28 april, 2012 13:40  

Prime Minister Vladimir Putin holds a meeting on the implementation of tasks formulated in his election article, “Building justice: A social policy for Russia”


“We may have different approaches to problems, but our common goal is to improve the quality of life in Russia, to make it more decent, comfortable and prosperous, to create conditions for resolving demographic problems so that we can have more children and more happy children, and to help people in trouble, people with special needs.”

Vladimir Putin At a meeting on the implementation of tasks formulated in his election article, “Building justice: A social policy for Russia”

Transcript of the meeting:

Vladimir Putin: Good afternoon, colleagues. Today we will continue discussing how to implement the priority goals outlined during the recent political campaign. I suggest focusing on social policy, which certainly plays the key role in everyone’s life, as we know. I won’t offer any platitudes now. We often discuss these issues at various levels. I would like us to focus on some practical approaches.

First, salary is the simplest and most important thing for nearly everyone. Let’s talk about the salaries in the social sector – doctors, teachers and other social employees. When skilled professionals take on several jobs and work overtime and the government has to somehow legalise this situation – although we know that this affects work quality – this is not the best way to resolve social issues for either the provider or the recipient of a service. I will not speak in detail about this, [because] we will address this issue later today.

The second issue I’d like to suggest for our discussion is support for large families. It is a fact that demographics is a serious problem in this country and, in fact, many other countries, especially our European neighbours.

Russia is not an exception in this respect, and if we want to resolve this issue, it is not enough– although it is very important – to support women and couples who decide to have a child, and then a second and a third child, by issuing them certificates, vitamins and so on. We have many ways to assist at this stage, but what happens when the children are born? The number of openings at kindergartens and a families’ income – this is what we need to consider

I wrote in one of my articles that at this stage we should support the families who have decided to have a third child. Of course, this should be direct support granted to those who need it, as we’ve said more than once. This is a good approach and absolutely justified socially. Assistance should go first to families in regions with negative population growth and to low-income families that need our support.

This is what we’ll discuss today, along with what we decided before, to allocate land plots [to large families]. We have allocated 7,763 land plots and plan to issue another 31,000 plots in 2012. But this is not enough, and we know it. We should motivate the regions to help provide infrastructure for these plots, because otherwise using them will be impossible and people will start selling them and at least get some money. The value of such land plots may vary from region to region, but selling them is not a long-term solution anyway, as we see it.

The third issue I would like to highlight today concerns employment for people with disabilities. This is a very important issue. You know that we have millions of disabled people and the overwhelming majority of them want to and can work, which is important. For example, nearly 4.5 million of the more than 13 million Russians with disabilities are people of employable age, yet only slightly more than one million of them have jobs. As I have said, this is not because they don’t want to work – they do. Last year, 272,000 people with special needs sought the assistance of employment services, but only 85,000 of them were offered jobs.

Of course, employers should change their attitude towards this issue, but shifting the responsibility for finding employment for the disabled entirely to business would be the wrong approach. The cost of one special workplace varies from 30,000 to 430,000 roubles. We should consider and discuss ways and steps to support those businesses and employers who really want to join our efforts to help people with special needs, to offer them employment, especially because these people – I know this for myself having been to such facilities – these people work not only willingly but also efficiently.

These are the issues I would like us to discuss today. Of course, we will address any other issue you consider important in this sphere.

Let’s get down to work. Please, Ms Golikova (Tatyana Golikova, Minister of Health and Social Development).

Tatyana Golikova: Mr Prime Minister, colleagues. We have prepared a small presentation; it consists of three aspects that Mr Putin has outlined as key issues for our meeting today. It would be logical to start with the first issue – salaries.

I will begin with the salaries of doctors, nurses and low-grade medical personnel. Before talking about the details, I’d like to say the following: the adoption of the laws on mandatory medical insurance and on healthcare has divided the system into two levels – the state level in the regions, and the federal level, with healthcare facilities subordinated accordingly to regional or federal authorities.

I would like to say that the bulk of medical services in the regions are provided within the medical insurance system, which also have social facilities that provide medical assistance to patients with tuberculosis and AIDS and to drug addicts. The system is the same at the federal level, where the healthcare system has one more element – the provision of high-tech medical assistance.

With our legislation in mind, we are to gradually increase funding and to step up structural changes in healthcare within the next four years, by 2015.

In this connection, I would like to begin with the first slide that deals with the provision of personnel in the Russian healthcare system. I would like you to remember several figures on this slide, because I will also speak about them later.

We have nearly 523,000 doctors of various specialties – I will also speak about this later, including doctors working in sanitary and epidemiological inspection facilities and pharmacists, including those with a higher education. But there are also other medical personnel, to which I’d like to draw your attention. If you look [at the slide], you’ll see that this medical staff is considerably larger than the number of doctors, by almost 100,000. This is important to our discussion.

But clinical doctors, the doctors who directly help the patients, are the key medical personnel as regards the provision of quality and affordable medical assistance. Here is the situation – look at the second part of the slide.

In fact, we need 152,000 more clinical doctors. There is a shortage of doctors in outpatient clinics and too many doctors in hospitals.

As for nurses, the situation is complicated in both outpatient clinics and hospitals. We are still below the 1to 3 ratio, that is, one doctor for every three nurses. Our current ratio is 1 to 2.1.

As for shortages or redundancies, outpatient clinics primarily lack the specialists shown in part one of the second slide. I won’t read out the figures, but you can see that the shortages are substantial. As a rule, outpatient clinics lack specialists in narrow fields.

At the same time, hospitals employ too many of the specialists mentioned in the middle of the slide. But hospitals also lack specialists in such areas as anesthesiology, critical care medicine, oncology and phthisiology. Several Russian territories mentioned here face substantial disproportions in terms of human resource shortages or redundancies.

