Return to: Index of "1994 Country Reports on Economic Practice and Trade Reports" ||
Index of "Economic and Business Issues" || Electronic Research Collections Index || ERC Homepage



                     Key Economic Indicators
           (Billions of rubles unless otherwise noted)

                                    1992       1993      1994 1/

Income, Production and Employment:

Real GDP (1990 prices) 2/            459        409       344
Real GDP Growth (pct.)               -12        -11       -16
GDP (at current prices) 2/        18,063    162,301   600,000
By Sector:
  Manufacturing                   10,068     88,087   157,888
  Services                         6,089     64,216   188,898
  Agriculture                        N/A        N/A       N/A
Real Per Capita GDP (1990 prices)  3,095      2,763     2,332
Labor Force (000s)                75,600     74,900    74,800
Unemployment Rate (pct.)             4.8        5.1       6.0

Money and Prices:  (annual percentage growth)

Money Supply (M2)                    743        480       324 3/
Central Discount Rate 4/              80        210       170
Personal Savings Rate 4/              16         26        39
Consumer Price Index               2,501        840       104 3/
Exchange Rate (USD) 1/               415      1,247     2,204 5/

Balance of Payments and Trade:  (millions of U.S. dollars)

Total Exports (FOB)               39,972     46,300    48,200
  Exports to U.S.                    500      1,700     2,800
Total Imports (CIF)               34,984     34,300    33,200
  Imports from U.S.                2,100      3,000     2,600
Aid from U.S.                      2,380      1,700     1,625
Aid from Other Countries             N/A        N/A       N/A
External Public Debt 6/           87,000     83,700    85,000
Debt Service Payments (paid)       1,815      2,000     4,700
Gold and Foreign Exch. Reserves    3,014      5,875     4,100 5/
Merchandise Trade Balance          4,988     12,000    15,000
  Trade Balance with U.S.         -1,600     -1,300      -200

N/A--Not available.

1/ Figures are from the State Statistical Committee
(Goskomstat) and U.S. Embassy estimates.  The rapid
depreciation of the ruble over the past four years makes it
meaningless to delineate this data in dollar terms.
2/ GDP at factor cost.  1990 GDP was 644 billion rubles.
3/ First eight months, not annualized.
4/ Figures are actual, end of period.
5/ As of September 1, 1994.
6/ Russian officials have recently quoted debt stock as high as
$112 million in 1994.  However, this figure includes debt to
former Soviet Union countries and is generally not included in
Russia's hard currency debt stock. 

1.  General Policy Framework

    The Russian Federation (Russia) is the largest of the
republics of the former Soviet Union and also the wealthiest,
with oil, timber, natural gas, minerals, and fertile soil. 
After the collapse of the Soviet Union in October 1991,
however, Russia was left with serious economic problems
stemming from decades of a planned economy and the disruption
of its traditional commercial and industrial ties.  This was
compounded by sharp cutbacks in defense spending and an influx
of foreign competition, particularly in consumer goods, at very
low import tariff rates.  Real GDP fell by 19 percent in 1991,
12 percent in 1992, 11 percent in 1993, and a projected 17
percent in 1994, for a cumulative decline of 47
percent--greater than that experienced by the United States
during the Great Depression.  However, Russian statistics fail
to capture much of the emerging private sector activity, and
thus overstate the decline.

    The "ruble zone" of the states of the former Soviet Union
collapsed in 1993.  Following the July 26, 1993 Central Bank
decision to withdraw old ruble notes from circulation, other
republics of the Commonwealth of Independent States (CIS) moved
to establish their own currencies.  This helped bring the ruble
under control of the Central Bank of Russia (CBR) and reduced
inflationary pressures from other republics.

