wages and also increasing the level of monetary fines. The Government specifies that the text of the Bill was drafted in consultation with the all-Russia employers’ organizations and trade unions and was also approved by the Russian Tripartite Commission on Social and Labour Affairs. The Committee requests the Government to keep it informed of any developments in this regard and to transmit the text of the legislative amendment as soon as it is adopted.

3. With reference to labour inspection, the Government reports that in the third quarter of 2006, visits were conducted in some 13,595 enterprises, including 2,762 state organizations. As a result of those visits, a total amount of 1.81 billion roubles (approximately US$70.5 million) in wage arrears were recovered and paid to over 266,000 workers, while in 156 cases criminal proceedings were initiated against the managers. The Committee requests the Government to continue supplying up to date statistics on labour inspection results and all other activities aiming at ensuring compliance with national laws and regulations on wage protection.

Protection of wage claims in the event of the employer’s insolvency

4. The Committee notes with interest the Government’s indication that a Bill on the protection of the citizens’ wage rights in the event of the insolvency (bankruptcy) of the employer has been drafted and is now the subject of tripartite consultations. According to the Government’s report, the purpose of the draft legislation is to align the national legislation with the requirements of ILO Convention No. 173 and article 25 of the revised European Social Charter which provides that all workers have the right to protection of their claims in the event of the insolvency of their employer. Moreover, the Government refers to a plan of cooperation between the Government, all-Russia trade unions and all-Russia employers’ organizations for the enforcement of the right of workers to prompt and full payment of their wages. Under this plan, a system of economic measures has been developed to guarantee the right of workers to wages in case of insolvency of enterprises, including the establishment of a compensation mechanism. The Committee requests the Government to keep it informed of any developments concerning the finalization and adoption of the new legislation on the protection of wage claims in the event of the employer’s insolvency. It recalls, in this connection, that the technical assistance and expert advice of the Office are at the Government’s disposal, especially as regards the drafting of legislation implementing the standards set out in Part III of Convention No. 173 dealing with the protection of workers’ claims by a guarantee institution. The Committee would also be grateful if the Government would provide full particulars, including copies of any relevant texts, concerning the plan of cooperation concluded with the social partners in relation to the prompt and full payment of wages.

The wage situation in the fishing industry in the Kamchatka region

5. Further to its previous comment on this point, the Committee has been in receipt of a collection of documents concerning alleged violations of workers’ rights, including accumulated wage arrears, in the fishing industry in the Kamchatka region. These documents contain a series of communications by which the Independent Union of Fishers of Kamchatka calls upon public authorities to investigate into various abusive practices affecting fishers, including but not limited to the non-payment of wages and the absence of effective remedies to ensure the recovery of unpaid wages, as well as the replies of several services, such as the Fisheries Department of the Kamchatka Regional Authority, the State Labour Inspectorate of the Kamchatka Region, and the Municipal Prosecution Service of the City of Petropavlosk, all indicating that they lack authority to review the matter. The Committee once again requests the Government to provide its comments in reply to the observations made by the Independent Union of Fishers of Kamchatka.

Observation (CEACR) - adopted 2006, published 96th ILC session (2007)

The Committee recalls its previous observation concerning the persistent phenomenon of accumulated wage arrears affecting millions of workers and their families, and the need to intensify the Government’s efforts in order to prevent that phenomenon from becoming endemic or cyclical. It notes with regret that the Government’s report has not yet been received.

In addition, the Committee takes note of the observations made by the Independent Union of Fishermen of Kamchatka concerning the application of the Convention. The workers’ organization alleges that wages due to fishers and workers in the production of fish products – a branch of economic activity with an estimated workforce of 20,000 fishers generating 80,000 jobs onshore – are in general not paid, and that there are no appropriate and effective remedies to allow the recovery of unpaid wages. The Committee invites the Government to reply so that these comments may be examined in detail at its next session.

[The Government is asked to reply in detail to the present comments in 2007.]

Observation (CEACR) - adopted 2005, published 95th ILC session (2006)

The Committee notes the detailed information supplied by the Government in its last report.

1. Current situation of wage arrears. The Government states that although the total amount of wage arrears is constantly decreasing, the problem of deferred payment of wages remains acute affecting some 7.3 million workers employed in 44,200 enterprises. According to the national statistical institution (Goskomstat), the wage debt stood at 29.9 billion roubles (approximately US$1 billion), of which 24.9 billion in the industrial sector, 4.2 billion in the sector of social services, and 0.8 billion in all other branches. Wage arrears persist mostly in construction, agriculture, transport and public utilities while among the principal reasons for the deterioration of the situation are the failure of consumers to pay for products received or services rendered, the severe lack of funds for the purchase of raw materials and spare parts, and the extensive use of barter for settling debts. As regards the public sector, the Government reports that particular attention is paid to branches, such as education and health, and that in most cases either wage debts are totally paid off or the length of the delay is reduced to two weeks. The Government adds, however, that in certain areas such as the Republic of Sakha, the territory of Krasnoiarsk and the regions of Irkoutsk, Kemerovo and Kamtchatka, the wage situation has not improved and additional resources from the federal budget are constantly needed.

2. Legislative developments. The Government indicates that the legislative guarantees for the protection of the workers’ right to remuneration remain at times inoperative. It refers, for instance, to section 145.1 of the Penal Code, as amended, which provides for penal proceedings against heads of enterprises, institutions or organizations in case of non payment of wages for reasons of greed or other self-interest, and points out that tribunals have been in great difficulty proving the causality between the delayed payment of wages and any personal motives of enterprise directors.

The Government hopes, however, that the severe measures introduced by the new Labour Code, Federal Act No. 197-FZ of 31 December 2001, regarding the protection of wages will help to contain the phenomenon of wage arrears by accelerating the settlement of outstanding payments. The Government refers, in particular, to section 131 of the Labour Code limiting the part of wages which may be paid in kind to 20 per cent; section 142 which provides that a worker is entitled to suspend his/her work if payment is deferred for more than 15 days; and section 235 which requires employers to pay interest for each day of delay.

3. Enforcement measures. The Government states that the federal labour inspection services continued carrying out extensive controls to monitor the regular payment of wages and the proper use of public funds to this end. The Government affirms that, during the reporting period, some 54,700 inspections were carried out, 29,900 summons were issued, and over 5.3 billion roubles worth of wages were recovered. Moreover, the Government gives a summary account of some of the most typical examples of wage-related infringements revealed through labour inspection visits, such as sub-minimum pay rates, embezzlement of wage funds, overpayment or advanced payment of wages to certain workers despite existing wage arrears, and non-payment of holiday pay. Finally, the Government provides a list of enterprise directors who have been inflicted administrative fines ranging from 2,500 roubles (approximately US$90) to 5,000 roubles for gross violations of the labour legislation on wage protection.