In this connection, when we don’t have enough doctors and medium-level medical personnel, then we must certainly assess our opportunities in the context of the possible retraining of those extra specialists working at hospitals. At the same time, we activate our available resource, namely, the students at higher medical education institutions.

That situation is as follows. In all, 23,600 future medical specialists are studying at higher medical education institutions at the expense of various sources, including budgetary and extra-budgetary sources. However, the estimates for 2012 show that about 20% of them will not be working in the medical profession. Consequently, the healthcare sector is to receive an estimated 18,900 specialists. Nevertheless, we have monitored the situation, and it turns out that many aging medical specialists are quitting their jobs. As a rule, this problem is linked with inter-district and rural communities, which have few young specialists. Local elderly specialists already have to retire.

Instead of merely eliminating human resources shortages, we must also create incentives to motivate our students to work in rural areas. This issue is highly important. Here is what we are doing and plan to do in this respect.

Under newly adopted legislative changes, the Ministry of Education and Science and we have approved a new educational standard for medical students on September 1, 2011. This educational standard envisions far more intensive practical training courses for senior students, beginning with the fourth year. We have already signed the order, which allows medical students who have completed a three-year course, to work as junior and medium-level medical personnel in their home communities or at any clinic of their choice, provided the opportunities are available.

This will reduce the problem and the tensions linked with medium-level medical personnel to some extent. Nevertheless, it will not drastically solve the problem with doctors, and we will have to take action and stipulate persuasive measures, so that students will go and work in remote communities.

Various states use similar practices. If a high school graduate wants to enroll at a medical college or university but has failed to score enough points, then the administration might agree to accept him or her and even to train them free of charge on the condition that he or she promises to work for three or five years in the northern territories or other sparsely populated territories. This deal would allow the students to receive their medical degrees and to work for some time periods later on. I believe that we should consider a similar mechanism.

We don’t have enough doctors, and this is a major problem. At the same time, you have already decided to provide financial support for the mandatory medical insurance system. Consequently, we should keep in mind that there is enough funding to pay doctors and medium-level medical personnel up to 2015 under the mandatory medical insurance programme. This is a cautious estimate.

Why am I saying that the Ministry of Finance and our ministry have reached consensus on providing additional funding for the mandatory medical insurance programme? Such funding will make it possible to raise wages by 24% in 2013, by 13% in 2014 and by 17% in 2015. Why am I talking about 2015? Because we see the 2015 period as a certain criterion when equal mandatory medical insurance rates and prices for non-working people will be introduced all over Russia.

We might face some problems with financial support after 2015. This can be explained by the fact that we will also need additional financial resources then. Slide No. 4 shows the estimated calculations in this area. With what can these financial resources be linked? The thing is that the mandatory medical insurance system encompasses three population categories: the economically active, children and senior citizens. The non-working population comprises children and senior citizens. Employers pay for the economically active and the regions pay for the non-working population.

Both payment categories amount to insurance premiums under the law. But employers pay twice as much for economically active individuals than what is being done for the non-working population. The latter is more expensive in terms of medical costs. Regarding this, many experts and analysts, including those affiliated with employers, have raised the issue of increasing payments for the non-working population, so they would be similar to those being made by employers for economically active individuals. But, considering the extremely high financial-support differentiation levels among the regions, we are in no position to accomplish such an objective quickly.

Nevertheless, we will have to re-examine the indexation of payments for the non-working population, I repeat, the non-working population, after 2015. This should be done either in 2014 or, better still, in late 2013 in order to facilitate the functioning of the mandatory medical insurance system. Frankly speaking, this is what the law says. We are not discussing the possibility of compelling employers to pay higher insurance premiums. This will allow us to solve the problem with salary increases for junior-level and medium-level medical personnel employed within the mandatory medical insurance system.

And now I would like to say just a few words about federal medical agencies. This situation seems to be more complicated, but in a sense it’s simpler.  The federal system of medical agencies is rather multi-faceted. This system comprises federal agencies and R&D institutes, which apart from treating patients  conduct research. Moreover, they provide high-tech medical assistance. Under the law, high-tech medical assistance remains an independent branch until 2015. After that, it will become part of the mandatory medical insurance system and will be covered by the appropriate rates and prices.

On the other hand, we have quite a few departmental agencies, which are primarily affiliated with law enforcement agencies and 27 federal executive agencies. All of them control medical agencies to a varying extent. This includes federal agencies and various academies, such as the Russian Academy of Sciences, the Russian Academy of Medical Sciences and their branches, etc.

In advance of this meeting, Mr Putin, we tried to figure out how much it would cost to bring wages up to the average regional level by 2018, taking optimisation measures into account. Obtaining data from the national security, defence and law enforcement agencies is still problematic, but some information of this kind has started to trickle in.

The important thing for us is to adopt uniform approaches. What I mean is this.

In line with your article and your subsequent comments on the issue, we are determined to double the average regional pay for doctors, higher-education teaching personnel, academics and scientists by 2018. But we understand that this is impossible unless we implement structural changes in any area, be it healthcare, education or science. But each of these areas is beset with problems of its own. I’ve mentioned personnel support. Mr Fursenko (Minister of Education and Science Andrei Fursenko) will possibly speak about something else.

As I said, we are introducing effective contracts, but the considerable pay rises will apply not to all, but only to their signatories. Slide 6 shows how this will work in practice. These figures are only benchmark estimates. So to reach this target, we’ll have to carry out a number of reforms.

