One-Factory Towns Hit Hardest by Crisis
Agence France Presse
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For The St. Petersburg Times
The cellulose factory in Baikalsk is by far the town's largest employer.
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BAIKALSK — The cellulose factory in Baikalsk once employed 2,200 people and was the lifeblood for the town on the shore of Russia’s Lake Baikal and a symbol of Soviet-era industrialization. As well as being by far the biggest employer in this town of 16,000 people, the factory’s power plant also supplied hot water, electricity and heating to its inhabitants. But now, amid the economic crisis, it employs only 268 workers and a heavy silence weighs beneath the plant’s famous smokestacks, an emblem of Russian industry. Its main owner, the Basic Element holding company of Russia’s former richest man Oleg Deripaska, is encumbered by billions of dollars of debt accumulated for a spending spree in the good times of the Russian economic boom. And its problems are shared by many other towns across the country — known in Russian as monogorodi — whose populations are largely dependent on one single factory for their wellbeing. “They reduced the staff progressively. Firstly, 50 people. Then by 1,300. Then 154 more,” local trade unionist Alexander Shendrik told AFP. “Baikalsk came into being thanks to its factory. Before that there was nothing but taiga around here. People came from all over to work here.” Even those workers still employed in the factory have not been paid for two months and their future remains in doubt as Basic Element considers closing the plant as it is no longer profitable. Today it is not the factory production line but the local job center that is buzzing. Dozens of people queue outside the facility daily looking for new openings. “Our situation is without hope. We are a little town, far from anywhere. Who is going to worry about us?” said Irina, a woman in her forties who was sacked by the factory in March, as she awaited her turn at the center. Tulana Abdugafur, 51, worked as a mechanic in the factory for 25 years and is now living off the salary of his wife, who works in a school. “I can’t find work as I’m close to the retirement age,” he said. “It’s hard, we took out a loan and now we are in debt.” Shendrik said that debts were a major problem for many of the laid-off workers. “The banks want to be paid back but people cannot pay back the money.” In June, 42 workers started a hunger strike to obtain 100 million rubles (2.2 million euros) of unpaid wages. According to the Moscow-based Institute for Regional Politics there are 460 single industry towns in Russia with a total population of 35 million. In 2008, they accounted for 40 percent of Russian GDP. “The drying-up of credit and the fall in prices of commodities have caused problems in many companies,” said the institute’s director, Bulat Sotliarov. “The situation is at its most critical in cities dependent on car factories,” he said. “It’s a little less severe in the coal and metals sector and there is almost no problems in towns involved in the energy industry.” The government has openly admitted it is concerned about outbreaks of social unrest in Russia, a phenomenon almost unthinkable in the boom days under the Vladimir Putin presidency. In the best known incident, laid-off workers from cement factories in the town Pikalyovo in June blocked a main highway for several hours, causing kilometers of traffic jams. Basic Element is an owner of one of the three factories in Pikalyovo, which is located in the Leningrad Oblast, about 250 kilometers to the south east of St. Petersburg. In a scene that has now entered modern Russian folklore, Putin, now Russia’s powerful prime minister, visited the town and forced Deripaska to sign an agreement to restart production at the plants. In the episode, relayed endlessly on Russian state television, Putin slammed a pen on the table in front of the oligarch and told him to “sign now.” A handful of other towns have seen similar disturbances over unpaid wages — although not followed by such dramatic prime ministerial intervention. This month, workers from a construction firm blocked bridges and roads in the Altai region in southern Siberia and also threatened to block a motorway. According to Deripaska himself, it is the responsibility of federal and regional authorities to create job opportunities and promote small and medium size business. “My task should be to care about my companies,” he said in comments released by Basic Element last week. “How to make them profitable and how to work with low demand, how to cut costs and create new products and create new opportunities in terms of markets.”
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