Pikalyovo and Other Monocities to Receive Kremlin Rescue

The government has chosen criteria under which 400 towns and cities that rely almost exclusively on one employer will be eligible for 10 billion rubles ($315 million) of state assistance next year.

Prime Minister Vladimir Putin ordered the government to develop a plan to help the cities, known as monogorody, after workers in the Leningrad region town of Pikalyovo blocked a federal highway to protest wage arrears.

Under the criteria, more than 400 settlements qualify as monocities, but not all of them will get help, one of the Regional Development Ministry sources said.

"Cities with atomic or hydropower stations, oil and gas towns, closed and scientific cities, and all exporting cities are in normal economic shape," he said, adding that the government expected to provide aid to about 200 cities.

Pikalyovo: Case study of a 'monocity'

Pikalyovo is a town in the Leningradskaya Oblast about 200 kilometres from St Petersburg, with a population of about 22 thousand. Before the onset of the economic downturn in 2008 about 5000 of these were employed at one of Pikalyovo’s 3 major plants.

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The most recent transformation of what had once been a standard piece of soviet era economic planning began with the purchase of the Pikalyovo aluminuos plant by Oleg Deripaska’s Basic Element in 2007 to become BaselCement – Pikalyovo. In 2008 the towns two other key plants, Metakhim and Pikalyovo Cement, halted operations because they could no longer get the necessary raw materials from BaselCement – Pikalyovo. 2009 has seen Pikalyovo Cement partially restore its operations free from reliance on BaselCement – Pikalyovo, which is still closed, along with Metakhim. The shutdowns have meant the redundancy of an estimated 1500 employees, with a further 2500 estimated to be working a shortened week, or on unpaid holidays.

In June, residents of Pikalyovo have protested more than once against local authorities, seeking heating for local social institutions, including hospitals and kindergartens.

The protests drew a visit from Russian Prime Minister, Vladimir Putin, on June 4. At a meeting attended by local government officials, representatives of plant owners, and workers the Prime Minister strongly criticized both the businesspeople running the plants – “I think, you made thousands of people hostages of your ambitions, unprofessionalism or maybe mere greed.”, and “where is social responsibility of business?” – and local authorities – “Nobody will convince me that the region’s administration has done its utmost to escape this.” – in the face of claims of salaries remaining unpaid, with locals reduced to impoverishment, and rising crime rates in the town.

“In the 90’s the problem of “monocities” was burning, then it went to a shadow, arising anew today.”

“As I see it, there should be federal statutory instruments obliging businesses provide for a due payment of salaries and social transfers for its workforce. Judicially, every owner of a business should sign a collective agreement with its workers for a year. According to this document, a businessman should provide an agreed salary at an agreed time by agreed means. He is to fulfill his market obligations first. He could use his own savings or some of his assets, but the money is to be there. Amazingly enough, in Russia a due payment of a salary is sometimes perceived as a kind of a social benefit, not a must. This is where we go absolutely different ways with the European countries.”