    Massive government credit emissions in 1992 and 1993
produced a surge in inflation, leading the Central Bank to
raise the discount rate to 210 percent and tighten issuance of
credits in 1993, achieving a monthly inflation level of 15
percent by the end of that year.  In 1994 the discount rate was
gradually lowered to 130 percent as inflation fell to 4 percent
monthly in August, rising sharply to 15 percent in October
after the ruble's crash.  The CBR interest rate was increased
to 170 percent in October and then to 180 percent in November. 
The government aims at a monthly inflation rate of five to
seven percent by the end of 1994.

    Despite falling demand for their products, Russian
enterprises continued to borrow money either to maintain the
work force or for speculative investments.  State subsidies and
cheap government credits, massive during 1992 and 1993,
declined in 1994 but remain significant for agriculture,
defense and the northern territories.  Widespread failure of
enterprises and the government to pay for purchases produced a
chain of inter-enterprise arrears which remained unresolved in
December 1994.

    Russia's mass privatization program utilized individual
vouchers issued to each citizen in its first phase from October
1992 through June 1994.  According to the State Property
Committee, 70 percent of Russian enterprises are now in the
non-state sector.  The majority of enterprises were privatized
under the so-called "option two," through which enterprises
managers and employees purchased 51 percent of the shares. 
Local state property committees, the central State Property
Committee or federal government ministries typically retained a
significant interest (up to 30 percent of the shares).  The
remaining shares were auctioned publicly for vouchers (through
June 1994) or cash, a process in which foreign investors were
able to participate.  Under the second phase of the
privatization program, enacted by a July 1994 presidential
decree, the remaining 30 percent of state enterprises will be
privatized for cash, primarily through auctions and tender
offers, aimed at attracting foreign investment.  The remaining
shares in privatized firms still held by the government will
also now be sold.  The privatization in this phase will include
the land on which enterprises are located. 

    The right of Russian citizens to own, buy and sell, lease
and mortgage land was established by presidential decree in
October 1993 and is protected by Russia's constitution,
although Russia still lacks a comprehensive law on land
ownership to implement these rights.  Beginning in 1992, the
government formally shifted ownership of land and property to
workers and pensioners of state and collective farms.  All farm
land and other property is now in one of several forms of
private ownership.  The 1993 presidential decree established
the right of farm workers wishing to leave the collective to
receive their share of farm property or monetary compensation. 
So far about 300,000 individual farms have been established,
but Russian agriculture is still dominated by the former
collectives, which own over 90 percent of arable land and
produce over 90 percent of the country's total agricultural

    The 1994 federal budget, which was approved by the
parliament in June 1994, called for a budget deficit of 70
trillion rubles, or roughly 9.6 percent of projected GDP.  The
actual federal deficit reached 11.8 percent of GDP in the first
three quarters of 1994, and is unlikely to fall below 10
percent of GDP by the end of the year.  The majority of the
deficit (76 percent) in the first three quarters of 1994 was
financed by credits of the Central Bank of Russia at
below-market rates.  The remainder of the deficit was financed
equally through government bond offerings and foreign credits. 
The government's draft federal budget for 1995 calls for zero
Central Bank monetary financing of the projected deficit of 7.8
percent of GDP.  The government intends to finance 60 percent
of the 1995 deficit through government securities' offerings
and 40 percent through foreign credits.

    Due to lower than expected inflation and GDP and optimistic
revenue assumptions, budget revenues for 1994 were down 43
percent from that projected in the 1994 budget law.  In
response, the government undertook large scale expenditure
sequestration in an attempt to keep the budget deficit under 10
percent of GDP.  Actual revenues for 1994 can be broken down
into tax revenue (70 percent), revenue from foreign trade and
foreign operations (10 percent), and non-tax revenue (20
percent--mostly income from the sale or use of government

    Nearly half of Russia's 1994 exports by value were
concentrated in energy and another quarter in raw materials. 
Trade with industrialized countries in 1994 comprised over 70
percent of total Russian exports and nearly two-thirds of total
Russian imports in nominal terms; each was up about 20 percent
from 1993 levels.  Trade with former Comecon countries,
developing countries, and the Baltic states continues to fall,
and remains at a fraction of Soviet-era levels.

