Salaries of a large caliber – Newspaper Kommersant No. 199 (7400) dated 10/26/2022
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A bill proposing to provide defense enterprises with the opportunity to pay salaries at the level of 110% of the average for the region has been submitted to the State Duma. The main idea of the project is to give the management of companies fulfilling state defense orders the opportunity to compete for personnel from other sectors of the economy.
The military interests of the state continue to compete with the economic ones: following the involvement of the state apparatus in meeting the needs of the military operation, the authorities expect to intensify the use of resources to fulfill the state defense order (SDO). A group of State Duma deputies (among them are the heads of the committees on industry Vladimir Gutenev and on economic policy Maxim Topilin, this usually implies at least the coordination of the project with the government) propose a new way to calculate the cost of military contracts through amendments to the laws “On State Defense Order”, ” On insolvency (bankruptcy)” and “On mobilization preparation”.
Deputies see pricing adjustments as a systemic measure for solving the problems of state defense orders – when determining the price of products in the cost, it is proposed to take into account the indexation of salaries of employees of military-industrial complex enterprises to a level that is at least 10% higher than the average for the market in the region where the enterprise is located. Now the enterprises-suppliers under the state defense order cannot offer competitive salaries, which is why they complain about the shortage of personnel. “If an enterprise optimizes overhead costs and at the same time indexes the level of wages of the main production workers above inflation (to achieve the average level for the region), the structures of the Ministry of Defense accept a reduced level of overhead costs, but at the same time, the growth of average wages is limited by indicators of the forecast of the socio-economic development of the Russian Federation, forming thus the losses of the enterprise, ”the authors note in the explanatory note to the project. This, in turn, slows down the growth of labor productivity in the defense industry and reduces the quality of products.
As Yevgeny Nifantiev, one of the authors of the bill, a member of the State Duma Committee on Industry and Trade, explained to Kommersant, since the profit of contractors in the military-industrial complex is limited, there are no opportunities to stimulate staff. “Using this method, enterprises supplying the state defense order are experiencing a shortage of personnel. With this bill, we create an opportunity for enterprises to provide employees with wages above the average market in the region where they are located,” he calculates. At the same time, it is assumed that organizations themselves will be able to decide how and which employees to stimulate or hire. “We cannot interfere in the work of specific enterprises, but we proceed from the fact that additional funds will be directed precisely to increase the wage fund, and not the rate of return, because if there are no necessary specialists, then there will be no production and completed state contracts,”— adds Evgeny Nifantiev.
Other amendments by parliamentarians, which propose to allow general contractors to use single accounts to pay for contracts with subcontractors and transfer the property of bankrupts, by decision of the collegium of the military-industrial commission, to temporary management of military enterprises (see Kommersant-Online), activate during mobilization (probably in the sense of the legislation, which now distinguishes it from “partial” mobilization) and martial law, that is, under the conditions of the actual “military operation” in the current definition, they are probably inapplicable or limited.
What else does the state defense order need in case of war
In addition to the draft law on increasing the “salary” resource of the military-industrial complex, amendments to the bankruptcy law, deputies propose to transfer the property of any enterprises that are in bankruptcy to the management of contractors under the state defense order (GOZ), for which it is proposed to oblige arbitration courts to suspend bankruptcy proceedings during the period of mobilization or wartime in relation to debtors, the rights and obligations of the bankruptcy trustee for the sale of property for the transfer of his movable and immovable property (except for cash) to the supplier in need of them under the state defense order. The decision on this must be approved by the board of the government Military-Industrial Commission and is binding on the arbitration court. Probably, we are talking about ensuring the use of scarce capacities by the military-industrial complex, access to which may be blocked in the process of the owner’s bankruptcy. Other functions of the bankruptcy trustee, for example, to identify the debtor’s property from third parties, are proposed to be retained, and bankruptcy proceedings to be resumed after the end of mobilization or war.
The second project involves the creation by the head executor of the state defense order of a single account for settlements with subcontractors under all state contracts and contracts under the State Defense Order. This account will consolidate all funds from the accounts opened under each military contract or subcontract. Thus, the contractor will be able to flexibly manage funds and optimize time and financial costs during mobilization or martial law – de facto, the authors are trying in this way to transfer the experience of the Ministry of Finance and the Treasury in the operational management of consolidated budget funds to the state defense order, depending on the needs of the budget.
De facto, the amendments imply an increase in the profits of enterprises. It is difficult to predict how the mechanism of its redistribution in favor of workers’ salaries will work in practice, in contrast to the inevitable increase in the cost of output of state defense orders. Until now, the key factor in the effectiveness of the Russian state defense order has been the low cost of resources. It should be noted that the design of the mechanism for increasing salaries in the military-industrial complex is only formally the same as in the case of increasing the salaries of doctors and teachers by the “May” presidential decrees in the 2010s. There, the main “drive” mechanism was the KPI of the governors and the local budgets controlled by them, here – the good will of the managing enterprises involved in the implementation of the state defense order.
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