Thursday, June 11, 2009

Russian town revolts due to lack of jobs

We found this unique look at how the global recession is effecting small towns in Russia from Time Magazine.

The town of Pikalyovo has rampant unemployment after the local cement factories closed down. People there took to the streets to protest over never receiving back pay. The protest got Vladamir Putin's attention, and the Russian government is taking steps to make sure more protests don't occur in the country.

From Time Magazine, reporter John Wendle gives us the story of the Pikalyovo.

For three months, Pikalyovo's citizens had been living in crippling poverty after the town's recession-hit cement and brick factories started closing down. Thousands of workers were laid off and almost overnight nearly 25% of Pikalyovo's 20,000 residents were unemployed. After making several pleas to their employers for back pay — at one point crashing a meeting at the mayor's office to demand their jobs back — the workers turned to desperate measures. On June 2, they staged a strike along a major highway linking the city of Vologda to St. Petersburg, blocking the route for hours. Finally Moscow took notice and Prime Minister Vladimir Putin flew in by helicopter to force local politicians and factory owners to pay the town's workers the money owed to them. Now Pikalyovo's shops, cafes and banks are doing good business again, but as the recession sweeps across Russia, small single-industry towns all over the country are just one factory closure away from suffering the same plight. (See pictures of Putin.)

"You wouldn't have seen anything like this — people were fed up and angry," says Alexander Plush, 41, another former factory worker standing in line at the ATM. Plush had worked for 17 years at one of the Pikalyovo's cement factories until it closed a few months ago. "Before we got paid, people were living on bread and water and the food they could grow in their gardens this early in the year," he says.

The situation was so bleak that, according to Russian media, people in Pikalyovo were forced to eat wild plants, while the city's hot water was shut off after residents couldn't pay their bills. When Putin came in to save the day, he saw PR potential in Pikalyovo's distress. During a nationally televised meeting in the town, the prime minister scolded local officials and factory owners, including billionaire tycoon Oleg Deripaska, a onetime Kremlin favorite whose investment company Basic Element owns the town's BaselCement factory. "You have made thousands of people hostage to your ambitions, your lack of professionalism — or maybe simply your trivial greed," Putin said.

Yet even Putin's harsh words and the disbursal of pay have not put an end to the feeling here that the crisis will continue. "It's unlikely the situation will change. Receiving our pay was a small gesture, a short-term solution," says Denis Yershov, a former employee at the local electricity plant who helped block the road last week. "I'll be happy when we have work again. I'll be happy when we have stability and I'm able to feed my family."

Yershov's sentiments — and those of nearly everyone else TIME spoke to in Pikaylovo — are playing out at checkout counters in shops all over town. "People are only buying the cheapest brands. It's like they don't believe the change will last," says Oksana Gavrilova, a staunch Putin supporter who had worked at the EuroCement factory for eight years before she was laid off. Leaning down into a nearly empty cooler to grab a kielbasa, she says, "Without the factories, Pikalyovo is nothing."

And she is right. Pikalyovo is one of hundreds of cities across Russia whose populations are supported by just one factory or one industry. If that factory or industry is wiped out by the global economic downturn — as Pikalyovo's was when the price of cement dropped and Deripaska's company Basic Element put half of its workforce on forced leave — the whole town is sent into a tailspin

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