    Russia has several trade agreements with CIS states
involving barter or guaranteed delivery of specified
commodities, and is in the process of creating a customs union
among CIS states.  Russia has agreed to a free trade zone with
Belarus.  A Partnership and Cooperation Agreement signed with
the European Union in 1994 awaits ratification.  Russia has
declared its intention to accede to the GATT (General Agreement
on Tariffs and Trade), and is a member of the World Bank and
the International Monetary Fund (IMF).  The U.S.-Russian Trade
Agreement of June 1990 provides mutual most-favored-nation
(MFN) status.  The U.S.-Russian Bilateral Tax Treaty, effective
from January 1994, eliminated double taxation of U.S. citizens
and firms.  The U.S.-Russian Bilateral Investment Treaty,
signed in June 1992, awaits ratification by the Russian

2.  Exchange Rate Policy

    The Central Bank of Russia quotes a daily official unified
ruble exchange rate in dollars and several other hard
currencies, based on market exchange rates determined in daily
auctions held at the Moscow Interbank Foreign Currency Exchange
(MICEX), a private corporation where the bulk of on-exchange
hard currency trading occurs.  Auction markets are also
organized in St. Petersburg, Yekaterinburg, Novosibirsk,
Vladivostok, Rostov-on-the-Don and other major cities.  The
Central Bank intervenes on the MICEX and other exchanges, as
well as on the larger interbank market outside the auctions, to
smooth currency rate fluctuations and regional supply
distortions.  While relatively little trading actually occurs
on-exchange, the markets are important in setting official
prices since CBR intervention occurs there.

    The ruble depreciated against the dollar in nominal terms
from 1250 to 2200 rubles per dollar but appreciated slightly
against the dollar in real terms between January and August
1994.  It then took several sharp falls in September and
October and, after recovering with the help of extensive
Central Bank intervention, declined gradually to 3250 rubles
per dollar by the end of November.  Central Bank reserves
before the October crash stood at 4 billion dollars.

    Exporters are required to convert into rubles 50 percent of
export earnings at the free market rate.  Through a system of
"passports" recording all export transactions, the commercial
banking system cooperates with official efforts to monitor the
repatriation of export earnings.  Purchases of property,
transfers of capital abroad, and foreign borrowing of resident
juridical persons require authorization of the Central Bank. 
Without Central Bank permission it is illegal for Russian
companies or citizens to maintain bank accounts outside of
Russia for purposes other than operating expenses. 
Non-residents can open individual ruble accounts and commercial
ruble accounts for servicing foreign trade operations and for
investment.  Both citizens and non-residents can maintain
domestic hard currency accounts.

3.  Structural Policies

    Russia's rudimentary antitrust law was implemented in
December 1993 by presidential decree.  A November 1993
presidential decree requires larger companies to establish
stock registries to record ownership in the company.  The
government is preparing securities and brokerage legislation
and a commercial code, part of which is encompassed in the
recently adopted civil code.

    By the end of 1994, prices had been freed on virtually all
wholesale and retail goods, and the government planned to free
prices on oil (roughly one quarter of the world market price at
the time) and oil products in 1995.  In November 1994 the
government preliminarily approved a policy to restrict the
number of products and services subject to federal controls to
natural gas, utilities, freight and passenger rail
transportation, precious metals and diamonds, airport services,
and postal, telephone, radio and television communications.

    A new tax code is in preparation to replace the obsolescent
one of December 1991.  Taxes are confusing, constantly revised
and inconsistently applied.  Currently all major taxes are
collected by a single federal agency and divided between the
center and regions according to a revenue-sharing formula,
although much ad hoc bargaining still occurs.  A 23 percent
value-added tax (VAT) is imposed on Russian and foreign firms
conducting commercial activities in Russia.  Corporate profits,
taxed at a rate of 32 percent in 1993, were taxed at 13 percent
on the federal level and up to 25 percent by the regions in
1994.  Personal income tax rates in 1994 ranged from 12 percent
through 30 percent.  Wages were subject to social security
taxes totalling 39 percent.  A 38 percent tax is levied on
"excess wages" (above the equivalent of $38 per month as of
November 1994).  Russian-sourced "passive" income earned by
foreigners is subject to a 15 percent withholding tax on
dividends and interests and a 20 percent tax on royalties and