The Committee considers that almost ten years after it first examined the situation of wage arrears in the country, the fundamental problem - failure to apply the Convention in practice - still persists. The Committee notes the Government’s continued efforts to put an end to pay abuses and the positive results obtained in some respects. However, certain disturbing practices continue unabated, as the Government admits by referring to the "persistent gravity of the wage situation". The Committee is particularly concerned by the fact that, as indicated by the Government in its report, wage arrears are not always due to cash shortages, or other material impossibility of enterprises to honour their financial obligations, but rather to the wilful decision of certain company managers or executives to misappropriate wage money and direct these resources towards other uses. In this connection, the Committee wishes to refer to paragraph 507 of its 2003 General Survey on protection of wages in which it considered that "in case enterprises deliberately choose to apply for other purposes funds which should have been used for the payment of employees’ wages, it is not admissible for States through their supervisory services to fail to take vigorous and effective action so as to comply with the Convention and to put an end to such blatant abuse." The Committee therefore requests the Government to intensify its campaign so as to prevent the phenomenon of wage arrears from becoming cyclical or endemic; fight effectively against the demonetization of the economy and the use of money surrogates; and rigorously enforce labour laws in the face of particularly tenacious patterns of disrespect. It would appreciate if the Government would continue to communicate specific information on the evolution of the situation and any further measures taken to ensure compliance with the Convention, especially as regards the application of truly dissuasive sanctions proportionate to the seriousness of the offence and likely to produce tangible results, that is to say a sizeable reduction in the number of workers suffering from arrears in the payment of their wages.

[The Government is asked to reply in detail to the present comments in 2006.]

Observation (CEACR) - adopted 2001, published 90th ILC session (2002)

The Committee notes the information supplied by the Government in its reports and the attached documents. The Committee notes, in particular, that the Government has still to respond specifically to several observations made by workers’ organizations and noted in the Committee’s previous observations.

The present situation with respect to wage debts and delayed payment

According to the latest figures communicated by the Government, the total wage arrears as at 1 January 2000 amounted to 43,741 million roubles, which represents a decrease of 33 per cent compared to the same date in the previous year. As at 1 April 2000, the total amount of wage arrears stood at 39,879 million roubles, and thus dropped by 3,686 million roubles, or 8.5 per cent, since 1 March 2000. During the month of April 2000 wage arrears were reduced by another 3 per cent and amounted to 38,674 million roubles. The Government indicates that the situation improved in 85 constituent Territories. In the social sector organizations, in particular, the wage arrears due to insufficient funding from the federal budget were reduced in 31 regions while those due to insufficient funding from the regional budgets in 80 regions. Out of the total volume of the arrears caused by insufficient funding from the federal budget into the sector of "science and scientific service" over 80 per cent amounts to the share of establishments at Moscow, Moskovkaya Oblast, St. Petersburg, Sverdlovsk Oblast, Voronezh Oblast, Penza Oblast and Krasnoyarsk Krai. Moreover, the Committee notes that according to the information supplied by the Government, wage arrears still persist in specific sectors, notably in industry (16,107 million), agriculture (7,742 million), construction (5,133 million), public utilities (2,795 million) and transport (2,304 million). The Committee requests the Government, in the first place, to make every effort to redress the situation with respect to state organizations funded through either federal or regional budgets. It also asks the Government to continue to closely follow the evolution of the situation as to the advancement of the settlement of outstanding wage debts and report regularly on any future developments in this regard.

Reinforcement of the state labour inspection

The Committee notes that the bodies of the Federal Labour Inspectorate, the Prosecutor’s Offices, the Taxation Police, the Taxation Inspection, the financial and labour bodies continued to coordinate the work of monitoring the delays in the payment of wages and the targeted use of budgetary funds allocated to such purposes. The Committee notes that under Government Order No. 1035 of 9 September 1999, the various agencies of the Ministry of Labour and the Federal Labour Inspectorate (including the territorial bodies) were united, and that a new Department of State Supervision and Monitoring of the Implementation of Labour and Safety and Health Legislation was set up within the Ministry of Labour and Social Development.

The Government indicates that in the course of 1999, state labour inspectors inspected over 49,000 enterprises throughout the country. As a result, over 32,000 warrants were issued and wage arrears totalling 10.5 billion roubles were settled. Over 6,000 enterprise managers and other officials were fined by the state labour inspection for the total sum of 3.7 million roubles while disciplinary procedures were initiated against 514 managers and other officials. From 1 January to 15 April 2000, the labour inspection services carried out over 10,000 inspections resulting in some 6,600 warrants and more than 1 billion roubles worth of wage arrears paid out. Fines were imposed against 1,888 managers and other officials for the total sum of 1.08 million roubles.

The Committee notes with concern, however, the Government’s statement that while the measures taken by the labour inspection services helped to restore the protection in practice of workers’ labour rights, mass violations of those rights continue to be one of the main sources of the ongoing social and economic stress of the country. The Government further affirms that in most regions there are still delays in the payment of wages and that inappropriate use of budget resources has become widespread. In many cases, plant managers facing large sums of arrears of wages and social benefits choose to use money to provide loans or to pay fuel and oil bills, services or mission expenses.

In particular, the Committee notes the detailed account contained in the Government’s report on individual cases detected by the state labour inspection of misuse of funds allocated to pay workers’ wages. In one of the most striking cases, for instance, inspection revealed that while the unpaid wages of some 3,000 employees of an enterprise amounted to 9.1 million roubles, including arrears of 138 dismissed employees for the sum of 620,000 roubles, the management of the enterprise used the wage funds for other purposes such as the repair of the apartment of the security chief, the purchase of furniture, the refurbishment of administrative buildings, the construction of a country-house and the financing of a football team.

In addition, the Committee notes the information provided by the Government on inspection results regarding the coal industry and educational establishments. With respect to selective inspections carried out in all coalmining regions of the country regarding the observance of wage protection legislation, the Government indicates that, on the whole, no cases of untargeted use or spending were observed but that in some enterprises the wage arrears increased. The Committee notes, however, that on at least one occasion, the administration of a coalmining company sought to reduce the amount of wage arrears by issuing promissory notes for the sum of 750,000 roubles. The Committee wishes to stress that such practices openly contravene the provision of Article 3(1) of the Convention which prohibits the payment of wages in the form of coupons, vouchers or in any other form alleged to represent legal tender. The Committee hopes that the Government will make every effort to reinforce labour inspections in this field and will take the necessary measures, as appropriate, to put an end to such practices (see also under "Other provisions of the Convention" below).

Regarding educational establishments, the Government states that numerous inspections showed that, in general, financial resources allocated to wage payment were used according to their purpose. The wage arrears of the educational employees were reduced by 47 per cent in 1999 and additionally by 30.6 per cent from January to April 2000. As at 1 May 2000, the outstanding wage debts to educational employees amounted to 628 million roubles.

Legislative developments and court decisions

The Committee notes the Government’s reference to recent legislative changes, including the adoption of Act No. 48-FZ of 15 March 1999 supplementing the Penal Code with new section 145-1, the adoption of Government Order No. 1035 of 9 September 1999 respecting state supervision and monitoring of compliance with national labour and safety and health legislation, and the continued examination of the federal Bill to amend and supplement the Labour Code and of the federal Bill to supplement section 855 of the Civil Code on settling wage claims as privileged debts. It also notes that the Government at its session of 29 June 1999 adopted a wage arrears payment schedule for the different regions, and decided to monitor its implementation.

With relation to judicial settlement of wage claims, the Government indicates that according to available statistics the number of civil court cases referring to the repayment of wage debts is growing. In 1996, 20.7 per cent of all civil court cases heard in Russian courts concerned the payment of wage arrears. The corresponding figure for 1997 was 31.9 per cent, while in 1998 it stood at 27.5 per cent. In terms of the actual number of wage claims examined by the courts, in 1999 some 765,520 court decisions were delivered concerning suits on labour remuneration.

The Committee notes this information but insists on the need for strict application of effective sanctions to punish and prevent infringements of the labour legislation on wage protection. In this connection, the Committee is surprised to note that since the adoption of Act No. 48-FZ of 15 March 1999 by which a new section 145-1 was inserted into the Penal Code concerning liability for failure to pay wages, there have been no court decisions under this new provision. Recalling that as the Government mentions in its report, inspection continues to reveal widespread abuses and cases of embezzlement and corruption with respect to wage funds, the Committee urges the Government to sustain its intensified efforts to ensure that sanctions and redress for injury are properly enforced.

