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Books by Grigory Yavlinsky
Economics and Politics in Russia
The Center for Economic and Political Research (EPIcenter)
Nizhni Novgorod-Moscow, 1992
CHAPTER 2. The New Policies of the Administration.

2.2. Social Policies

Modern social policy of the center

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A qualitatively new composition of society in the social sphere shows that above all today, one cannot examine the social policy of the center as something united, having its own institutions, its mechanisms of realization, its resources, definite logic and goals. It found its own autonomous forms of existence in view of the actions of the federal administration, definite actions of local organs of power and, finally, forms of social welfare from separate families and citizens; it is impressive that all these

forms came into being relatively autonomously, forming a spontaneous and contradictory system of self-survival. The perspectives of social protection are just as varied.

Activities of the federal administration. One may ascertain that the consummation of the first stage of financial stability in the social sphere had a highly concrete result: The destruction of the old government welfare system and practically full loss of control on the part of the administration over the reversibility of the processes in these spheres.

Attempts to establish "social support" for the public as before return to a closed circle of the necessity of the next stage of financial stabilization and inevitability of additional momentary injections in the social sphere, however in view of the minimum pay, transfers reaction to demands of striking committees and the pressures of different regions. The basic peculiarities of the Russian administration in the social sphere can be described by several characteristics: Exclusivity, inconsistency, compensatory character, and orientation toward monetary forms of supporting the public, and reaction, as a rule, to things that have already happened, i.e., a passive, subordinate character. Here we get a closed circle, the rupturing of which in the framework of the old methods of distribution process is impossible. However the center continues to live with the illusion of this exclusive mission and reinforced mutual understanding and support of the population.

Actions of the local organs of power. The basic gravity of supporting the still-functioning system of social welfare lies in the local organs of power. The obligation of guaranteeing the territory basic food products, medications, heat and extra cash for the paying of wages and pensions, the easing of unemployment and the protection of free health care and education, albeit a minimum level. This generous


relegation of the center came with practically no underpinning support of either finances or other resources. The potential of local powers in the areas of autonomous social policy considering the current predicament in these spheres is not very great. The ability to manoeuvre in conditions of high inflation and a decline in production is minimal. Even attempts to check the fall in the standard of living of the general population in the territory demands significant efforts on the part of the local governments and runs into serious limitations.

Forms of self-guarantees of the public. The disorientation felt by a large portion of the population gives rise to the simple understanding that the former system of state social welfare is practically destroyed, while conditions for a new system are not yet created. The loss of old reference points, disorientation, alienation, and an austere economic regime for many groups of the population is slowly giving rise to a situation of self-survival, frequently tied to an exit from the state sector. The use of supplementary nongovernmental, and occasionally illegal, sources of existence has always been typical for our people. This was a second system of social guarantees. Today, such a system is becoming the prime system for many strata of society. This system has its own rules. If you consider that we have an issue with the public in its massive poverty, inasmuch as this "Reform administration" forcefully laid upon it the costs of stabilization, then one can perhaps foresee the austerity and destruction of the "shadow" economy.

Conclusion: the situation being created now is highly dangerous in its uncontrolled nature and multidirectional interests which it attracts. We are speaking not about isolated strata, groups and territories. We are discussing the majority of the population living in Russia. There is nothing left for the administration to distribute between individuals (vouchers are the latest contribution to welfare increase). Local powers will also soon exhaust their

possibilities. Gradually a spontaneous redistribution of functions among social partners is beginning: the government, local powers, enterprises, trade unions and individual citizens. But this is a long and excruciating process. The situation is already rapidly getting worse. Already by 1993, the population will know the fact of massive unemployment, a rapid depreciation in wages, without which it is impossible to heal the sick and educate children. In such a society there cannot be agreement, there is not even a future.

Such a prognosis is fully realistic should the current policies continue, should there be no appearance of political will and wisdom in order not only to break apart the system, but to bring into existence something new which will help begin to rebuild.

What must be done to break from this hopeless situation to one of hope?

A manoeuvre by the center toward a social policy is vital. The crux of the policy must be a mix of the most basic functions of a social welfare system and the instruments for their realization, plus the financial resources at a regional level.

The transfer of the center of gravity of the most difficult social policy question to local organs of power is in a certain sense natural. Decentralization of this system of social welfare of the population promotes the augmentation of its targeting, i.e., its orientation toward the demands of concrete groups, and differently used instruments of social policy depending on chosen orientations,priorities and specific territories. That raises its efficiency. The redistribution of functions among local organs of power, different social organizations of workers, and the financial sources of the social programs play a role in the

realization of a working normative base. All this implies a well thought out consistent policy and the availability of time.


However, until now the central power practically has been merely throwing these social functions down to the local level. The local powers are not prepared to accept the full volume of these functions as they are connected with the population, social stability of each region, and in the final tally, with the political stability of each region. They are beginning to look for any way out of the current situation; from a full refusal of the social programs to unprepared forms of social protection with the necessary financial resources. Regional social policies, instead of specifically directed and goal oriented ones, acquire spontaneous characteristics. The government social policy as a way of realizing the entire interests of the nation, and the preservation of its integrity of its socio-cultural traditions is not being formed. All the same, the worsening situation gives witness to two qualitatively new events. First, there is becoming felt a limit to the regional capacity for social policy, and this correspondingly traces out its contours at the federal level. Secondly, local organs are working and establishing their own models of regional social policies and their own mechanisms depending on the peculiarities of each region.

A conscientious organized redistribution of social functions between federal and local powers means the beginning of a dialog between the center and the representatives of the regions regarding the spheres and forms of their cooperation. At the the base of this process must lie a policy of social agreement. The subjects of such an agreement might be:

-- Problems in the formation of a single labor market, including federal laws in the matter and the decisions of the administration of the plan to convert defence branchesand state enterprises, and mechanisms of regulating internal and interregional migration.

-- The division of power of the center and local powers in the area of regulating incomes, including the limits to the regulation of wages, the creation of a minimum wage level, and a mechanism for indexation of wage pensions and benefits.

-- The demarcation of free social programs in the area of health care, education and social services.

-- The articulation of protection of items in federal and local budgets, tied to financing for the social sphere.

-- The formation of federal reserves on the most important programs and mechanisms of control and disposal of them.

Reconsidered directions can be added to and clarified depending upon the interests of the regions and the peculiarities of the specific instances. The important policy task of the center is to interrupt the spontaneity of the process, and bring in organized controls.

The important conditions for the continuity of this dialog, and accordingly the policy of the center, is the legal and financial formation of achieved agreements. That means:

-- The transfer of resources to localities along with new responsibilities.

-- The sharing of expenses according to items in federal and local budgets.

--Clarification in the matter of diversion of functions in the sphere of federal taxes for social programs and reorientation to local social programs.

It is possible that with the purpose of speeding up the creation of standard bases and the development of institutions and the increase in the activities of federal administration, it is expedient to grant it the right to make decisions, in spheres such as the legal regulation, before the actual manifestation of the appropriate law.

Thus, it is possible, and in our eyes vitally important, that the center take steps to create a new social policy. But for that, one must accept what is happening.


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