    The rate of excise tax on imported goods differed
considerably from the rate on domestic goods and was assessed
on a different basis at the end of 1994, although an April 1994
decree requires that the two systems be unified.  Import taxes
have risen steadily over the past three years.  The latest rise
in July 1994 doubled duties on average across the board and
raised the average weighted tariff to about 15 percent ad
valorem, with some duties well above 30 percent.  These have
affected U.S. exports including aircraft, automobiles and
confectionery.  The tariff law promulgated in July 1993
establishes types of duties and provides for establishing
preferential tariffs on a reciprocal basis.

    All enterprises above 100 million rubles capitalization
($80,000 as of December 1993, $30,000 as of December 1994) must
be registered with the government, which can involve extensive
delays.  Noncompetitive bidding is sometimes used to award
contracts for very large government projects involving natural
resources.  Cases exist of tenders awarded to U.S. companies
being subsequently revoked by the government in the interests
of domestic competitors.  An established and transparent set of
regulations regarding bidding is lacking, but a law on
concessions for development of raw material reserves, as well
as a production-sharing agreement regulating oil export rights
are in preparation.

    Export taxes, introduced in 1992 because of vast
differentials between domestic and international prices, were
gradually lowered in 1993 and 1994 and are applied to a
diminishing list of commodities, primarily oil and oil
products, natural gas, certain non-ferrous metals, timber and
wood products, some fertilizers, rare fish and fish products. 
Special agreements with certain CIS countries, notably Belarus
and Ukraine, further reduce or waive these export taxes.  Oil
exports by some joint ventures have been exempted from the
export tax.

    Annual quotas and licensing of exports of "strategically
important" commodities (e.g. gas, oil, metals, fertilizers,
timber), which were designed to limit export volumes and
support prices beginning in 1992, were abolished in July 1994
except for oil and oil products (until January 1995) and
commodities subject to international agreements.  The right to
export these commodities remains limited to about 500 "special
exporters" certified annually by the Trade Ministry.  Since the
abolition of quotas and licensing, all export contracts for
"strategically important" commodities still require
registration with the Trade Ministry, which has proposed
extending this system to all exports.  The Trade Ministry also
is abetting the formation of industry-specific cartels called
"unions of exporters," nine of which exist so far, to
collectively maintain export prices of "strategically
important" commodities and prevent antidumping actions.

4.  Debt Management Policies

    Russia and the other former republics of the USSR agreed in
October 1991 to become "jointly and severally" liable for the
Soviet foreign debt.  Russia's share of the debt was set at 61
percent.  Russia subsequently reached agreement with the other
republics to manage or assume liability for their respective
shares of the Soviet debt in exchange for their relinquishing
their respective claims on Soviet assets.  Russia has reached
agreement with Ukraine on debt repayment.

    Russia has succeeded in gaining significant temporary
relief from its debt burden during the transition to a market
economy.  An April 1993 agreement with Paris Club creditors
rescheduled virtually all of Russia's official bilateral debt
arrears and maturities falling due in 1993.  The United States
and Russia in October 1994 signed a $900 million debt
rescheduling agreement, formally putting into effect the Paris
Club rescheduling accord reached in June between Paris Club
official creditors and Russia.  The Paris Club agreed to
reschedule $7 billion in official debt owed by Russia in 1994,
thus easing the repayment burden.  A preliminary agreement with
the London Club of commercial creditors followed in October,
but a final agreement was still pending as of the end of 1994.