While noting all the different measures and positive developments described in the Government’s reports, the Committee would still like to note that the problem of wage arrears continues to defy immediate solution. The Committee cannot but emphasize once again the need for continued concerted action and strong commitment in addressing the three main parameters of the problem, namely effective assessment of the situation, application of dissuasive sanctions, and appropriate compensation to workers for the loss suffered. The Committee therefore urges the Government to take all necessary measures to ensure the rapid settlement of outstanding wage debts and to provide up-to-date information on inspection results, the number and nature of infringements observed, the administrative and penal sanctions imposed, as well as any relevant court decisions and the total sums of wage arrears effectively paid out through judicial means.

Other provisions of the Convention

The Committee notes the information supplied by the Government on existing legislation giving effect to the provisions of the Convention as well as on the draft Labour Code which was approved by the State Duma on 27 October 1999. In particular, the Committee notes that with regard to Articles 3 and 4 of the Convention, the Government and legislative bodies are considering the possibility of including new provisions in the draft Labour Code to bring the national legislation into closer conformity with the requirements of the Convention, for instance, by expressly prohibiting wage payment in the form of promissory notes, vouchers or coupons, also prohibiting the payment of wages in the form of alcoholic beverages, narcotic, toxic or harmful substances, weapons or other such articles, and laying down specific conditions to ensure that allowances in kind are beneficial to the worker and his family and fairly valued. The Committee hopes that favourable consideration will be given to the above proposals and that sections 128 (basic state guarantees in labour remuneration) and 129 (forms of labour payment) of the draft new Labour Code will be revised accordingly.

Moreover, the Committee notes that the Government also plans to introduce a new section to the Labour Code regulating the operation of works stores in accordance with Article 7 of the Convention even though there still exist a very small number of undertakings with stores and services of this kind and there would appear to be no individual or collective complaints concerning the use of such stores. With respect to the preferential treatment of workers’ wage claims in the event of bankruptcy or judicial liquidation of an enterprise (Article 11), the Committee notes that under section 855 of the Civil Code wage claims are granted a second-rank privilege without any restriction as to the periods or amounts involved, and that it is intended to reaffirm such priority in the draft new Labour Code under consideration. It also notes the Bill to supplement section 855 of the Civil Code, which was approved by the State Duma on 16 June 1999, and which provides that when funds are paid into an account for the purpose of paying wages to persons employed under an employment contact, any payment from the account shall be effected irrespective of the priority order established by law. Finally, concerning the payment of wages at regular intervals (Article 12(1)), the Committee notes the new section 234 of the draft Labour Code which provides that in the event of failure to comply with established terms for the payment of wages, the employer shall be obliged to pay them with interest charged in the amount of no less than 1/300 of the existing rate of the Central Bank for every day of the delay, starting from the day following the end of the normal statutory period allowed for the payment of wages in question until the day payment is actually made. The Committee requests the Government to continue to provide information on the process of finalizing the text of the new Labour Code and transmit a copy of the new legislation once it is adopted.

[The Government is asked to report in detail in 2002.]

Observation (CEACR) - adopted 1999, published 88th ILC session (2000)

Further to its previous observation, the Committee notes the information supplied by the Government to the Conference Committee on the Application of Standards in June 1999 and the discussions which took place in that Committee. The Committee notes that the Government supplied a detailed report just before its present session at a time when it was too late to be analysed. Therefore the Committee will examine this report in detail at its next session. In the meantime, the Committee can only hope that the report just received has dealt with all the substantive provisions of the Convention particularly relating to the following points raised only on the basis of the information that had been revised up to June 1999.

1. Present situation of wage arrears. A communication was received on 16 March 1999 from the Russian Cultural Workers' Union, which alleges the systematic non-payment of wages for up to seven months in the Russian cultural establishments, contrary to Article 12(1) of the Convention (Regular payment of wages), Article 3 (Payment in legal tender), Article 4 (Restriction on the payment in kind), and Article 6 (Freedom of the workers to dispose of their wages). Nor has the Government responded specifically to observations made by a number of other workers' organizations, and noted in the Committee's previous observation.

According to the information supplied by the Government to the 1999 Conference Committee, the total wage arrears, as of 1 May 1999, stood at 16,348,000,000 roubles, of which 12,088,000,000 roubles were attributable to shortfalls in budget funding at all levels. If these figures are compared to those supplied by the Government to the 1998 Conference Committee (total of 62,800,000,000 roubles, including 9,500,000,000 roubles of arrears due to the lack of direct financing out of the federal and regional budgets), the wage arrears in the public sector have considerably increased while the total arrears as a whole have been reduced.

The Government representative to the 1999 Conference further stated that 19.6 per cent of the shortfalls was in the federal budget financing and the remaining 80.4 per cent related to the territorial budgets, and that on 1 May 1999 wage arrears in the social sector resulting from shortfalls in the territorial budget were recorded in all the constituent territories of the Russian Federation, although the outstanding wage arrears fell in 68 regions.

The Committee notes with great concern the above information supplied to the 1999 Conference as a sign of a continued aggravation of the situation, even if it may not be the same in all sectors of the economy.

2. Measures to be taken. With regard to the present situation of non-observance of Article 12(1) of the Convention, the Committee has for some years been emphasizing the importance of such means as: (i) effective supervision; (ii) imposition of appropriate penalties to prevent and punish infringements; and (iii) steps to make good the prejudice suffered.

As to the information provided by the Government to the 1999 Conference, the Committee notes that the written information and the oral statement of the Government representative give various figures for 1998 and for January to April 1999, not only of the labour inspection carried out concerning the payment of wages (45,000 and 11,000 inspections respectively), but also of the number of employers fined (6,400 and 1,489) and of the total amount of fines (4,400,000 roubles and 1,246,000 roubles). The Government also provided the Conference Committee with the figures regarding the total sum of wage payments made to workers as a result of inspections - 9,000,000,000 roubles in 1998 compared to 7,700,000,000 in 1997 and 6,000,000,000 in 1996. However, the available information without further specification does not permit the Committee to conclude whether or not the measures by the Government have really been taken where they are needed, and are commensurate to the scale of the problem.

Regarding sanctions, the Committee notes that a new section 145-1 was added to the Criminal Code (adopted on 17 February and entered into force on 15 March 1999) to punish non-payment of wages by a fine to be calculated according to the minimum monthly wages or the income of the convict, or by deprivation of the right to occupy certain positions or to conduct certain activity for up to five years, or by imprisonment for up to two years, with a provision for increased penalty for a case that caused grave consequences. It requests the Government to supply detailed information on the enforcement of this new provision (number of cases investigated, prosecuted and convicted with details on the penalty actually imposed).

The Committee further notes that, in its statements made at the 1999 Conference, the Government considers it necessary to take measures in a variety of areas such as: enacting legislation for state supervision and monitoring of compliance with labour legislation; adopting the new draft Labour Code which has already been submitted to the state Duma; ensuring effective administration and financial control over other public undertakings in their activities, including the payment of wages and improving accountability of managers; creating a legal framework for the activities of state officials in management bodies of joint-stock companies; ensuring the principle of responsible ownership of socially important facilities.

