Putin’s real fraud rips off Russian retirees

September 12, 2018

Kate Seidel explains the background to a rise in struggle against austerity and Putin’s regime in Russia — and looks at what the left has to say about the way forward.

PROTESTS ARE spreading in Russia against the government’s proposal to increase the retirement age by a steep five years.

On September 9, demonstrations organized by liberal opposition leader Alexei Navalny took place in over 80 cities. Rallies in Moscow and St. Petersburg mobilized around 2,000 people each.

Local authorities for the most part refused to grant permits, which meant protesters faced beatings and mass arrests. Almost 1,200 people were arrested around the country, with more than 600 in St Petersburg alone — including an 80 year old and an 11 year old.

One week before, there were also sizable protests, including 9,000 and 1,500 people at two rallies in Moscow, sponsored by the Communist Party and the social-democratic A Just Russia, respectively, along with 1,500 in St. Petersburg. Further protests are planned in advance of the second round of discussions of the bill later this month, including for next Sunday in St. Petersburg.

St. Petersburg residents give City Hall a “red card” at an unsanctioned protest
St. Petersburg residents give City Hall a “red card” at an unsanctioned protest (Anticapitalist.ru)

There will be more protests to come through the second hearing of the legislation, which is scheduled for later this month.

The protests are a response to the unveiling of the bill in June, which would increase the retirement age from 60 to 65 for men and 55 to 63 for women. It would also raise the value added tax rate from 18 percent to 20 percent.

The announcement of the legislation came as the government was buoyed by Vladimir Putin’s March election win and the patriotism surrounding the World Cup, and shielded by a month-long ban on protests in 11 cities, allegedly as a safety precaution.

Nevertheless, this is a massively unpopular move that 90 percent of Russians oppose. It has been a prime cause in the plummeting popularity ratings of Putin and the government, led by Prime Minister Dmitry Medvedev.

In May, 79 percent of people polled by the Levada Center approved of Putin’s actions as president — by June, 65 percent did. The government’s approval rating went from 43 percent in April to 34 percent in June, and approval for the ruling United Russia party dropped from 48 percent to 38 percent, according to the Russian Public Opinion Research Center.

The protests, which have called international attention to the issue, are the result of ongoing campaigns by a number of opposition forces, including independent socialists who started organizing actions as soon as the bill was announced.

The People Are Against Raising the Retirement Age is a group launched by the Russian Confederation of Labor and supported by a range of socialists. It is willing to work with official opposition parties to organize protests.

The group’s Change.org petition has gathered almost 3 million signatures, and its protest map shows gatherings in 281 cities across the country that drew tens of thousands of participants in June and July.

This widespread mobilization has forced Putin to soften his approach slightly. On August 29, he proposed that the women’s retirement age be moved to 60 instead of 63. Nonetheless, all but a half-dozen of the ruling United Russia party’s deputies — who make up three-quarters of Russia’s legislature, the Duma — voted to support the bill in the preliminary round of hearings on July 19.

A New Chapter in Putin’s History of Austerity

Much of Putin’s legitimacy rests on his image as the opposite of former President Boris Yeltsin in the 1990s — a stable leader ready to save Russians from economic uncertainty.

In reality, Putin’s “strong state” protects existing property arrangements and the results of privatization during the Yeltsin era, even though some oligarchs have had to surrender some political autonomy. In fact, it was under Putin that the number of Russian billionaires as recorded by Forbes went from 0 to in 2000 to 106 today.

This should be seen as connected to the era of plundered and privatized state of the 1990s. Yeltsin was able to secure a constitution with lopsided presidential powers that allowed him to pass free-market reforms — powers that Putin inherited in 1999. His ruling party, United Russia, was honed in the efforts to push through unpopular policies like the flat tax and new labor code in 2001 and the monetization of welfare benefits in 2005.

After returning to the presidency in 2012, after being prime minister for a term, Putin signed the “May Decrees” raising the salaries of public-sector workers and demanding increased productivity, without providing additional funding to the regions that paid their salaries.

This led to overwork, employer fraud (managers paid workers the same salaries, but falsely claimed they only worked half-time, and mass layoffs in education and public health care, including 14,000 doctors in Moscow and 90,000 medical workers across the country.

As late as 2015, Putin admitted that raising the retirement age while men’s life expectancy remained so low would be impossible. But given the lack of political accountability for him or United Russia, people should be horrified, but not surprised, to see them going back on earlier promises.

The Boss Says for You to Work Until You Die

Aside from the basic outrage that the government would be denying workers several years of promised pension payments, discussions about the retirement age center around a few themes.

The first is Russia’s low average life expectancy: According to the state statistics service Rosstat, women born in 2017 will live for 77.6 years on average, and men just 67.5.

The average life expectancies for men and women are expected to rise to around 72 and 81 by 2028, when the new retirement ages will have been put into effect. However, those aren’t the people who will be retiring in 2028 — that would be men born in 1963 and women born in 1968, who are expected to live on average to ages 64 and a half for men and 73 for women.