    Russia's total external debt to Western creditors is
approximately $85 billion, of which half is owed to governments
 (Paris Club), a third to commercial banks (London Club), and
the remainder to foreign exporters.  Servicing of the debt in
1994, after rescheduling, was about $4.7 billion.  In order to
ensure control of contracting for new foreign lending, the
Russian government has formed an inter-ministerial committee to
limit the amount of borrowing, and the parliament has imposed
the requirement that it must approve new Russian government
loans exceeding $100 million.  The Russian government claims
that it is owed $150 billion from Soviet-era deals.  Although
most of the debt will probably never be paid, Russia has begun
to arrange repayment from some countries in the form of goods;
approved traders may bid for the right to import these goods at
discounted prices.

    Russia became a member of the International Monetary Fund
in 1992 and made a first credit tranche drawing of $1 billion. 
In 1993, based on Russian efforts to limit credit expansion and
the budget deficit, the IMF approved a $1.5 billion drawing
under the new Structural Transformation Facility (STF).  Russia
did not meet its 1993 targets, but renewed stabilization
policies in the fall of 1993 opened the way for a second $1.5
billion STF drawing approved in the spring of 1994.  Russia is
engaged in negotiations with the IMF for a Standby Agreement of
about $6 billion.

5.  Significant Barriers to U.S. Exports

    The June 1993 Customs Code, which offers 15 alternative
regimes for handling external trade, standardizes Russian
customs procedures in accordance with international norms. 
However, customs regulations change frequently, often without
sufficient prior notice, are implemented unevenly, and are
subject to arbitrary application.  There is no journal similar
to the Federal Register which comprehensively covers changes in
standards and border restrictions.  In December 1993 the United
States and Russia implemented a 1990 Customs Mutual Assistance
Agreement (with the Soviet Union) which was replaced in
September 1994 by a new U.S.-Russian agreement.

    Russia's July 1993 Consumer Protection Law stipulates
official certification (by Gosstandart) of imported products
for conformity to Russian technical, safety and quality
standards.  Certification is based on a combination of
international (notably European Union) and Russian standards. 
All food items imported into Russia are subject to food quality
and safety standards and require a certificate for each
shipment.  Manufactured items can receive certificates allowing
import of a good over a three-year period.  Import licenses are
required on the normal range of dangerous and harmful materials
and goods.  U.S. companies have complained of costly procedures
and arbitrary certification requirements.  Russia is
establishing reciprocal standardization with the U.S. and other
countries and acceptance of foreign certification by accredited
institutions.  A joint Russian-U.S. communique of December 1993
pledges cooperation on improving and simplifying certification,
testing and quality assurance of U.S. and Russian products in
each other's markets.  A February 1994 memorandum of
understanding between the U.S. Food and Drug Administration and
the Russian Ministry of Health and Medical Industry established
a framework for cooperation and exchange of information on 
drugs and biological products in order to facilitate their

    Most service industries still require comprehensive
regulatory legislation.  Although little of Russia's services
legislation is overtly protectionist, the banking, securities
and insurance industries have secured concessions in the form
of presidential decrees.  In practice, foreign companies are
often disadvantaged vis-a-vis Russian counterparts in obtaining
contracts, approvals, licenses, registration and certification,
and in paying taxes and fees. 

    State procurement plays a limited and declining role for
non-defense industries, although production subsidies and
government grain purchases continue in agriculture.  A December
1993 decree abolished state agricultural purchases at fixed
prices.  The federal government has earmarked the equivalent of
$15 billion for purchase of Russian domestic aircraft to be
leased at a discount to domestic airlines.  Rail transportation
prices have been allowed to rise steadily over the past three
years but remain indexed to the cost of inputs.  The grain and
aircraft programs are supported from a government fund
equivalent to $5 billion.  The few remaining import subsidies
and centralized imports for nongovernment purposes were
eliminated in 1994, and the 1995 draft budget contains no
provisions for subsidized imports.  The U.S. Bilateral
Investment Treaty with Russia would provide substantial
assurances to U.S. investments if the Russian parliament
ratifies it.