To begin with, we must restructure the network. What does it mean? According to 2011 statistics, we have a 15% surplus of hospital bedspace on the national scale, this despite the existing personnel shortages and the fact that many doctors have to work in two or more jobs. The federal ministry and agency institutions, subordinate both to us and other agencies, should optimise the network’s organisational structure in the constituent entities of the Russian Federation. The important thing is extending high-quality and affordable specialised medical aid. Whether it is provided by a federal or local institution is of no importance. But this should certainly tally with sickness and mortality rates in the region.

To my mind, it’s high time we did away with parochialism and stopped drawing distinctions between federal and local institutions. It makes no difference for residents what medical institution – federal or local – their aid comes from. The principal consideration is its quality. Over the last two years, incidentally, we have been mostly modernising institutions in the constituent entities, bringing in personnel, equipment, and so on.

If we significantly increase pay, we should consider the so-called status benefits envisaged by the Labour Code – workplace hazards, additional holidays, shorter working hours – that take up about 22.6% of the gross payroll.

No one says anyone’s rights should be encroached upon. But if we want to boost the pay and make the transit to an efficient tariff, we must know how we are going to bridge the gaps. The current state of affairs is this. A doctor works for a small wage and has to take another medical job or two, equally low-paid, to make a living.

The main thing is, if we keep in mind the status benefits, to assess individual work places in the public sector. We launched this pilot project in 2011. If the assessment takes the right course, we might save about 45 billion roubles, which could be used to increase pay.

Finally, as I said earlier, the number of administrative and managerial staff is significantly higher than that of doctors. This must be optimised as well, to the point of authorising heads of federal or local institutions to impose a ceiling on this category of personnel.

As we consider pay-related matters, we must proceed from the assumption that we’ll maintain the due level of differentiation between the categories of staff – doctors, administrators, junior-level and medium-level personnel, and others. We have not discussed this issue with you, we’ve discussed it with the Ministry of Finance and with our colleagues from other ministries. We have no problem raising the pay by 200% before 2018 to the categories I’ve just mentioned. But there are other categories, such as medium-level personnel, and we have not discussed what their pay would amount to by 2018. We said that it should equal the average pay level in a region, which means a 100 percent increase, not 200.

You also urged for pay rises for college teachers. There is no final decision on this yet, but we suggest that by 2018 the increase should be between 100 and 125%, according to the regional level.

There is also junior-level staff and we, the ministry, propose an 80% rise.

What we mustn’t forget either is that our medical institutions and our educational institutions hire both doctors and teachers, who are paid a pittance. This is a small category, but they are in need of a pay rise as well, if we are to abide by the approaches we have been developing.

Yet another category is the social workers that we have mentioned. The Ministry of Finance has suggested what I see as an absolutely reasonable approach. Insofar as social workers fall within the purview of the constituent entities of the Russian Federation, the agreements on subsidies to the latter must include a clause that a certain amount thereof should be used for pay rises.

As for the final calculations, each federal agency responsible for this or that sphere has to crystallise all the data and we have to coordinate the final procedures. I think we will soon accomplish the work on the national scale. Where the constituent entities of the Russian Federation are concerned, if we go on with the course we have prescribed within the framework of compulsory health insurance, no additional inputs from the federal budget will be needed.

Thank you.

Vladimir Putin: Thank you very much.

But we’ll return to this subject again. Let’s listen now to what Mr Fursenko has to say on increasing the salaries of teachers at higher and other educational institutions. Please, go ahead.

Andrei Fursenko: The proposals on increasing the salaries of education workers are based on different mechanisms, depending on the level of education.

I’d like to start with schools, with secondary education. This project has been implemented for the most part, it was based on the mechanism through which federal subsidies replaced the spending obligations of the Russian regions related to modernisation, and the funds that were saved in this way went towards  increasing salaries.

Vladimir Putin: There's one detail here which I’d like to draw your attention to. I have spoken to governors about this many times. We say that the salaries of schoolteachers should be no lower than the average salary in the economy of a specific region. They agree with this and by the end of the fourth quarter the average salaries in some regions were equal to the average salary in the economy in the first quarter of the year. Well, this is still a small manipulation. Let’s work without those kinds of tricks.

I’d like to draw your attention to this fact and ask you to talk to your colleagues in the regions.

Andrei Fursenko: Mr Putin, from the very start we planned a certain time lag which was connected with…

Vladimir Putin: Listen, there will be a certain lag but this year the average economic salaries must match the average salaries of schoolteachers at the time we are discussing them and not in the first quarter.

Andrei Fursenko: I understand. Nevertheless, we are still implementing this project, albeit with some delay. The salaries of education workers are increasing at the same rates as the average in the economy. This never used to be the case. In this context, the majority of the regions are still managing to hit this target although admittedly with some delay.

We will discontinue allocating federal funds in 2013. Responsibility for further salary increases, at the same rates and with the same commitments will be fully transferred over to the regions.

We therefore propose to use the same mechanism for raising the salaries of teachers at other levels, at least some of them, for which the regions are responsible. In particular, I’m referring to preschool education.

In the first quarter of 2012 the average salaries of preschool teachers amounted to less than 14,000 roubles. In our estimate, by the end of the year they will rise no higher than to about 14,500 roubles without additional support.

A number of regions have already started expanding this project to include more categories of teachers for whom salaries are being raised, including preschool teachers. The Nizhny Novgorod Region for instance has done this.

It's been proposed that by the second quarter of 2013 the average salaries of preschool teachers in all regions should match the average salaries in the education sector for 2012. This is a big increase. We hope to raise them to 18,500 roubles, which is still not up to the average salary for the economy, but it's still a big step in the right direction. We think that this is the first step that can be made. But to make this happen we've suggested that part of the funds should be put into the State Programme on Education, by this I mean the same funds that could be allocated to the regions as subsidies under the same conditions.