3. In the light of the above, the Committee would conclude that there still remains great need for further measures to be taken by the Government in different areas and as swiftly as possible. The Committee notes that the Government's reply tends to concentrate on the situation in the sector financed by public budget, and on financial and budgetary measures. This may be justified if it is the sector where the problem is accentuated. However, the Committee recalls that the Government has the double responsibilities - as an employer to pay their employees' wages regularly and promptly, and also to enforce the national legislation providing for regular payment of wages to all employees covered by the Convention.

The Committee again requests the Government to refer to the report of the committee set up to examine the representation made under article 24 of the ILO Constitution by Education International and the Education and Science Employees' Union of Russia, which was approved by the Governing Body in November 1997, and the recommendations contained therein. It asks the Government to supply, in particular, detailed information on supervision, penalties, the settlement of wage arrears, texts of any relevant legislation and, more specifically, the application of the new provision of the Criminal Code mentioned above. The Committee would also urge the Government to include information on any decision made by courts of law or other tribunals concerning the question of regular payment of wages.

4. The Committee considers that the concern expressed by the committee referred to above, which examined the representation, concerning the need to ensure that measures taken to reimburse wage arrears do not result in the violation of other provisions of the Convention, would seem to be confirmed by the observation by the Russian Trade Union of Employees of Culture noted in paragraph 1 above. In addition, the Committee has noted that the Education and Science Employees' Union of Russia pointed out the increase in the payment of wages in kind in some regions.

The Committee requests the Government to indicate measures taken or envisaged to ensure not only the regular payment of wages but also the application of all the provisions of the Convention, and to supply a full report in due time. It also requests the Government to include, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

Direct Request (CEACR) - adopted 1998, published 87th ILC session (1999)

With reference to its previous comments, the Committee again requests the Government to provide further information on the following points:

Article 3, paragraph 2, together with Article 6, of the Convention. In its earlier report, the Government stated that enterprises may pay wages through savings banks or by bank cheque. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee again requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent in the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages through savings banks the freedom of the worker to dispose of his wages, as required under Article 6, is guaranteed to the full extent and at any time.

Article 4, paragraph 1. According to the Government's earlier report, enterprises may make partial payment of wages in kind. The Committee again asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures have, in accordance with paragraph 2, been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the "index-linking of deposited wages", the Committee again requests the Government to indicate whether the indexing of deposited wages in its present form may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee has noted that, under section 30, subsection 2 of the Act respecting insolvency (bankruptcy) of enterprises, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receivership, the cost of the operation of the insolvent enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. The Committee again requests the Government to clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes costs incurred before the bankruptcy procedure.

Observation (CEACR) - adopted 1998, published 87th ILC session (1999)

Further to its previous observation, the Committee notes the information supplied by the Government both in writing and orally to the Conference Committee on the Application of Standards in June 1998 and the discussions which took place in that Committee. The Committee notes with regret that the Government has supplied neither a detailed report which was requested in its previous observation, nor any further information after the one submitted in June 1998 to the Conference Committee, nor replies to the observations made by the workers' organizations mentioned below, which were transmitted to the Government for comments (the first two in August, and the last one in October).

1. Present situation of wage arrears. Since the Committee's previous session, further comments have been received concerning the application of Article 12(1) of the Convention (Regular payment of wages) from workers' organizations as follows: a communication dated 24 April 1998 from the Central Committee of Timber and Related Industries Workers' Union of Russia states that 2 "trillion" roubles (US$334,000,000) of wages remain unpaid to the workers of the industry, amounting to the equivalent of three months' salary for all the workers. The Health Workers' Union of the Russian Federation, in a communication dated 28 May 1998, quotes the formal information received from the State Committee of Statistics of the Russian Federation, according to which the deficit in the resources for wages increased to 1,257,441,000 roubles as of 1 May 1998 from the amount of 229,436,000 roubles at 1 February 1998, and further indicates the amounts owed to the health sector workers in some regions (as of 1 May 1998, 85,487,000 roubles in Krasnoyarsk, 91,212,000 roubles in the Kemerovo region, 91,665,000 roubles in the Republic of Yakutia, 57,720,000 roubles in the Tumen region, 39,889,000 roubles in the Primorski Krai). The Education and Science Employees' Union of Russia indicates, in a communication dated 25 September 1998, that in the middle of August 1998, the total wage arrears to education workers reached 4.8 "billion" roubles (nearly US$800,000,000), constituting the average of 1.4 months' wage.

According to the information supplied by the Government to the 1998 Conference Committee, the total wage arrears at that time stood at 62,800,000,000 roubles, including 9,500,000,000 roubles of arrears due to the lack of direct financing out of the federal and regional budgets, and the amounts owed by the federal Government were not higher than 30 per cent. As to the indebtedness of enterprises financed from the regional and local budgets for 1997, the Government representative stated at the Conference Committee that the problem was practically eliminated through financial assistance of 20,000,000,000 roubles, and that in January 1998 only five regions of the Federation still had wage debts.

The Committee notes with great concern that there is no evidence of definite improvement in the situation of wage arrears, and that, on the contrary, the observations from workers' organizations, including the one received in autumn, rather point to even further aggravation of the situation.

2. Measures taken. With regard to the present situation of non-observance of Article 12(1) of the Convention, the Committee has for some years been emphasizing the importance of such means as: (i) effective supervision; (ii) imposition of appropriate penalties to prevent and punish infringements; and (iii) steps to make good the prejudice suffered.

According to the information provided by the Government to the Conference, the labour inspectorate carried out in 1997, together with the prosecutor's office, the tax inspection office, Ministries of Finance and the Police, inspections in 45,000 undertakings, which revealed more than 27,000 cases of violation of wage legislation and resulted in the payment of nearly 6,000,000,000 roubles. During the first five months of 1998, over 16,000 inspections made 1,700,000,000 roubles of wages paid.

Regarding sanctions, the Government representative to the Conference referred to the plan of draft legislation for 1998 including the elaboration of 75 draft federal laws covering, among others, the issue of the payment of wages. However, the draft laws to modify labour, administrative and criminal laws in order to increase liability for violation of wage legislation, submitted over a year ago, had not yet been adopted by Parliament. Reference was also made to a presidential decree adopted on 5 May 1998 on additional measures to ensure payment of wages to workers in the budgetary sphere and to improve the financial situation. In addition, a plan was approved by the Vice-Chairman of the federal Government for ensuring the resolution of the prompt payment of wages to the employees of organizations financed out of the budget.

However, the Committee notes the observation of the Health Workers' Union of the Russian Federation that the powers granted by legislation to the executive bodies in the regions allow them to have at their disposal all available financial resources including those allocated from the federal fund. The Education and Science Employees' Union of Russia considers that commitments jointly undertaken by the federal Government and local authorities to return arrears of wages are not implemented, and that no decision is taken as to how expenses should be met in federal educational establishments. Since the Government has not responded to the above-mentioned comments from the workers' organizations, the Committee invites the Government to provide its observations on the points raised.

The Committee further notes the statement of the Government made at the Conference to the effect that many managers of enterprises may be using the resources, instead of paying the wages, to resolve their financial problems at the expense of the State and their own workers. The Government admits that this could be explained by the fact that the economic, disciplinary and administrative liability for such action is inadequate as compared to the profit made.

3. In the light of the above, it is difficult for the Committee to conclude that all possible measures have been exhausted by the Government. The Committee notes that the Government tends to attribute the difficulty to various factors such as: the transition from the centrally planned to a market economy and the consequent structural reforms in the economy; the fall of prices in the international market of a series of Russia's export products; and the Asian financial crisis. It however notes the Government's positive statements that it shares the trade unions' concern about wage arrears and that the Government places its first priority on the solution of the problem of wage arrears, which could be found only in dialogue with the social partners.