6.  Export Subsidies Policies

    The 1995 budget has no provisions for centralized purchases
for exports except military technology, coordinated through a
single state organization, Rosvooruzhenie, in accordance with
an April 1994 presidential decree.  The export of oil, oil
products and natural gas is still extensively centralized, and
provides a significant portion of federal budget revenue.  The
government auctions rights to conduct centralized exports of
"strategically important" commodities in return for waiving
export taxes, although such exports "for state needs" have
fallen short of targets due to diminishing margins between
domestic and international market prices.  Privatized former
Soviet foreign trade organizations continue to handle a large
share of exports.

7.  Protection of U.S. Intellectual Property

    In 1992-93, Russia enacted laws strengthening the
protection of patents, trademarks and appellations of origins,
and copyright of semiconductors, computer programs, literary,
artistic and scientific works, and audio/visual recordings.

    The Patent Law, which accords with the norms of the World
Intellectual Property Organization, includes a grace period,
procedures for deferred examination, protection for chemical
and pharmaceutical products, and national treatment for foreign
patent holders.  Inventions are protected for 20 years,
industrial designs for ten years, and utility models for five
years.  One must wait four years before applying for a
compulsory license.  The Law on Trademarks and Appellation of
Origins introduces for the first time in Russia protection of
appellation of origins and provides for automatic recognition
of Soviet trademarks upon presentation of the Soviet
certificate of registration. 

    The Law on Copyright and Neighboring Rights, enacted in
August 1993, protects all forms of artistic creation, including
audio/visual recordings and computer programs as literary works
for the lifetime of the author plus 50 years and is compatible
with the Berne Convention.  The September 1992 Law on
Topography of Integrated Microcircuits, which also protects
computer programs, protects semiconductor topographies for ten
years from the date of registration.

    Russia has acceded to the obligations of the former Soviet
Union toward the Universal Copyright Convention, the Paris
Convention, the Patent Cooperation Treaty, and the Madrid
Agreement.  In November 1994, the government gave authorization
for accession to the Berne Convention and the Geneva Phonograms
Convention.  Under the U.S.-Russian Bilateral Investment Treaty
(not yet ratified by the Russian side) Russia has undertaken to
protect investors' intellectual property rights.  The Bilateral
Trade Agreement obligates protection of the normal range of
literary, scientific and artistic works through legislation and
enforcement.  Still ahead are a comprehensive revision, now
underway, of the Russian Criminal and Civil Codes, including
sections pertaining to intellectual property rights;
strengthened penalties; and the establishment of specialized
courts, particularly a Patent Court, with trained and
experienced judges and attorneys, and trained police and
customs officers.  Legal enforcement of property rights has
been a low priority of the Russian government, as is evident in
the widespread marketing of pirated U.S. video-cassettes,
recordings, books, computer software, clothes and toys.

8.  Worker Rights

    a.  The Right of Association

    The right of workers to form or join trade unions is
guaranteed by the Russian constitution and the Russian Labor
Code, but full exercise of that right is limited in practice. 
The legacy of centralized economic management and communist
state trade union structure continues to retard the development
of a workers' movement and independent trade unions in Russia. 
Independent trade unions began to form in 1989 and continue to
develop slowly, but the official unions, reorganized as the
Federation of Independent Trade Unions of Russia (FNPR),
continue to predominate and remain subservient to enterprise
managers.  The right to leave an official union and join a new
one is guaranteed, but in practice many workers are reluctant
to take this step because official unions have retained control
over the social insurance fund, supported by a 5.4 percent
payroll tax and providing short-term disability, maternity,
leave, and annual leave benefits.  Most Russian workers have
little understanding of western concepts of worker rights and
do not view trade unions as their advocates.  The independent
unions have found it difficult to overcome this cynicism and to
educate workers about their rights and the role of unions in
protecting those rights.

