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2.7. Social Services and Culture

The expenditure appropriated under the 1999 consolidated budget for social services and culture amounted to 6.1 per cent of GDP as compared to 6.5 per cent in 1998. Expenditure on education fell by 6 per cent in real terms. Appropriations for health care actually did not change in real terms, and those for culture and the mass media went up by 10 per cent and 16 per cent, respectively.

Table 1

Government expenditure on social and
cultural services (1991 = 100 per cent)

	1991	1992	1993	1994	1995	1996	1997	1998	1999
Health care Of which	100	80	108	98	72	71	81	67	67
Government budget	100	80	91	81	59	57	65	51	51
Mandatory corporate insurance oremiums	-	-	17	17	13	14	16	16	16
Education*	100	79	79	76	56	58	64	52	49
Culture, arts and mass media*	100	91	81	87	63	54	60	46	51

*government budget expenditure.

Source: estimated from RF Statistics Agency data using GDP deflators.

Table 2

Government expenditure on social and cultural services
(in per cent of GDP)

	1991	1992	1993	1994	1995	1996	1997	1998	1999
Health care of which	2,9	2,5	3,7	3,9	2,9	3,1	3,7	3,1	3,0
Government budget	2,9	2,5	3,1	3,2	2,4	2,5	3,0	2,4	2,3
Mandatory corporate insurance oremiums	-	-	0,6	0,7	0,5	0,6	0,7	0,7	0,7
Education*	3,6	3,6	4,1	4,5	3,4	3,7	4,3	3,6	3,3
Culture, arts and mass media*	0,5	0,6	0,6	0,8	0,6	0,5	0,6	0,5	0,5

* government budget expenditure.

Source: estimated from RF Statistics Agency data.

Budgetary Arrears in Social Services and Culture. Budgetary arrears in wages paid from budgets of all levels in social services were reduced by a factor of above 2.7 through 1999, including 2.7 in education, 2.9 in health care, and 2.5 in culture. While the government cleared its debts in education from the budget by February 1999, arrears of regional and local budgets continued to be high. To resolve this problem, the government persuaded regional governments to allocate at least 40 per cent of their territories’ own revenues, including federal transfers, to pay wages to employees in budget-dependent industries. This option allowed wages to be paid monthly and accumulated arrears to be cleared in education. In June and July, however, the budget fell deep into wage arrears again, because, in the first place, of the regions having started at exactly that time to repay the loans they had received from the budget, as was provided for in the agreement with the IMF. Beginning in July, the Russian Ministry of Finance began gradually to reduce its transfers to the regions by deducting the loan sums due for repayment. This move had an immediate effect on the payment rate of budgetary arrears. Some other forms of budget loan repayments (such as set-offs or prolongation of loan repayment terms) had, probably, to be used to sustain the emerging trend toward reduction of arrears in wages. The situation improved in the second half-year, when budgetary arrears in wages paid in social services from budgets at all levels decreased by Rb1,480 million, or by 42 per cent.

On the results of 1999, however, social services remain the main sore point as far as wage arrears are concerned: they account for 61.2 per cent of all arrears, which amount to 32.5 per cent in education and 16.4 per cent in health care. Insufficient receipts of territorial budgets, lack of legislation on earmarked federal transfers, and the left-over principle used in financing social services are still the principal factors behind the continuing budget wage arrears in social services and culture.

Table 3

Dynamics of budgetary wage arrears for social
and cultural services в 1999

Budgetary wage arrears	as at 1.01	as at 1.02	as at 1.03	as at 1.04	as at 1.05	as at 1.06	as at 1.07
Total, in Rb millions of which:	20051	19371	18998	16958	15288	14571	14605
Social services	16675	15611	15135	13485	12088	11477	11555
o/w:
Education	5522	4794	4638	4008	3444	3250	3437
Health care	2920	2537	2346	1944	1663	1558	1610
Culture and arts	776	685	636	547	482	461	475

Budgetary wage arrears	as at 1.08	as at 1.09	as at 1.10	as at 1.11	as at 1.12	as at 1.01. 2000
Total, in Rb millions of which:	14995	13753	13692	13369	12358	10165
Social services	11881	10726	10683	8302	7725	6223
o/w:
Education	3506	2628	2641	2777	2597	2026
Health care	1825	1775	1795	1620	1412	1023
Culture and arts	502	458	450	436	400	312

Source: RF Statistics Agency

Strike Movement in Social Services and Culture. The strike movement in social services and culture peaked in January 1999, when more than 134,000 people employed in 5,000 educational institutions participated in strikes (or 98 per cent of all strikers). Their chief demands focused on economics and were precipitated by the continuing practice of delays in wages and by the vast backlog of wage arrears. The worst affected in this respect are the Altai Krai and the Bryansk, Smolensk, Chita and Orenburg oblasts.

Table 4

The strike movement in social and cultural services

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