Even without raising the retirement age, according to the WHO, men born in 2016 already have a 30 percent chance of dying between the ages 15 and 60. Russians’ fear of being worked to death is no exaggeration.

Another problem is the demographics of Russia’s workforce, which is aging, partly because of the impact of privatization and austerity in the 1990s, when the total population, birth rates and life expectancy all shrank.

A large proportion of workers continue to work past retirement age to supplement their low pensions, which average about $200 a month. The idea of further filling the ranks of the workforce with older workers, who are particularly vulnerable to discrimination and often are in failing health, does not sit well with them.

The government’s initial plan to raise the retirement age to 63 for women touches on the question of gender parity. Women’s lower retirement age was meant to be an acknowledgement of the increased burden of domestic labor and a way to incentivize them to take care of grandchildren.

Putin patronizingly claims that he chose to dial back the eight-year increase in the retirement age for women because of Russia’s “special, considerate relationship” with them. But until Russia starts dealing with rampant discrimination and domestic violence, most women are unlikely to buy that argument.

There are other sources of revenue that could cover the projected gap between pay-ins to the pension fund, but they go against sources of the regime’s support.

Estimates put Russia’s shadow economy — where workers lack contracts and are paid in part or in full in cash — at about 40 percent of gross domestic product. These employers fail to pay into the pension fund.

According to one calculation, if all workers were brought into the legal economy, current pension payments could be sustained. But while workers would have an incentive to organize from below to fight for legal contracts, the government isn’t interested in this approach. Squeezing workers is easier than ensuring compliance from employers.

Even more obviously, Russia has a flat income tax (set at 13 percent, including capital income, which is proposed to rise to 15 percent). The value-added tax, which Russia has instead of a sales tax and which accounts for about a third of federal budget revenue — will likely be raised from 18 percent to 20 percent as part of the pension “reform” plan, but these costs would probably be passed on to consumers.

Of course, the solution of raising income taxes on the rich, while obvious to the 90 percent of Russians who oppose raising the retirement age, would be very difficult for Putin’s regime. Governors in poor regions depend on taxing their poor residents, and the very wealthy are always ready to hide their assets abroad.

The ruling class is pulling out all the stops to come up with an explanation for why their plan is the only option — from Orthodox priests declaring that poverty will make Russians morally pure to Putin’s framing of the decision as the inevitable result of the demographic crises of the Second World War and the 1990s. Centrist economists glumly echo their claims, ever ready to bravely make the “tough calls” at other people’s expense.

Power to the Millions, Not the Millionaires

What socialists can hope for in these circumstances is not only Putin gets less popular, but that he loses his aura of being “above politics” — responsible only for foreign policy triumphs and not any of the decisions of the government that affect people’s lives. And, of course, we fight for the people to develop a sense of their power in resistance.

This pension “reform” creates an opening for democratic demands that go directly against the 1 Percent and their state. It exposes how far the regime is from representing people politically, and how bankrupt its economic horizon is.

But for protest to be successful, it absolutely must reflect mass discontent, which requires coordination between a broad range of opposition forces (from liberals to Stalinists), as in 2011 and 2012, when Russians protested fraudulent parliamentary and presidential elections.

There are already successes on this front: Russians’ willingness to protest has increased from 37 percent in July (after the reform was announced, but as protests were just beginning) to 53 percent in August.

But there are still a lot of strategic questions to debate.

For one, it is difficult to build the momentum to overcome city officials’ reluctance to allow permits for protests in visible areas. So should protesters risk mass arrests at an unauthorized protest or agree to move farther from downtown? And there are ongoing debates about the forms that protest should take.

Socialists must also be careful as they navigate the terrain of the opposition. Many ordinary Russians feel that the parliamentary opposition parties are opportunists looking to co-opt protests, and their suspicions aren’t unfounded.

There are the forces around the aging, nationalist Communist Party (KPRF), which lives comfortably on the budget provided to it by the government for participation in elections.

The KPRF is planning to gather signatures for a countrywide referendum, a strategy they’ve discussed since the last referendum 25 years ago, but the government always finds ways to throw out signatures. Such an attempt will suck resources and demobilize workers.

Even in the case of those who break more radically from the charade of “managed democracy,” there are contradictions. While Navalny is willing to openly criticize Putin, the fact that he has previously supported both raising the retirement age and keeping a flat tax makes it hard to believe that his campaigns will defend workers.

Still, in many places where he is the only visible face of the opposition, people will turn out to protest at his call.

Socialists have to go a step beyond the poisonous apathy that dampens protest in Russia. They will be fighting all the way until the law is repealed, building unions and organizations that will continue flexing working class muscle after the fight is over.

This can only be done on the basis of solidarity, not delegating the task to saviors of any political persuasion.

Further Reading

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