The Committee therefore urges the Government to make an unequivocal and manifest commitment to put an end to this violation of the Convention, and to take all necessary measures to ensure the payment of wages on time and the rapid settlement of wage arrears already outstanding. It asks the Government to continue to supply information on them and the results achieved, by indicating concrete and specific measures taken by the Government rather than making statements of general principle.

In this regard, the Committee requests the Government to refer to the report of the committee set up to examine the representation made under article 24 of the ILO Constitution by Education International and the Education and Science Employees' Union of Russia, which was adopted by the Governing Body in November 1997, and the recommendations contained therein. It asks the Government to supply, in particular, detailed information on supervision, penalties and the settlement of wage arrears, including texts of any relevant legislation, such as the above-mentioned presidential decree and the one on the enhancement of penalties, when adopted. Please include reference to any specific measures taken to prevent the diversion to illicit purposes of funds which should be used to pay wages, in accordance with the above recommendations. The Committee would urge the Government to include information on any decision made by courts of law or other tribunals concerning the question of regular payment of wages.

4. The Committee shares the concern of the above committee which examined the representation as to the need to ensure that measures taken to reimburse wage arrears do not result in the violation of other provisions of the Convention. It notes that the Education and Science Employees' Union of Russia points out the increase in the payment of wages in kind in some regions.

The Committee notes that the Government has not replied to the previous observation concerning other provisions of the Convention such as: Article 3 concerning the prohibition of payment with promissory notes or coupons; Article 4 concerning the regulation of payment in kind; Article 11 on the treatment of wages as privileged credit in the case of bankruptcy; and Article 15 on the sanctions in case of violation. It requests the Government to indicate measures taken or envisaged to ensure not only the regular payment of wages but also the application of all the provisions of the Convention, and to supply a full report referring to each substantive provision of the Convention. It also requests the Government to include, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

The Government is also asked to refer to the points raised in the direct request, which the Committee is repeating since no reply has been made for a few years.

[The Government is asked to report in detail in 1999.]

Direct Request (CEACR) - adopted 1997, published 86th ILC session (1998)

With reference to its previous comments, the Committee again requests the Government to provide further information on the following points.

Article 3, paragraph 2, together with Article 6, of the Convention. In its previous report, the Government stated that enterprises may pay wages through savings banks or by bank cheque. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee again requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent in the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages through savings banks the freedom of the worker to dispose of his wages, as required under Article 6, is guaranteed to the full extent and at any time.

Article 4, paragraph 1. According to the Government's previous report, enterprises may make partial payment of wages in kind. The Committee again asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures have, in accordance with paragraph 2, been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the "index-linking of deposited wages", the Committee again requests the Government to indicate whether the indexing of deposited wages in its present form may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee has noted that, under section 30, subsection 2 of the Act respecting insolvency (bankruptcy) of enterprises, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receivership, the cost of the operation of the insolvent enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. The Committee again requests the Government to clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes costs incurred before the bankruptcy procedure.

Observation (CEACR) - adopted 1997, published 86th ILC session (1998)

Representation under article 24 of the Constitution

The Committee notes that the Governing Body at its 270th Session (November 1997) adopted the report of the committee set up to examine the representation alleging non-observance by the Russian Federation of the Convention, made under article 24 of the ILO Constitution by Education International and the Education and Science Employees' Union of Russia.

The Committee notes that, following the recommendations of the above committee, the Governing Body urged the Government to ensure the full application of the Convention and in this regard:

(i) to take all necessary measures, in full consultation with workers' and employers' representatives, to ensure prompt payment of wage arrears owed by different state budgets, enterprises and organizations;

(ii) to strengthen supervision of payment of wages, notably through the reinforcement of the activities of the labour inspectorate;

(iii) to ensure effective enforcement of dissuasive sanctions for the non-payment of wages;

(iv) to take specific measures to prevent the diversion to illicit purposes of funds which should be used to pay wages;

(v) to ensure that measures taken to reimburse wage arrears do not result in the violation of other provisions of the Convention.

The Governing Body further invited the Government to supply detailed information on all the measures taken or envisaged in accordance with the above recommendations and the consequent development of the situation, including:

(i) details of the numbers of workers affected, the nature and amount of wages owed, and the number and nature of the establishments and enterprises concerned in the non-payment of wages as well as the amount of payments already made;

(ii) the number of labour inspection visits made in connection with the regular payment of wages, the number and nature of infringements observed, and the number and nature of penalties imposed, as well as similar information on criminal cases involving non-payment or delayed payment of wages;

(iii) the extent to which and the manner in which the schedules for the payment of wage arrears in educational establishments and the federal public budget sector are put into effect.

Observations received from workers' organizations

Since the Committee's previous session, further comments have been received concerning the application of Article 12(1) of the Convention (Regular payment of wages) from various workers' organizations as follows. The Federation of Independent Trade Unions of Russia (FNPR) indicates, in a letter dated 21 March 1997, that the total wage debt of enterprises of all forms of ownership has passed the threshold of 50 "trillion" (as in the original letter in English) roubles (over US$9 "billion" (idem)), thus bringing the country to the verge of a social explosion, and that nearly all trade unions of Russia were joining in the Day of Protest later that month. The International Confederation of Free Trade Unions (ICFTU) and the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) submitted with their letter of 28 August 1997 ample documentation prepared by the Independent Coal Employees' Federation of Russia and the Russian Chemical and Allied Industries Workers' Union. The attached documents include not only communications from sectoral trade unions, referring to the situation of wage arrears in their sectors, such as the chemical industry, the timber and related industries, and oil and gas, but also records of proceedings of various meetings held regarding the issue of wage arrears by high officials of the Government. Just to quote some examples, the Central Committee of the Timber and Related Industries Workers' Union of Russia indicates that the wage arrears increased in 1996 by 2.9 times to reach 1,523,000,000,000 roubles; the Trade Unions of the Workers of the Oil and Gas Branches of Industry and Construction note that the wage arrears in the industries of the oil and gas complex amounted to 8,100,210,000,000 roubles as of 1 February 1997. The Russian Chemical and Allied Industries Workers' Union states that wage arrears in the branches of industries covered by it amounted to 1,362,000,000,000 roubles, and also notes that cases were revealed where the funds were manipulated by banks in the interest of certain persons instead of spent on the needs of the enterprises.

Information supplied by the Government

The Committee notes that the Government transmitted several communications in response. In the communication received in October 1997, the Government indicates that the total wage arrears stood at 54,300,000,000,000 roubles as at 1 September 1997, of which 45,100,000,000,000 roubles (83.5 per cent) were owed in the production sectors and 8,900,000,000,000 roubles (16.5 per cent) in the social sector (paid out of the state budget). According to the Government, while the amount of wage arrears constantly increased in the first half of the year, there had been a positive trend in the last two months: the figure decreased by 738,000,000,000 roubles in July and 204,000,000,000 in August.