In our estimate, all in all the regions will require about 30 billion roubles in 2013 and subsidies from the federal budget could amount to 15-20 billion roubles. It has been proposed that up to one third of these subsidies should be channeled into basic repairs and renovations and in some cases into co-funding of the construction of kindergartens in order to clear the waiting lists. If we do this, then in the next two years we will be able both to get rid of the waiting lists for places altogether and considerably increase the salaries of teachers at this level.

We have two more levels for which the regions are responsible: additional education where salaries are quite low. They are approximately the same as in kindergartens and you have set us the task of bringing them up to the same level as those of schoolteachers by 2015. In addition, we were instructed to get more children involved in additional education – three quarters of all children by 2017. This includes things like hobby groups, sports clubs and the like.

Therefore, since all this is due to start somewhere around 2014, we suggest making all the specific calculations now. We also propose that part of federal funds or subsidies should be channeled into this task to act as a catalyst for changes in the future.

The other level of education is primary and secondary vocational education. At present, 210,000 masters and teachers work in these institutions. They currently earn about 17,000 roubles. We propose to start increasing their average salaries from September 1, 2013 to bring them in line with the average salary for the region, which  means that by 2013 they will be around 26,000.

We propose that this issue should be resolved both by using regional budgets and by attracting funds from employers. In order to encourage employers to invest, under your instructions we have prepared a draft law that the money they invest into the development of primary and secondary vocational education could be exempted from profit tax.

Vladimir Putin: We have to think everything through thoroughly, make sure we get our figures right. But we all said, me included, that our goal is to match the average regional salary. We will be trying to encourage the regions and employers to raise salaries for those categories of teachers with the same level of qualifications as those in general secondary schools. There should be no one size-fits-all approach – we don't want wage-levelling.

Andrei Fursenko: In general we believe that as regards primary vocational education we should withdraw general education in schools and leave the highly-qualified professionals in place because the main goal is to prepare…

Vladimir Putin: These are details but the general approach is right.

Andrei Fursenko: Okay.

Now to higher vocational education. You have instructed us to raise the salaries of teachers in this area to the regional economic average from September 1, and by 2018 the average salaries of teachers at higher educational institutions should be…

Vladimir Putin: I was talking about incomes rather than salaries.

Andrei Fursenko: According to a study of salaries carried out by our ministry, the average monthly salary of professors and teachers in 2009 came to 16,000 roubles and in 2011 it was  21,000 roubles.

At the same time, at about 30% of the higher educational institutions which are accountable to us – 95 out of 316 – we included not only their salaries for teaching but also the basic average salary. The average salary has remained below the regional economic average. This applies mainly to Moscow and St Petersburg. As a rule, salaries in other regions are higher. This also applies to Khanty-Mansiisk but the difference there is not so great.

That said, in many higher educational institutions the ratio between the number of students per  teacher is much higher than what is considered acceptable. In some, it is  50-100% above the acceptable level. We propose to start increasing salaries of teachers and professors from September 1 and to raise them to 26,000 roubles – the national regional economic average. In our estimate, the entire system of higher educational institutions will require more than six billion roubles from the federal budget because these are federal institutions and we cannot start improving the entire network immediately. In other words, we must start doing this now but we won’t be able to raise all these funds immediately by means of optimisation.

We believe that from 2013 we have to find at least one third of all the funding by increasing efficiency. What do we mean by this? First, we have to increase the ratio of the numbers of students to one teacher by at least 50%. That said, a number of specialties should preserve individual standards (in culture, healthcare and the high-tech sectors). But let me repeat that according to our calculations on average this increase is possible.

Next, we have to consider the demographic factor of reducing the state-funded admission to university, which will become possible after the change in the law defining how many students are funded out of the federal budget. The budget currently pays for the teaching of 170 students per 10,000 people. We are currently obliged to pay for more than half of all school leavers out of the budget because the number of young people has  fallen sharply.

We have prepared and submitted a draft law on how this number should be defined. This means that 800 people out of 10,000 between the ages of 15 and 30 should have their higher education state-funded. So we can fund roughly the same number of school leavers as is currently the case but we won't have to fund practically every school leaver.

A limit has been proposed – no more than 40% of the salary budget should go towards paying the salaries of administrators, managers and support staff. This is what Ms Golikova has said. At present, less than half of all the salary budget goes towards paying professors and teachers. This is not right, especially when compared with other countries. We are resolving this issue in schools, by stipulating that they spend 30% on non-teaching staff and 70% on teachers. We believe the same approach should be adopted at higher educational institutions.

Next point, we have to take the other half of the necessary funding from sources of financing such as paid educational services (Mr Putin, you talked about revenues). At present, in the majority of higher educational institutions student contributions make up only about half of the amount contributed from the budget. Our goal is to make sure extra-budgetary payments for such services are at least equal to the funding from the state budget. In other words, they should be fully paid for. Otherwise, we are subsidising students out of the budget who should be paying full tuition fees.

In addition, the monitoring of the earnings of teachers in higher educational institutions has to take into account others sources of income such as from science and contracts with the real economy. Today, in some higher educational institutions these additional sources make up over half of their overall earnings but as a rule they do not include them in their earnings. The public therefore believes that their salaries are low whereas in reality they are on quite good money.

And, finally, the last point, a third of all funds for increasing salaries should come from the federal budget. In our estimate, at least 15 billion roubles will be required for this in 2013, 25 billion roubles in 2014 and so on.

We believe that on the one hand this approach will enable us to fully implement your instructions that salaries should be increased through a comprehensive reorganisation of procedures, while on the other hand these procedures need to be supported by real money. Our proposal is that budget funds should be allocated only to those higher education institutions which are implementing the first three projects – they are implementing real restructuring, and receiving additional funds from extra-budgetary sources on the one hand, and from science, on the other. If these conditions are met, the state should offer them support.

