Tag Archives: Pensions

Shamanov Disputes Defense Spending

Shamanov addressing the Duma in 2018.PNG

Shamanov addressing the Duma in 2018

Former VDV commander General-Colonel Vladimir Shamanov’s Defense Committee has criticized the RF government in advance of the first Duma reading of the federal budget for 2020 (and plan for 2021-2022). The committee accused the government of steadfastly “ignoring the army’s needs” — pay for MOD civilians, military pensions, housing, and fuel specifically — in its spending proposals.

Russian media reported the committee’s complaints were spelled out in writing. The legislature will discuss the government budget on October 23.

Committee chairman Shamanov addressed the low wages of the MOD’s 900,000 civilian workers. 

Civilian workers of the MOD march for worthy pay in 2018.jpg

Civilian MOD workers march for “worthy” pay in 2018

As numerous as uniformed officers and soldiers, civilian defense employees are critical to Russia’s military but their pay only averages around 30,000 rubles ($470) per month against 46,000 rubles ($718) elsewhere in the economy, Gazeta.ru reported.

They received a three percent increase on October 1 but, coming so late in the year, it offset only a quarter of this year’s inflation (4%).

The Defense Committee claimed the current average military pension in 2020 will be 23,500 rubles ($368), and has declined 20 percent in recent years because it hasn’t always been adjusted for inflation, wrote Rossiyskaya gazeta.

[NB: Cumulative inflation for the period 2012-2018 in Russia was over 60 percent.]

The committee reminded the government that President Putin promised retirees in 2012 they would get inflation plus two percent to preserve their buying power. It asked for a 6.3 percent pension increase next year.

The MOD’s mortgage savings system for servicemen was lacking 92 billion rubles ($1.4 billion) at the start of this year, the committee said. The mortgage system depends on government contributions and won’t function without this financing.

The military budget also did not contain enough money for other servicemen and their families who depend on MOD rent subsidies.

According to Gazeta.ru, the committee proposed adding 145 billion rubles ($2.3 billion) to close the gaps in the provision of military housing in 2020. But the RF government did not include this funding in the budget bill.

The Defense Committee also reported the MOD owes 7 billion rubles ($110 million) for fuel this year, and the draft three-year budget contains money for only 1.57 million tons against the 2.1 million tons the military will need. Shamanov and company say the MOD will need an extra 20 billion rubles ($314 million) for this, according to Interfaks-AVN.

Speaking to Voyenno-promyshlennyy kuryer, conservative military commentator Konstantin Sivkov said:

It’s easy to find resources for these needs. Even if we don’t cut their pay, but just the bonuses of the top managers of state corporations, we’d find money for military pensions, and for medicine, and for housing subsidies. According to official data, they amounted to 67 billion rubles [$1 billion] for just the one year 2018.

Why Mr. Shamanov and his committee took on these particular issues isn’t clear. They didn’t tackle pay increases for active duty servicemen who are still several years behind the rate of inflation. They didn’t challenge spending on weapons systems, but then large parts of the defense budget are still secret.

They challenged the government (an easy target) rather than President Putin (a dangerous one). Shamanov and the majority of his committee are members of the party of Putin — United Russia.

Kind of a curious moment for the Russian legislature to offer some checks and balances to Russia’s executive branch.

Medvedev Signs Pay Law

Medvedev's Meeting on Pay Law

Monday President Medvedev met an unusual group — the Defense Minister, General Staff Chief, and MD / OSK commanders (but no service CINCs or branch commanders) — to announce he signed the long-discussed law on military pay that becomes effective on January 1, 2012.

The increased military pay in this law was a key goal for Anatoliy Serdyukov when he arrived at the Defense Ministry nearly five years ago.  Premium pay was just a stopgap.  So this is a success for his reform program.  His idea was to cut half (or more) of the officer corps and raise the pay of those remaining.  Of course, he had to back off somewhat on cutting down to 150,000 officers.

Why did it take so long to enact an increase in military pay?  Was it hard to find the money?  Maybe, given the global financial crisis of the late 2000s.  Was it hard to overcome former Finance Minister Kudrin’s resistance to higher defense outlays?  

Newsru.com, Svpressa.ru, and others see the pay increase as timed to coincide with Duma and presidential elections, and designed to engender the military’s goodwill toward the current leadership at the ballot box.  It’s worth noting the reduction in conscription from two years to one came in the context of the last national elections in 2008.

According to Kremlin.ru’s account, Medvedev indicated he wanted to congratulate those assembled on their long, hard effort to raise military pay to its new level, on average 2.5 or 3 times above today’s pay.  RIA Novosti provides the standard example of lieutenants rising from 19 to 50 thousand a month. 

In addition to higher base pay, the usual supplements will remain in effect, including additional pay for special duties, class qualifications, and difficult service conditions.  Premiums of up to three times base pay for outstanding performance will also continue.  Military pensions will increase at least 50 percent to 17,000 on average.  Read more about pay calculations here.

Addressing his small audience, Medvedev said:

“In such a way, servicemen have a very serious stimulus to carry out their service duties well and improve their professional training.”

