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.]