In any case we believe that we can meet the target in the time frame set, maybe even a little earlier.

Vladimir Putin: Thank you.

I propose we organise our agenda in the following way. Ms Golikova will discuss two other issues, and the Ministry of Finance will comment on all three problems we have agreed to discuss today. Please, go ahead, Ms Golikova.

Tatyana Golikova: Thank you, Mr Putin.

Please launch the second part of the presentation, on demography, on the birth of a third child. The first slide, please. This is the current situation with these positive indicators that have been accomplished. I won’t go into detail about the objectives, they’re listed on the slide; I’ll only talk about how we plan to proceed in the short-term. This is the second slide.

The regions must introduce these benefits and adopt the relevant legislative acts on families having three or more children. To this end the federal government must adopt a consumer basket law as a basis for calculating the subsistence level from January 1, 2013. This draft law has been prepared and will be discussed by the Russian tripartite commission.  

The intention is to extend this benefit to families with three or more children based on the subsistence level of a child and extend targeted payments, as you said, to those families with a lower per capita income than the existing per capita level in a given region.

This is our analysis. This data is for 2010. The Federal Service for State Statistics has no reported data on the regions for 2011 yet. However, we took those regions where the total birth rate (the number of children born per woman) is lower than average in Russia. We have 53 such regions according to the 2010 data. We based our calculations on an average payment of 7,000 roubles per child. There are variations though.

Vladimir Putin: This is European Russia, the Northwestern Federal District, part of the Volga Federal District and the Far Eastern Federal District.

Tatyana Golikova: We based our calculations on an average payment of 7,000 roubles per child, although the subsistence levels differ due to natural climatic conditions and living standards in each region.

Since this is the authority of each region, the Russian Federation undertakes a commitment to subsidise these benefits depending on the fiscal capability of each region. One proposal is to divide the 53 regions into three categories: the regions with a fiscal capability exceeding one unit; the regions with a fiscal capability of between 1 and 0.7; and those with the lower fiscal capability, that is, those needing higher subventions. For these regions, we have proposed a specific level of federal budget subventions.

Based on these estimates, we have concluded (see the third slide) that year by year we will need the following federal allocations and total expenses. These are only assessment indicators, nevertheless these indicators are based on expert demographic assessment estimates that our measures will provide a 17-20% increment for a third and subsequent births in the specific period until 2018 compared against 2012, or 924,400 children in this period.

Based on this approach, in 2013 (in the first three-year period) we will need to allocate 4.5 billion roubles from the federal budget; in 2014 – 13.1 billion; and in 2015 – 21 billion roubles. It is noteworthy that in 2016 the benefit should stabilise and should begin to decrease.

If we… O, yes, there is one more measure that you mentioned in your article; that is professional training and retraining of women with children under three years old. This is a very important measure. I will just cite some figures. 

There are currently 3.9 million women with children under three years, and 1.5 million women with children under 18 months. Of these, 548,000 women are unemployed. These are the current statistics. About 354,300 women want to work before child care leave ends, however only about 30,000 women can afford a babysitter for a child under three. This is the monitored data.

Based on these approaches (I’m just going through the presentation) and based on the average cost of training, some 21,100 roubles, the regions (this regional authority is effective since January 1, 2012) will spend, respectively, 551 million, 578 million and 607 million roubles; or the federal government can subsidise them. We extended federal budget subsidies in 2011 to this end; and from 2012 we handed over this money to regions. Unfortunately, of the 83 constituent entities of the Russian Federation, only 73 regions have assumed this authority.

In my view, this is not too much money, our calculations were based on maximum expenses, I think that the regions can afford these expenses to train and retrain the women wishing to work before their children turn three.  

And finally, slide seven, I just want to draw your attention to this, these are the projected results for 2020 against 2011. I want to point out that we will increase and we must increase the total birth rate, based on the indicators I mentioned, up to 1.814, that is, 1.8 children per woman. Keep in mind, that in the 1980s the Soviet Union had a birth rate of 2.2 per woman.

Vladimir Putin: Thanks to Central Asia.

Tatyana Golikova: That’s quite possible, Mr Putin, but the Soviet Union also took considerable, demographic measures, similar to those we are currently taking at the federal and at the regional levels.

However I want to highlight one point that seriously affects the demographics in Russia. The number of women between 20 and 29 following the [difficult] period of the 1990s will decline by 37.3%, and the number of women between 30 and 39 will increase 15.2% by 2020.

And we count more on this category of women to take a conscientious decision on a third and more children. And doubtless we must render adequate financial support because a family with many children is a family that as a rule decides to have a third and more children and then immediately falls into a different income group and has to reduce its consumption considerably.

Now, people with disabilities. We have repeatedly discussed this subject, I will not repeat the figures you quoted in your introductory speech. They can be seen on the first slide of the third part of this presentation.

I’d like to say that today the Federation Council ratified the UN Convention on the Rights of Persons with Disabilities. The issues voiced in the State Duma and in the Federation Council are mostly concerned with the idea that those with disabilities want to be normal members of society and wish to be involved in the community. Employment has a significant importance in this respect.

Again, I will not repeat the figures concerning the employment of persons with disabilities that you quoted. I will only say that a differentiation based on the 1st, 2nd and 3rd disability groups requires an adequate facilitation in the work place, it’s necessary. 

Of course, we are implementing measures in the Accessible Environment programme, nonetheless this year we maintained the subsidies under the federal budget control and these make it possible for us to extend financial assistance to the regions so that they can transfer funds to employers in order to equip work places. An average subsidy is currently about 50,000 roubles.  

Vladimir Putin: We increased it this year, didn’t we?

