The government has doubled one-time assistance to those who want to start up a business to 100,000 roubles.
The growing strain on the labour market could encourage the development of small business, but the government has decided to issue startup capital only to those who pledge to give a job to at least one jobless person.
There are some 5.8 million unemployed in Russia, according to the Healthcare and Social Development Ministry, down from 7 million last April. However, only 2 million of them are actively looking for a job and have registered with employment services.
In other words, it is no time to sit on one's hands, despite certain achievements. Therefore, the government has decided to dramatically shift its focus next year.
"Our priority will be to form a flexible and effective labour market," Vladimir Putin said at the last meeting of the government presidium, adding that the focus would be on additional measures to encourage people to start up their own businesses. Currently, the government issues a one-time allowance of 58,800 roubles ($1,950) to the unemployed who want to start up a business.
"The allowances will be doubled in 2010, on the condition that the new business will offer a job to at least one more unemployed person," Putin said.
The mechanism for such grants remains unchanged. To receive the money, the unemployed must be registered with a labour service and present a business plan based on one of the standard schemes or his/her own vision of business development.
If the authorities approve the business plan, the startup capital is transferred to the account of the applicant who has registered his/her business with the tax authorities. The sum of the grant is fixed and is not linked to the size of the unemployment benefit the person in question draws.
However, the recipient will have to supply documents on the spending of that grant to the employment service.
What can new businessmen do with such an allowance, which is modest even though the government has doubled it? It is enough to open a family hairdresser's salon, a footwear repair shop, or use a dacha for commercial production. The Federal Service for Labour and Employment is convinced that at least 120,000 people who have lost their jobs for some reason will start up a business by the end of the year.
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Yevgeny Gontmakher, deputy director of the Institute of World Economy and International Relations at the Russian Academy of Sciences:
"It is a good decision, as few people requested the 50,000-rouble allowance. Only a few thousand people did, and it is unclear what they have done with it. They would organise a services business with that money. For example, if you have a car you can start a business cleaning bathtubs. But with 100,000 roubles you can buy equipment and even hire one or two persons with a small salary. This could be good for young people who have graduated from a higher school but cannot find employment. However, small businesses should also be protected."
Boris Kagarlitsky, director of the Institute of Globalisation Studies and Social Movements:
"The effectiveness of small business does not depend on grants but on the effectiveness of the economy. There is no place for small business in the Russian economy, and it will not become twice as effective with a doubled grant. A considerable proportion of people do not want to start up a business because of high risks and big responsibility."
Vladislav Korochkin, vice president of Opora Rossii association of small and midsized businesses:
"The government has lowered the barrier for the advance of small and midsized businesses to the market. This is good, because sometimes you lack just a little to start up a business. You can find a business that will be in demand, from services to production, in nearly all districts. A startup businessman could go to a local supermarket, look around at what it has, and think of a way to compete with it."
Anastasia Ponomareva