The Government further indicates that 81.2 per cent of the wage arrears are attributable to the fact that enterprises and organizations lack their own resources, and the remaining 18.7 per cent is due to the inadequate financing of budgets at all levels. While in the social sphere 86.7 per cent of wage arrears are due to the lack of direct financing out of budget, the corresponding figure in the industrial sectors is only 5.2 per cent. Of the total arrears for the production sectors, 60.4 per cent is owed in industry (among the branches, 8,600,000,000,000 roubles in the energy sector, of which 3,200,000,000,000 is in the coal sector), 15.8 per cent in construction, 16 per cent in agriculture, and 7.6 per cent in transport. In the social sphere, 48.7 per cent is owed in educational establishments and 32.5 per cent in health care establishments. Some 96,700 enterprises and organizations owe wages, including 50,900 in the production sector and 45,800 in the social sphere. In another communication received on 28 November 1997, the Government adds that the wage arrears in educational institutions fell in comparison with the preceding period by 14.1 per cent to a figure of 4,374,000,000,000 roubles.

As to the measures taken to settle wage arrears and to ensure timely payment of wages, the Government mentions several Presidential Decrees and Orders, and also a procedure for cooperation between the bodies of the executive branch in the exchange of information on the financial status of organizations in arrears in the payment of wages, approved by the Ministry of Labour and other concerned ministries on 8 August 1997, as well as a draft government Order on priority measures to settle wage arrears in the sector of the economy that is not financed out of the budget, which was communicated to the Government on 24 September 1997. The Government also mentions large figures of amounts provided as financial assistance to the constituent territories.

As to the measures for supervision, the Government states that, in the first half of 1997, the Russian labour inspectorate carried out checks in more than 22,000 organizations, in which some 14,500 flagrant violations of wage legislation were revealed. More than 20,000 formal instructions were issued to rectify infringements through administrative audits of enterprises and organizations, which resulted in the payment of wage arrears in several regions. Following the instructions of the Provisional Extraordinary Presidential Commission (Protocol of 8 July 1997, No. 8) the labour inspectorate, together with the Ministry of Finance, investigated federal executive authorities and territorial bodies regarding the use of funds from the federal budget for the purpose of paying wages, during which cases of inappropriate use were discovered in 27 of the constituent territories.

Concerning penalties, the Government mentions in its communication of December 1996 a draft federal Act introducing criminal liability for gross violations in connection with delayed payment of wages, but no further information has been received on this point. As regards the timetables for settling wage arrears, the Government's communication of October 1997 only refers to the fact that such timetables have been drawn up regarding educational establishments, the coal industry and the scientific sector, and contains no information on their implementation.

Conclusions

The Committee notes that, in spite of the measures so far taken by the Government, there is no evidence of definite improvement in the situation of wage arrears since the figures cited by the Government as the decrease in July and August 1997, put together, do not reach even 2 per cent of the total wage debts outstanding at the beginning of September 1997.

The Committee notes that the Government recognizes, in its communication of October 1997, the necessity of a package of measures, including both urgent measures and those aimed at improving the economy as a whole: to strengthen supervision and liability of officials for the timely payment of wages, including labour inspection and supervision by the public prosecutor's office, and involvement of trade unions; to ensure compliance with the Order of 22 February 1997 increasing the liability of state representatives on the boards of joint stock companies for the timely payment of wages to their employees; to expedite the adoption of the Act to amend the Code of Administrative Offences and the Penal Code, which is before the State Duma (the lower house of Parliament), among other things. It notes however that these indications appear to be more statements of general principles rather than information on concrete and specific measures taken by the Government.

The Committee shares the concern expressed by the above committee set up by the Governing Body over the gravity of the situation and the social consequences of the non-observance of Article 12(1) of the Convention. It recalls that the Government is responsible, in terms of the provisions of the Convention, not only for the regular payment of wages directly made out of the federal budgets, but also to ensure the payment of wages in conformity with the provisions of the Convention to all the workers in the country to whom wages are paid or payable. The Committee has been emphasizing the importance of such means as (i) effective supervision, (ii) imposition of appropriate penalties to prevent and punish infringements, and (iii) steps to make good the prejudice suffered. In all these three aspects, the information supplied so far by the Government does not give the impression that all possible measures have been exhausted.

The Committee therefore urges the Government to make its clear commitment to put an end to this violation of the Convention and to take all necessary measures to ensure the payment of wages on time and the rapid settlement of wage arrears already outstanding, and to continue to supply information on them and their results. It asks the Government to supply, in particular, concrete information on the supervision, penalties and the settlement of wage arrears, including texts of any relevant legislation, such as the one on the enhancement of penalties. The Committee would urge the Government to include information on any decision made by courts of law or other tribunals concerning the question of regular payment of wages.

The Committee earlier noted the Government's indication that a Bill had been adopted to amend the Labour Code concerning sanctions for violation of the Code, in particular in the case of unpaid or late payment of wages and that a law was adopted in third reading by the Duma concerning the compensation paid to the citizens for material loss for unpaid or late payment of wages. In the absence of information, it again asks the Government to include detailed information on this or similar legislative measures in its report.

In the absence of a reply to the previous observation concerning other provisions of the Convention such as: Article 3 concerning the prohibition of payment with promissory notes or coupons; Article 4 concerning the regulation of payment in kind; Article 11 on the treatment of wages as privileged credit in the case of bankruptcy; and Article 15 on the sanctions in case of violation, the Committee requests the Government to indicate measures taken or envisaged to ensure not only the regular payment of wages but also the application of all the provisions of the Convention. It also requests the Government to include, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

The Government is also asked to refer to the points raised in the direct request, which the Committee is repeating since no reply has been made for a few years.

[The Government is asked to supply full particulars to the Conference at its 86th Session and to report in detail in 1998.]

Direct Request (CEACR) - adopted 1996, published 85th ILC session (1997)

With reference to its previous comments, the Committee again requests the Government to provide further information on the following points.

Article 3, paragraph 2, in connection with Article 6, of the Convention. In its previous report, the Government stated that enterprises may pay wages through savings banks or by bank cheque. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee again requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent to the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages through savings banks the freedom of the worker to dispose of his wages, as required under Article 6, is guaranteed to full extent and at any time.

Article 4, paragraph 1. According to the Government's previous report, enterprises may make partial payment of wages in kind. The Committee again asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures, in accordance with paragraph 2, have been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the "index-linking of deposited wages", the Committee again requests the Government to indicate whether the indexing of deposited wages in its present form may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee has noted that, under section 30, subsection 2 of the Act respecting insolvency (bankruptcy) of enterprises, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receivership, the cost of the operation of the insolvent enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. The Committee again requests the Government to clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes costs incurred before the bankruptcy procedure.

Observation (CEACR) - adopted 1996, published 85th ILC session (1997)

Further to its previous observation concerning the application of Article 12(1) of the Convention (regular payment of wages), the Committee notes all the comments received from various workers' organizations since its last session, namely: Russian Coal Employees' Union (ROSUGLEPROF), Trade Union Federation of Primorsky Kraï; Federation of Independent Trade Unions of Russia; Education International (EI); Education and Science Employees' Union of Russia (ESEUR); Trade Union Association of the Republic of Karelia; Republican Trade Unions of Workers of Education and Science, Health Care and Culture; Medvezhegorsk District Trade Union of Educational Workers; and Segezha District Trade Union of Health Care Workers.