Tatyana Golikova: From 30,000 to 50,000, last year.

But we would like to propose that you consider the issue of differentiation depending on the disability group. For example, a blind person would need more sophisticated equipment for his work place… Well, depending on the quality of the work place that we need to offer.

If we raise the average standards for financial subsidies to the employer from 50,000 to 66,100 roubles, this would make it possible for us to involve those in need and those seeking jobs. Most importantly, we will not reduce the rate of disabled people that are involved in the programme from previous periods.

We have made the calculations on this; we will need federal budget allocations of 873,916,963 roubles for the coming three-year period. We have not yet reached an agreement on this with the Ministry of Finance. Again, this as well as the benefits for women is the responsibility of the regions. However, last year we took a decision concerning this group to maintain federal control over a part of the subsidies, and in 2012 this amount is 567 million roubles. We want to maintain federal control over this part because this is a socially important group and because we are implementing a package of measures related to the UN Convention on the Rights of Persons with Disabilities and the Accessible Environment programme.

Thank you.

Vladimir Putin: Tatyana Nesterenko, please.

Tatyana Nesterenko (Deputy Finance Minister): Thank you.

Mr Putin, the Finance Ministry is in the process of assessing the expenditure the Russian Federation and the regions may have to incur in implementing the changes of social policy outlined in the articles. Speaking about the effective contract, the increase of budget system expenditures as a whole – and we cannot separate the regions (where most of the labour is) – varies between 3% and 2%.

In this connection let me repeat what we at the Finance Ministry always tell people and perhaps even to this audience, namely that the budget system deficit, the balance and stability of the system is not about a choice between innovation and conservative development. It is not a roadfork. It is the condition of all development, including innovation. Stability of state finances is not negotiable as it is a precondition. Therefore we proceed from the assumption that any decisions must be seen as a choice of priorities, but within the constraints the state can afford, including by burdening and taxing the economy, etc.

Now for the more general view, although the calculations are not yet finished. I go along with the positions set forth just now by the ministers of healthcare and education. We continue work in this sphere with due account of the directives received from the government earlier.

This brings us to the issue of effective contract and the conditions for wage increases. Now we understand better than before that the decision we are taking on the issue of remuneration will determine the future profile of the social sphere for a long time to come, not only in terms of the quality of services, but even more importantly, the degree of state participation in this sphere. That too needs to be borne in mind.

In making the decisions we are facing now, we should proceed on the basis that they will be long-term decisions. These are fundamental economic policy decisions.

Our position is that wages should be realistic. The current situation is intolerable, when on the one hand we pay low wages, offer many social benefits and then cut railway tariffs and in general are tweaking the economy and creating non-transparent cash flows. The economic approach dictates that there should be real work and real cost of services so that these flows are transparent for the economy as a whole.

Our next concern is the issue of effective contract and the count of the effective contracts some ministries have submitted. How did they count it? They just multiplied by two the size of the wage fund or the number of employees in their respective spheres and immediately demanded increased allocations, like the Culture Ministry, for example.

When we talk about effective contracts and say that we are now determining the profile of the social sector, we must keep in mind that the state and the municipalities no longer hold the monopoly in this area. We should be aware that most of the so-called state services already involve non-state organisations. So it is impossible to imagine a decree that would make it obligatory for an employer to pay wages that are no lower than 200 – that is impossible. It would in fact be unconstitutional because a private school or a private university, taking into account all the remuneration issues – it is about making decisions, the relationship between the employer and the employee.

So we must understand that if we proceed in this sphere without realising that it is a service sector, oblivious of the fact that there are more and more non-state organisations involved in this sector, and just order an increase of allocations to state-owned universities and state educational or healthcare institutions, we will end up having no efficient non-state organisations in this sphere. We will simply freeze them out. They will be unable to compete with the state as wages growth accelerates.

For all these reasons we believe (and we are conducting our own count) that it would make more sense to talk about the cost of state and municipal services. We set the cost of services and announce an offer, including to state organisations: if the cost suits you, come and take part in it, as the Education Minister was just saying.

We should do everything to create a toolkit that would tie the cost of the service to the user of these services and the user then chooses the organisation that offers a higher quality service.

Therefore, if we are creating this instrument, if we speak about the cost of services and the need to take it into account in the so-called effective contract, we must realise that we cannot double the salaries of all teachers and doctors, including in the private sector.

Why? Because when we speak about the cost of services, the first thing we should do is to determine the volume of state guarantees. Take higher education and healthcare organisations. Not all the doctors are in the sphere of state guarantees.

A cosmetologist and to some extent a dentist are just two examples but there are many professions that are not involved in delivering services guaranteed by the state. Therefore, as we discuss step by step what we should do, determine the amount of guarantees that we offer through the effective contract, we should offer only as much as we can deliver.

It must be understood that the amount of guarantees can be to some extent changeable.

If the budget can afford it we can offer everyone education over and above the standard. If not, the constitution says: ensure pre-school and secondary school education and anything extra would depend on the possibilities. That is why it is so important to determine the volume of guarantees.

Second. The ratio should be finely tuned not only in order not to push out non-state organisations, but also so that we do not stifle competition with other sectors.

We are told: we need “an effective contract” or remuneration. As a matter of fact remuneration must be competitive. But when we ask ourselves whether the public sector wages are competitive or not, the answer depends on how you look at it. But statistics are relentless and they show that the number of public sector employees in the Russian Federation is growing; it is 107.9 per thousand people whereas in the developed countries it is half that number and in emerging markets it is three times lower.  

What does that prove? It proves that across the board the public sector, in terms of the average cost of labour, is totally uncompetitive. Why? Because there are guarantees, because there are too many benefits that are not reflected in the wages. But a village doctor or teacher has free heating and electricity and can retire ten years earlier than employees in other sectors.