He was careful to say those without duty posts (the so-called распоряженцы) won’t be left behind:

“It also includes important provisions, which, in principle, allow us to prevent worsening of the material situation of different categories of servicemen, citizens, dismissed from military service, their family members, if the amount of pay given them is reduced in connection with introducing the new system, then here there is an established mechanism of compensation and balancing out of these payments that is also an important guarantee of financial stability for our servicemen.”

Not reassuring.  But those guys won’t vote for United Russia and Putin anyway. 

The president continued:

“I won’t conceal that many drafts were ripped up around it, there were many discussions about whether we were prepared to raise pay to such a degree, whether the state had the resources for this, whether this wouldn’t drain our budget, wouldn’t create some kind of problems in the future?”

“I want to tell those present and, naturally, all servicemen of the Armed Force to hear me:  it won’t drain us, everything will be normal, and all required payments by the government will be made because this is the most important guarantee of raising the professional preparation of servicemen and improving the quality and effectiveness of the Armed Forces.  Therefore, the decisions, proposed several years ago, are being executed and put into action by this law.”

Thanking Medvedev, Serdyukov said:

“For us, in a complete sense, this resolves all earlier problems:  this is manning with both officers and contractees; this is serving; this is the attractiveness of military service, the fact is this is the entire complex of issues which weren’t practically resolved for us.”

Medvedev completed his remarks with this:

“But the main thing the state, by adopting this law, its signing and, accordingly, its entry into force, shows is that decisions once given voice are subject to unconditional fulfillment, whether someone likes them or not, if depending on them is the social condition of a huge number of people:  these are servicemen and their family members.”

“And further, we will do this so that our Armed Forces will be highly effective, and service in them will be prestigious and highly professional.”

So Medvedev declared it a test of governmental capability, and swiped at dear departed Kudrin who opposed the extent of defense budget increases in view of priorities like education and health (not to mention the pension fund).

It takes capability to implement a decision, yes, but it takes even more to stick with it over the long term.  Will the Russian government be able to continue the new level of military pay when the elections are over, economic conditions less favorable, oil prices and revenues lower, and budgets tighter?  That’ll be the true test of capability.

P.S.  We shouldn’t forget that the Defense Ministry has also semi-obligated itself to paying 425,000 professional enlisted contractees 25,000 rubles or more a month in the future.  That will probably equal the bill for paying officers.  Let’s estimate this total cost at 500 billion rubles a year.  The non-procurement defense budget in 2009 was only 670 billion.

Army’s Protest Mood (Follow Up)

You may recall Prime Minister Putin’s February trip to Kaliningrad, where he heard complaints about the lack of apartments and low pensions for ex-servicemen.  Today Besttoday.ru publicized video of the once-and-future president’s meeting with Kaliningrad veterans’ organization representative General-Major Kosenkov. 

Who knows where this clip’s been until now.  But, at the time, Putin’s handlers apparently decided it wouldn’t be good PR, and kept it under wraps.

The video’s become a minor sensation because it shows Putin dismissively ripping an appeal from former officers and soldiers.  Besttoday shows both a more inflammatory short clip, ending with Putin tearing the paper, and the longer clip above where Putin talks about raising pensions this year. 

As one blogger sees it:

“For the edification of those still expecting something from Putin.  You think someone is reading your complaint letters, petitions, etc.?  Then watch the video closely once more.”

“Enough with sitting by the TV and listening to cheap stories!!!”

A little context is needed . . . Kosenkov doesn’t associate himself with the paper he shows Putin.  It’s just an example, a warning about what’s being said and circulated.  We don’t even know exactly what it said.

Kosenkov represents a domesticated, acceptable group deserving of an audience with the prime minister.  Hence, the former general-major doesn’t bat an eye when Putin tears the paper.  But perhaps Putin’s just a little too quick to take offense at this appeal.  He didn’t have to look at it, or he could’ve just put it down without reacting.

At any rate, the Russian blogosphere is abuzz today because tearing the paper exemplifies and personifies Putin’s disdain for his uncontrolled, noncompliant opponents who are impudent enough to offend him with their manifestoes, placards, demonstrations, and disobedience.

But back to the army writ large . . . yes, parts of it are oozing some discontent, but they still generally don’t fall into the same category as political opponents of Putin’s quasi-authoritarian regime.  They just don’t have much in common with anti-Putin forces.

And Putin’s delivering on his promise to raise military pensions.  The new pay law just passed its third Duma reading.  It reportedly contains, on average, a 60 percent increase for retired servicemen.  This is supposed to take the average military pension from about 10,000 rubles per month (about the same as the average labor pension) to about 17,000.  And retirees have been promised semiannual indexation for inflation in the new pay law.

But one could point out that the new pay system will increase active duty pay by 200 and 300 percent, and will divide former and current servicemen financially, socially, and politically.  But suffice it to say that Vladimir Mukhin’s original article on “candy for the military electorate” was on-the-money.  

Parts of a couple quotes he provided bear repeating:

“‘In 2000, when Vladimir Putin became President, military pensions were on average three times more than civilian ones.  Now they are much lower.  Who stopped the current authorities from keeping our pensions at the previous level?'”

“‘[Increased defense expenditures] will lead to increased problems in the economy.  Or is there a possibility that militarization [i.e. rearmament] simply won’t occur, and this means the military’s negative attitude in society will exacerbate further.'”