The price of productive labour

What are the reasons for the bankruptcy of so many successful companies who participated in the implementation of the public projects as government contractors, including metro construction, in Russia?


Construction of the Gorny Institut station in St Petersburg

According to construction workers, one of the main reasons is in the low tariff rates not answering the real market prices, especially regarding the salary of the specialists. Today they calculate them on the base of the rates stated in 2001. These tariffs are17 years old, and of course, these figures have nothing to do with reality. The correction of the prices is in order, but the used deflator indexes are also outdated.

The average rate for the worker salary of the first labour grade is 13,500 Rubles (180 Euro) per month. The metro construction worker at the latest line under construction officially has a rate of 11,000 rubles (147 Euro). The real salary varies from 40,000 (533 Euro) to 60,000 (800 Euro) per month. And it is unclear how to compensate this difference.  

So the loses just within one contract might be millions. It is a close call to bankruptcy, and if it continues this way, the construction of the metro system in St Petersburg will be implemented by foreign companies as for the foreign contracts different rates are applied. It would be wrong to think the issues of the funding for public contracts do not affect other industries than underground construction. The same state of affairs is registered in transport construction area, for example.

The decision seems evident: the sectoral tariff agreement acts at the territory of St Petersburg, approved by the Governor of the city. This document is updated regularly once in 3 years.  But the public contractor and regulatory agencies did not accept it legally. So the design institutes cannot base their norms to a coast account. On a positive note, St Petersburg authorities realise the significance of the issue and they are ready to communicate with the professional society. The representatives of the local professional associations and Committees try to find a solution at the moment and to reach authorities of the Federal level.

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