Have you seen this in any other sector of the economy? Who would work in an economy if such uncompetitive conditions are created in individual sectors? I look at those who are below average. There are a host of sectors other than the budget-financed sector that are below average. We are not going to twist our economy in such a way as to stunt economic development in other areas. Therefore we are in favour of introducing the so-called imputed cost of labour. Of course we should proceed from the minimum standards of the services. We must provide a comparable, competitive analysis of what is happening in the economy and in the public sector.

I have already mentioned that statistics are not all bad. If we translate it into cost, one has to work at least 40 hours a week for one’s pay in the economy, but public sector employees do not have to work 40 hours for the average pay. Teachers work 36 hours, for example, and doctors even less sometimes. We are talking about imputed cost of labour. We are talking about market instruments that would make the load comparable and more or less even.

We are talking about imputed cost and workloads. Examples have been sited. Take higher education institutions. We have a standard ratio of ten students per teacher. The average for Russia is 7.7, but there are higher education institutions where there are two to four students per teacher. We are talking about productivity. We are comparing the actual situation in this sphere with how one should work in the economy in order to earn the average pay.

Therefore we envisage the following algorithm of preparing the road map, an effective contract.

First, we must determine the amount of guarantees, and this is very important. We should be aware that it is a particularly unpopular measure in healthcare. We are used to everything being free. Our healthcare is designed in this way. The mandatory medical insurance project balances the situation. The amount of state guarantees is matched by contributions. If we feel that the economy cannot contribute that much we will have to cut the amount of state guarantees, including through the so-called managed waiting lists, change in the timeframe for delivering non-urgent medical assistance. Tatyana Golikova probably has more to say about it.

It is necessary to develop standards for rendering services. This is being done in the health service and in higher education. And we should have a clear idea of the standards for which we calculate the wage fund.

We should proceed from the cost of one man-hour to determine the wage fund and build it into the cost of the service.

We should prepare a model contract with the CEO of the institution that won the tender as a safeguard that he or she will deliver that service. This is a relationship between the employer and the employee: labour. You cannot regulate it from top down. But if you have become a provider of government services, if you have won the right to render a particular service you have to at least enter into a labour contract with the state institution and sign a contract on subsidies with a private institution, ie in fulfilling this function you ensure such and such ratios.

Of course, we believe that a model contract with an employee who renders a service must be worked out. Because, I repeat, imputed cost means that the contract must include all the types of pay other than the wages, otherwise we will offer an unfair advantage and seriously distort economic relations in other sectors of the economy.

The model contract may stipulate the right of the employee to waive certain non-cash benefits in exchange for higher pay. We will have to address the issues of early retirement, including in this sphere. That is also imputed cost of labour. All these things should be looked into carefully.        

Most importantly, we would like to note that among other things it is certainly possible to reach a decision and to issue immediate payments. We can implement reforms with or without funding, but it is impossible to give away allocations without reforms. We need to clarify this issue from the very start. We must not disburse funding first, and only later clarify specific reforms and begin acting. The Ministry of Finance has not changed its position on this issue.

 Now, I would like to say a few words about labour. We have submitted our own numerous calculations as well. However, I believe that we will continue to discuss this question in the government. We have been duly instructed on how to make the relevant payments.

As far as the benefits for families with a third child are concerned, we should clarify another vital landmark issue. What should be the income level that we must provide to families that have decided to have the third child?

We have now been offered the following proposal in terms of families who receive per-capita incomes that are lower than per-capita regional incomes. Believe me, there are families with two children or even one child, as well as childless families. Not every family receives the regional per-capita income level. There is tremendous differentiation among the regions.

Therefore, when we say that a family might become impoverished, then, in our opinion, it is appropriate to discuss the subsistence minimum. What if a family with a child fails to attain minimum subsistence levels? Because this is a question of poverty, and this is not a per-capita income. Indeed, poverty implies some sort of correlation with the subsistence minimum – a ratio of one, 1.5 or two. We need to make a decision depending on specific capabilities. However, I would like to note once again that, in our opinion, attaining a per-capita income would be a serious contradiction because not every family has such an income today. The level of such incomes in the regions is also obvious. It would be appropriate to compare such families’ incomes even in Moscow.

Of course, we prioritise low-income families as far as this issue is concerned. We believe that we should clarify the extent of our involvement in providing financial support for these families. This is the first thing.

Second, if we stipulate a ratio of one, 1.5 or two to the subsistence minimums, I don’t know, then we should clarify the amount of additional payments. This is the second principle. They tell us that we should pay 7,000 roubles to everyone. This means that a family should receive 7,000 once a child is born. That means the families that fall short of this level receive 7,000 roubles, whereas those that have an extra thousand in terms of their per-capita income receive nothing. That is fair and the concept of low-income families is always determined as a sort of state support ceiling, rather than, I repeat, when someone’s differentiation coefficient is one point lower.

We have cited examples of what might happen and of the possible eventual inequality if we start implementing this approach. In our opinion, this is not quite correct from a social standpoint, and I am not commenting on the financial aspects of the issue. We are prepared to discuss this question once again.

Speaking of jobs for persons with disabilities, we have been instructed to reassess these issues by July 1. We believe that this must be done, and we must analyse them in the future. The decision to stipulate allocations has been entered into the protocol. To be honest, it is our opinion that this decision must be taken as part of the budget planning process, and we will stipulate this in accordance with the process.

In my opinion, we should pay attention to certain aspects of this issue, such as transfers and considering certain state policy elements in contract relations. Any company cooperating with the state in any type of contract or receiving subsidies, such as, for example, our television and radio broadcasting companies – whether the company is involved in a tender or receiving a state contract, it must abide by some elements of policy. This is standard practice in every country. This should also become a precondition for any contract with the state. Those involved in this process must fulfil certain conditions and, notably, provide jobs for disabled individuals.