    Russian law guarantees Russian workers the right to strike,
but numerous restrictions severely limit the exercise of that
right.  The law prohibits strikes which are for political
reasons, which pose a threat to people's lives or health, or
which might lead to "severe consequences."  This ambiguous
language has meant the de facto prohibition of strikes in key
sectors of the economy including defense, communications, civil
aviation, and railroads.  The law also requires a multi-stage
process of notification and negotiation before striking, which
gives employers ample time to coerce, intimidate or bribe
workers.  The Russian government has made little effort to
protect trade union leaders and strikers from retribution.  The
ambiguity of Russian labor laws provides employers with
opportunities to punish trade union members, and there were
numerous cases in 1994 of enterprise managers firing workers
for union activities.  However, free trade unions have had
increasing success obtaining favorable verdicts in labor
violations suits in the Russian courts.  With U.S. government
assistance, the free trade unions have established two labor
law centers in Russia to help free trade unions defend their

    b.  The Right to Organize and Bargain Collectively

    Collective bargaining is protected by Russian law but is
not practiced widely in Russia.  Many enterprises refuse to
negotiate collective bargaining agreements, and many agreements
are not the product of genuine collective bargaining, given the
subordinate relationship of official unions to enterprise
management.  Free trade unions have been more aggressive in
demanding genuine collective bargaining.  Enforcing management
compliance with contracts remains problematic.  In several
sectors of the economy, wages, benefits and general conditions
of work are established by industry-wide tariff agreements
reached in talks between trade unions, management and
government.  This arrangement reinforces the traditional
tendency of Russian workers to expect the government to
establish wages and other workplace conditions.

    c.  Prohibition of Forced Labor

    Russian law prohibits compulsory labor, and there were no
reports of its occurrence in 1994.

    d.  Minimum Age for Employment of Children

    The Labor Code does not permit the regular employment of
children under the age of 16.  In certain cases, children aged
14 and 15 may work in intern or apprenticeship programs.  The
Labor Code regulates the working conditions of children under
the age of 18, including prohibiting dangerous work and
nighttime and overtime work.  Government enforcement is largely
ineffective, and there is anecdotal evidence to suggest that
the protections for children under 18 are violated.  The
responsibility for the protection of children at work is shared
by the Labor Ministry and the Ministry for Social Protection. 

    e.  Acceptable Conditions of Work

    The Russian legislature sets the minimum wage, which
applies to all workers.  The minimum wage in Russia ranged
between $5 and $10 per month during the second half of 1994,
but the average salary was about $100.  The primary purpose of
the minimum wage is to serve as a baseline for computing
benefits, pensions and some wages scales.  For example, the
wage scale for government workers, who are among the
lowest-paid in Russia, is based on a multiple of the minimum
wage.  The labor code provides for a standard workweek of 40
hours, which includes at least one 24-hour rest period, premium
pay for overtime or holiday work, and minimum conditions of
workplace safety and worker health.  However, these standards
are widely ignored and government enforcement of safety and
health regulations is inadequate.  Industrial deaths and
accidents continue to rise dramatically in Russia.  The Labor
Ministry reported that 30 Russian workers die and another 50
are injured each day as a result of workplace accidents.

    f.  Rights in Sectors with U.S. Investment

    In the petroleum, food and telecommunications industries
where U.S. investment is significant, observance of worker
rights does not differ markedly from other sectors.  The
petroleum and telecommunications sectors are highly unionized,
but the official unions predominate.  The food sector is less
unionized but working conditions there are no worse than

  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
              Category                          Amount          

Petroleum                                             227
Total Manufacturing                                    -3
  Food & Kindred Products                    -1
  Chemicals and Allied Products               0
  Metals, Primary & Fabricated                0
  Machinery, except Electrical              (D)
  Electric & Electronic Equipment             0
  Transportation Equipment                    0
  Other Manufacturing                       (D)
Wholesale Trade                                         2
Banking                                                 0
Finance/Insurance/Real Estate                           0
Services                                                3
Other Industries                                      (*)
TOTAL ALL INDUSTRIES                                  230      

(D) Suppressed to avoid disclosing data of individual companies
(*) Less than $500,000

Source: U.S. Department of Commerce, Bureau of Economic

To the top of this page