The Russian Coal Employees' Union (ROSUGLEPROF) indicates that wages have not been paid to miners for three to six months and that social tension has reached a dangerous level in coal-mining regions. The Trade Union Federation of Primorsky Kraï states that wages have not been paid for five or six months and that the total wage debt in the Primotje territory exceeds 800 billion roubles, including 146 billion for energy workers, 115 billion for coal industry workers, 115 billion for budget sector employees, and 75 billion for municipal and communal workers. The Federation of Independent Trade Unions of Russia states, further to its earlier comment, that total wage debts at enterprises of all kinds of ownership reached the sum of 29.3 trillion roubles (US$5.6 billion) by the end of July 1996. The Education International (EI) and Education and Science Employees' Union of Russia (ESEUR) jointly comment on the non-payment and the delay in payment of salaries for employees in the education sector and provided a copy of the letter from the Deputy Minister of Labour concerning the situation of non-payment of wages. According to this letter, the total sum of non-payment of wages as at 20 December 1995 from the federal budget stood at 952.6 thousand million roubles (education: 622.3 thousand million; health: 248.0; culture: 331; mass information resources: 37.2; and social policy: 1.4). The same letter further cites non-payment of wages to workers in the budget sector (in thousand million roubles) in several territories: Mordovian Republic 53.3; Altai kraï 43.4; Astrakhan oblast 6.5; Kurgan oblast 52.5; Nizhegorod oblast 42.0; Novosibirsk oblast 12.2; Orenburg oblast 46.1; Perm oblast 14.7; Tula oblast 13.6; and Nenets autonomous oblast 0.51. The Trade Union Association of the Republic of Karelia points out that wages have not been paid regularly in contravention of section 96 of the Labour Code, and that workers are offered consumer goods to sell so as to keep part of proceeds with them. Cases of non-payment of wages amounting to tens of thousand millions of roubles are also mentioned by the other workers' organizations.

The Committee notes the above information with grave concern, since the situation is too serious to be considered as purely one of transition to market economy. It recalls that the present problem concerns the implementation in practice of the national labour legislation which gives effect to the Convention. Noting that the Government has communicated no observation in response to these comments, the Committee urges the Government to indicate all the measures taken to ensure the regular payment of wages, not only in the sector where wages are paid directly from the federal budget but also in all other sectors by such means as effective supervision, imposition of appropriate penalties to prevent and punish infringements and steps to make good the prejudice suffered. In particular, the Committee asks the Government to include information on any decision made by courts of law or other tribunals concerning the question of regular payment of wages.

The Committee earlier noted the Government's indication that a Bill had been adopted to amend the Labour Code concerning sanctions for violation of the Code, in particular in the case of unpaid or late payment of wages and that a law was adopted in third reading by the Duma (the lower house of Parliament) concerning the compensation paid to the citizens for material loss for unpaid or late payment of wages. It asks the Government to include detailed information on this or similar legislative measures in its report.

In the absence of reply to the previous observation concerning other provisions of the Convention such as: Article 3 concerning the prohibition of payment with promissory notes or coupons; Article 4 concerning the regulation of payment in kind; Article 11 on the treatment of wages as privileged credit in the case of bankruptcy; and Article 15 on the sanctions in case of violation, the Committee requests the Government to indicate measures taken or envisaged to ensure not only the regular payment of wages but also the application of all the provisions of the Convention. It also requests the Government to include, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

[The Government is asked to supply full particulars to the Conference at its 85th Session and to report in detail in 1997.]

Direct Request (CEACR) - adopted 1995, published 83rd ILC session (1996)

With reference to its previous comments, the Committee requests the Government to provide further information on the following points.

Article 3, paragraph 2, in connection with Article 6, of the Convention. In its previous report, the Government stated that enterprises may pay wages through savings banks or by bank cheque. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee again requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent to the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages through savings banks the freedom of the worker to dispose of his wages, as required under Article 6, is guaranteed to full extent and at any time.

Article 4, paragraph 1. According to the Government's previous report, enterprises may make partial payment of wages in kind. The Committee again asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures, in accordance with paragraph 2, have been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the "index-linking of deposited wages", the Committee again requests the Government to indicate whether the indexing of deposited wages in its present form may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee has noted that, under section 30, subsection 2 of the Act respecting insolvency (bankruptcy) of enterprises, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receivership, the cost of the operation of the insolvent enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. The Committee again requests the Government to clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes cost incurred before the bankruptcy procedure.

Direct Request (CEACR) - adopted 1995, published 82nd ILC session (1995)

With reference to its previous comments, the Committee requests the Government to provide further information on the following points.

Article 3, paragraph 2, in connection with Article 6, of the Convention. In its previous report, the Government stated that enterprises may pay wages through savings banks or by bank cheque. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee again requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent to the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages through savings banks the freedom of the worker to dispose of his wages, as required under Article 6, is guaranteed to full extent and at any time.

Article 4, paragraph 1. According to the Government's previous report, enterprises may make partial payment of wages in kind. The Committee again asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures, in accordance with paragraph 2, have been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the "index-linking of deposited wages", the Committee again requests the Government to indicate whether the indexing of deposited wages in its present form may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee has noted that, under section 30, subsection 2 of the Act respecting insolvency (bankruptcy) of enterprises, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receivership, the cost of the operation of the insolvent enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. The Committee again requests the Government to clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes cost incurred before the bankruptcy procedure.

Observation (CEACR) - adopted 1995, published 83rd ILC session (1996)

Further to its previous observation concerning the application of Article 12(1) of the Convention, the Committee notes the comments made in a letter dated 21 March 1995 by the Trade Union Committee of the Far-East Plant "Zvezda", which states that wages have been paid with a delay of two to three months for a long period of time. It has also received comments from the Federation of Independent Trade Unions of Russia dated 4 November 1995, which points out the aggravation of the situation as regards the payment of wages. The latter organization refers to the Government's attitude which, for example, led to the de facto cancellation of the provision on the reservation of 30 per cent of the average of the bank accounts of enterprises for the payment of wages. The Committee also notes the information supplied by the Government representative and the discussion that took place in the Conference Committee in June 1995.

In the above information, the Government again refers, as reasons for the difficulties of applying the Convention in this respect, to the country's transition to a market-based economy and the continuing decline in production, as well as to the breakdown of the system of mutual payment between enterprises and the destruction of technological and economical network in the country. It further refers to various measures, including some in the form of Presidential Decrees, taken to regularize payment and to reinforce supervision of compliance with the wage-payment obligations.

The Committee notes that most of information on the measures brought by the Government representative to the Conference Committee had already been noted in the Committee's previous observation. It however notes with interest the Government's indication that a Bill had been adopted to amend the Labour Code concerning sanctions for violation of the Code, in particular in the case of unpaid or late payment of wages and that a law was adopted in third reading by the Duma (the lower house of Parliament) concerning the compensation to be paid to the citizens for material loss for unpaid or late payment of wages.

The Committee recalls that the present problem concerns the implementation in practice of the national labour legislation which gives effect to the Convention. It again emphasizes that the effective application of the Convention, through the national provisions giving effect to it, should comprise three principal aspects: supervision, appropriate penalties to prevent and punish infringements and steps to make good the prejudice suffered. In this connection, the Committee notes with concern the statement by the Government representative in the Conference Committee that some directors of certain enterprises were taking advantage of the difficult economic situation by avoiding wage payment and using the money for private purposes. It shares the view of the Conference Committee that the measures to ensure the application of the Convention would in fact contribute to the process of economic transition.

Noting the reference made by the Worker member of the Russian Federation in the 1995 Conference Committee to the difficulties in applying other provisions of the Convention such as: Article 3 concerning the prohibition of payment with promissory notes or coupons; Article 4 concerning the regulation of payment in kind; Article 11 on the treatment of wages as privileged credit in the case of bankruptcy; and Article 15 on the sanctions in case of violation, the Committee requests the Government to indicate measures taken or envisaged to ensure not only the regular payment of wages but also the application of all the provisions of the Convention. It asks the Government to supply information in particular on the draft legislative provisions concerning sanctions and compensation mentioned above, and other measures for ensuring the application of relevant provisions in practice. It also requests the Government to include, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

The Committee is also addressing a direct request to the Government on certain points.