Vladimir Putin: Thank you. Does anyone want to add anything? Mr Shmakov, go ahead.

Mikhail Shmakov: Mr Putin, colleagues, I might bring some disagreement to the discussion. Let me say that I feel great respect for Ms Nesterenko and the Ministry of Finance. But I believe the last report has solely reflected the ministry’s opinion on the issues, including wages and paying benefits for newborn children and third and subsequent children – and this opinion is very superficial.

The ministry has started working on these issues, but there is still a lack of finances probably because it has acted in a similar manner before. Or, I believe, they are implementing different policies than those proposed by the relevant ministries, such as the Ministry of Education and Science and the Ministry of Healthcare and Social Development. The Ministry of Finance is engaged in everything – and I think that this is not the way that things should be done.

Let’s discuss this matter. We have specialists here with a deeper knowledge of the issues, such as contract execution or wage formation. Thus, when it is approved or proposed that not all healthcare workers should receive a 200% percent wage increase because it is assumed that they receive certain benefit payments – which are mostly non-existent – this is not quite right. It seems like a biased and superficial suggestion.

I believe that the Ministry of Healthcare and Social Development – either the new ministerial line-up, or some other state body responsible for labour issues– should now analyse how we should develop the wage system at budget-funded organisations and make comments together with the related ministries.  

Moreover, I personally believe that the wage level at budget-funded institutions certainly affects employers’ attitudes. They choose not to increase wages for public sector employees, whose labour is valued so low by the government. This affects and reduces the overall wage level in the country, which impacts general economic indicators through insufficient taxes, such as income tax and others. Sadly, this triggers a totally different mechanism. In terms of benefits for third and subsequent children, families do not have a third child or subsequent children because they want receive 7,000 roubles. This is not about money. The point is that we want – and I believe this is the aim of our discussion and reports – to provide assistance to these families, and not to leave large families in a tough situation. Sorry for my pragmatic approach, but children are a costly affair for any family.

I think that the presentation of the problem made by Ms Golikova is more realistic than the position voiced by the Ministry of Finance.

I would also like to add – and Ms Golikova briefly mentioned this as well – that new debates are now underway on the minimum consumption basket’s composition and cost. Let’s take an honest look at all of the benefit payments and the cost of goods, or the cost of a doctor’s services per hour. No economist can set the cost of an hour of labour for a highly qualified professional, such as a doctor or a university teacher.

It doesn’t matter – and this was mentioned by Mr Putin early on in the meeting – that some university departments specialising in narrow fields there may be just one or two students per teacher.  These are rare professions, and we are not going to look for a dozen brilliant musicians before we open a cello class. This will not work and it will only result in mediocrity across the board.

Therefore, Mr Putin, I believe that professionals must handle financial issues, as there are many details that must be taken into account. At the same time, though, the Ministry of Finance should undeniably provide its assessment of the situation, such as whether it can manage certain overall expenses through 2018.

Vladimir Putin: Thank you. Anyone else?

I was confident that our discussion would take such a turn. You can only imagine the discussions that take place at the Trilateral Commission, where trade union and ministry representatives meet to discuss issues. These debates are always fierce.

I would like to emphasise that we have one shared goal. Despite having different approaches to these issues, we all aim to improve the living conditions of Russia’s citizens, to make them more comfortable and financially secure, to overcome demographic problems and to allow families to have more children and to be contented, and to assist people in difficult situations and with disabilities. Certainly, this requires financial resources.

We are not going to devote too much time to this. First, we have already been talking for 1.5 hours and, second, such a discussion could continue endlessly. We spent three hours speaking about these issues at a governmental commission meeting and now we have met at an extended meeting. And we have done this to involve the people who are not engaged in these issues on a daily basis but who are concerned about them.   

I mentioned this at the Government Presidium meeting and I will say it again. Undoubtedly, we cannot allocate finances for certain sectors if we are unaware of the returns that they will bring. This is definitely the right approach. Of course, we should see how certain sectors operate. We know perfectly well how some hospitals operate when they have too many beds. We know that they pay for electricity, gas, rent and land fees, and their bed stock is used inefficiently.

Ms Nesterenko has provided examples of how many teachers and social workers there are in economically developed countries, in Russia, and in other parts of the world. There are many discrepancies indeed.

But I would like to say one thing. We have to base our actions on reality. We need to see how people live and whether they have enough for themselves and for their children, or if what they have is completely insufficient. At the same time, we must assess our budget’s capabilities so as not to devastate it.

Everything that has been announced in recent months bears no relation to the tough political struggle during the election campaign over the past three months. Instead, it is all rooted in the need to improve the state of affairs in the social sphere, namely with the demographic situation and in the education and healthcare sectors. This is vitally important. Many issues are pressing and their solution is overdue, and we must find a way to resolve them regardless of the election campaign.

Everything that I said and wrote in my articles was not based on wishful thinking, but rather on a thorough preliminary analysis and debate. Some of my colleagues did not agree on certain issues – but before I spoke or wrote, I consulted with key figures.    

I urge everyone to make an effort to ensure that the decisions that will finally be made will be economically balanced and socially fair. However, in any case, what has been announced will be implemented. 

We have discussed issues related to the distribution of the additional finances that we will receive this year. We will maintain these conditions in the future. Certainly, it is too early to speak about this, but our forecasts are all the same rather prudent. I have agreed with the Finance Ministry’s proposals on distributing this year’s additional revenues. I ask the ministry to consider what we have discussed once more and to give top priority to the issues that we have spoken about today.

Thank you very much.