Observation (CEACR) - adopted 1995, published 82nd ILC session (1995)

Further to its previous observation, the Committee notes the information supplied by the Government as well as the comments received from the Union of Workers in Geology, Land-Surveying and Cartography, and from the Trade Union Federation of Primorsky Krai, concerning the application of Article 12(1) of the Convention with regard to the regular payment of wages. According to the former union, which refers particularly to geological prospectors, over 50 per cent of the work carried out had yet to be paid for by the Government at the time of communication (February 1994), and wages and salaries had not been paid since October of the previous year. The latter federation, located in Vladivostok, alleges that the delay in wage payment amounts to three to five months. Both these organizations consider that the situation is a violation not only of the Convention but also of the national legislation.

The Government refers, in its report, again to the country's transition to a market-based economy and to the continuing decline in production. It indicates that, under Presidential Decree No. 1005 of 23 May 1994 concerning additional measures to regularize payment and to reinforce payment obligations, a corporate body may obtain cash resources from its bank up to a certain amount for wage and equivalent payments. Provision is also made so that the roubles can be obtained for payments, including that of wages, through the sale of resources in deposit or foreign currency accounts. The Government also refers to Presidential Decree No. 458 of 10 March 1994, concerning the liability for violation of the citizens' labour rights, which instructs the public prosecutor's office to strengthen supervision of compliance by enterprises and other organizations, irrespective of their form of ownership, with the labour legislation and collective agreements, paying special attention to preventing non-payment or delay in payment of wages; the Decree also urges the courts to give special attention to cases involving violation of citizens' labour rights, including such wage payment problems.

The Committee takes due note of the above information. It further notes that Decree No. 458 requires the Government to prepare amendments to the penal and administrative legislation for the above-mentioned purpose and to submit it to the legislature. The Committee requests the Government to continue to supply information on legislative or other measures taken to ensure the payment of wages at regular intervals.

The Committee would point out that, as is underlined by the above-mentioned workers' organizations, the problem appears to concern the application in practice of the national labour legislation giving effect to the Convention. It again refers to the conclusions of the committee set up to examine the representation alleging non-observance of this Convention by another country (Official Bulletin, Vol. LXVIII, 1985, Series B, Special Supplement 4/1985, paragraph 41), where it was noted that the effective application of the Convention, through the national provisions giving effect to it, should comprise three principal aspects: supervision, appropriate penalties to prevent and punish infringements and steps to make good the prejudice suffered.

The Committee therefore requests the Government to provide information on the practical application in accordance with point V of the report form including, for instance, extracts from official reports that show the number of investigations made, infringements observed and penalties imposed.

The Committee is also addressing a direct request to the Government concerning certain points.

Direct Request (CEACR) - adopted 1993, published 80th ILC session (1993)

With reference to its observation concerning the comments made by the Trade Union Council of the Republic of Karelia, the Committee wishes to come back to certain further points.

Article 3, paragraph 2, in connection with Article 6, of the Convention. The Government states that enterprises may pay wages through savings banks or by bank cheque or make partial payments in kind. Under the Convention, payment by bank cheque or postal cheque or money order may be permitted or prescribed only in cases in which payment in this manner is customary or is necessary because of special circumstances. The Committee requests the Government to indicate whether such a form of payment is customary in the industries concerned and what special circumstances, inherent to the work relationships in question, necessitate this form of payment of wages.

Please also indicate whether in cases of payment of wages to savings banks the freedom of the worker to dispose of his wages, as foreseen under Article 6, is guaranteed to full extent and at any time.

Article 4, paragraph 1. According to the Government, enterprises may make partial payment of wages in kind. The Committee asks it to indicate the national laws or regulations, collective agreements or arbitration awards authorizing such payment. Please also indicate the industries or occupations in which such payment is customary or desirable because of the nature of the industry or occupation concerned, in accordance with this provision of the Convention. The Committee further requests the Government to indicate what measures, in accordance with paragraph 2, have been taken to ensure that:

(a) such allowances are appropriate for the personal use and benefit of the worker and his family; and

(b) the value attributed to such allowances is fair and reasonable.

Article 8. With respect to the index-linking of deposited wages, the Committee requests the Government to indicate whether, through the indexing of deposited wages in its present form, this may eventually lead to an indirect deduction from the wages due to the worker. If such deductions occur, in what manner are the workers informed, in accordance with paragraph 2, of the conditions under which and the extent to which such deductions are being made?

Article 11. The Committee notes that, according to section 30 of Presidential Decree No. 623 of 14 July 1992, this Decree was to remain in force only until the adoption of an Act respecting insolvency (bankruptcy) of enterprises, which has been enacted on 19 November 1992 and comes into force on 1 August 1993. It notes that under section 30, subsection 2 of this Act, wages have a relative priority over certain other debts in a bankruptcy procedure, but only after the cost of the bankruptcy procedure and of the receiver, the cost of the operation of the bankrupt enterprise and after the payment of obligations to persons who have suffered injury to their health or lives. In this respect, the Committee would be grateful if the Government would clarify whether the "cost of the operation of the bankrupt enterprise", to be given preference over the workers' wages, is limited to the period after the declaration of bankruptcy or whether it also includes costs incurred before the bankruptcy procedure.

Observation (CEACR) - adopted 1993, published 80th ILC session (1993)

The Committee takes note of the comments received from the Trade Union Council of the Republic of Karelia, alleging that in mid-1992, during two months, about 400,000 workers did not receive their wages in time, and that on 20 June 1992, the amount of non-paid wages, grants and pensions exceeded one thousand million roubles. The Trade Union Council holds the Government responsible for this development which it deems unlawful and in violation of the Convention.

In its reply to these comments, the Government states that in the course of the transition to a market economy, the freeing of prices of goods, together with an excessive increase in wages that was often not matched by output, has led to an imbalance in the volume of money available to pay for that output; producers found themselves with huge mutual debts and in a situation in which banks found themselves without adequate credit resources or cash available for the payment of wages. However, the President and the Government of the Russian Federation were taking steps to stabilize the economy and to regulate the payment of workers' wages.

The Government further states that a procedure for the index-linking of unpaid wages in state enterprises, institutions and organizations has been established. This procedure provided for the budget of the Russian Federation to be used for the index-linking in May and June 1992 of the unpaid and deposited wages of industrial and office workers at the rate of 80 per cent per annum (6.6 per cent monthly) or 0.22 per cent in respect of each day on which the payment of wages is withheld.

The Committee points out that according to Article 12, paragraph 1, wages should be paid regularly. The non-payment of wages and their depositing cannot be considered to be in line with this provision of the Convention.

The Committee recalls the conclusions of the Committee set up to examine the representation made by the General Confederation of Portuguese Workers alleging non-observance by Portugal of, inter alia, this Convention (cf. ILO Official Bulletin, Vol. LXVIII, 1985, Series B, Special Supplement 4/1985) in paragraph 41 of its report. The above Committee noted that the effective application of the Convention, through the national provisions giving effect to it, should comprise three principal aspects: supervision, appropriate penalties to prevent and punish infringements and steps to make good the prejudice suffered.

The Committee hopes that the necessary measures will be implemented through legislation and in practice, to enable the enterprises concerned to fulfil their obligations vis-à-vis the workers, and asks the Government to report on any developments in this respect.

The Committee is raising further comments in a request addressed directly to the Government.