Unemployment and outmigration keep Kabardino-Balkaria and Karachay–Cherkessia in stagnation

Small business in the streets of Nalchik (Aslan Urumov /OC Media)

While official statistics may say otherwise, many see unemployment in Kabardino-Balkaria and Karachay–Cherkessia as among the worst in Russia. Deindustrialisation, social alienation, and local corruption have all played a part in the region’s stagnation.

In Kabardino-Balkaria, and to an extent, in neighbouring Karachay–Cherkessia, there is a rapid alienation of young people. Those who cannot find a decent job in the republic often become addicted to alcohol. Others are trying to earn a living by gambling or by criminal activity.

Rifat is now a regular at the Fonbet bookmaker’s office in Nalchik, the capital of Kabardino-Balkaria. As a child he worked towards becoming a professional footballer, even playing professionally for Spartak Nalchik. But after sustaining an injury, he was forced to quit the sport.

A bookmaker’s office in Nalchik (Aslan Urumov /OC Media)

Rifat struggled to find work in Nalchik, and after a call from his brother, the head of security at a business in Ozyory, near Moscow, he travelled to join him there. But six months later, both Rifat and his brother were laid off as part of staff reductions. They both returned to Nalchik.

‘The work situation here had become even worse by then. I couldn’t even get a job on a construction site. For half a year, I received unemployment benefits — ₽800 a month. Then my wife left me, and now, in order to eat, I gamble. Sometimes I win ₽1,000–₽3,000 a day, sometimes my friends give me money if they win themselves. There are many like me coming here, and we try to help each other. This is how we live’, Rifat said.

In Nalchik alone, with a population of 238,000, there are more than 40 bookmakers, and this number is growing.

The decline of industry

One of the main reasons for the high levels of unemployment in both Kabardino-Balkaria and Karachay–Cherkessia is the decline of the once-grandiose enterprises of the Soviet era.

In Kabardino-Balkaria, plants such as Telemechanics, the North Caucasus Electrical Appliances Plant, a machine building plant, a machine-tool plant, plant for low-voltage equipment and others went bust in the mid-1990s. In the 2000s, a new cigarette factory built with Chinese government investments, and a medical equipment factory went bankrupt.

A similar situation developed in Karachay–Cherkessia, where a cement factory, a paint and varnish factory, a refrigeration engineering plant, a radio plant, and more than ten ironworks producing reinforced concrete structures and others have virtually ceased to exist.

In 2013–2017, several alcoholic drink producers were shut down in Kabardino-Balkaria for tax violations. These companies had provided incomes to a significant number of local people. The market was taken up by drinks producers from other regions of Russia.

The revival of other industries (e.g. the reconstruction of the Hydrometallurgical plant, the construction of the Ethan chemical plant), initiated during the administration of the previous head of the Kabardino-Balkaria, Arsen Kanokov, was postponed.

[Read on OC Media: ‘Environmental concerns’ mask a lack of funds to reanimate Kabardino-Balkaria’s erstwhile heavy industry]

According to radio journalist Murat Tlepshov, there were many factors behind the decline of industry. He says that both in Kabardino-Balkaria and in Karachay–Cherkessia, an important reason for the ruin of plants and factories was the fact that in the chaos of the 1990s, people with no experience of management or government managed to seize all branches of power, as well as organised crime, allowing them to control the privatisation of state property.

‘These people did not understand how production works and looked at it as just a source of fast money’, Tlepshov says. Ruthless exploitation of equipment, cheap substandard raw materials, and the flight of engineers and specialists led to an industrial catastrophe.

In Kabardino-Balkaria, of the plants built in the days of the USSR, only the high-voltage equipment and hydrometallurgical plants are still operational. In Karachay–Cherkessia, only plants for rubber products, cement, and refrigeration equipment are still operating. None of these enterprises are working at full capacity, and the refrigeration plant in Karachay–Cherkessia has reoriented its production towards garden furniture and barbecues.

The industrial decline in Kabardino-Balkaria and Karachay–Cherkessia has left a huge number of skilled workers, engineers, and other specialists unemployed. Some have left to work in central Russia or emigrated to Europe. Their place in the labour market was partially occupied by guest workers from the countries of Central Asia and Vietnam. Those who remained and were unable to open their own businesses, now often resort to odd jobs or seasonal work, or live on unemployment benefits of ₽800–₽4,800 ($13–$76) a month, paid for up to a year.

Land expropriation

Another reason for rising unemployment in the two republics is a difficult situation in agriculture. The overwhelming majority of farmers in both republics are deprived of the opportunity to lease land.

For example, in Kabardino-Balkaria, all land fit for cultivation has been given over for long-term lease (49 years with the right of extension) to several dozen officials, their relatives, and people from other regions of Russia who, not being citizens of Kabardino-Balkaria, own these lands through titular owners. Land is leased through auctions, in lots of ​​500–3,000 hectares. farmers cannot lease a lot with an area of more than 5–10 hectares, which would have been enough to support a whole family.

This situation has developed in the villages of the republic because corrupt officials on the regional and local levels exert pressure on landlords, who find it unprofitable to quarrel with the district authorities. The bodies of local self-government, which should ideally defend the interests of the villagers, have long withdrawn from resolving such disputes, effectively delegating their powers to the officials of the district administrations. In Kabardino-Balkaria’s Terek District, cases were recorded where the entire circulation of regional newspapers containing information about the holding of auctions was simply confiscated by district officials from points of sale and destroyed. This was done so that local farmers could not participate in auctions.

Thus, rural residents have only one way out — to work low-paying jobs for large tenants or go to work in cities. Those who managed work for at least the season, consider themselves lucky. Tenants, on the other hand, receive a solid profit from the sale of vegetables and fruits in the central and northern regions of the country, benefiting from the hopeless situation of seasonal workers (farm labourers) and paying them a meagre salary — not more than ₽500 ($8) a day, or paying for their labour with a part of the harvest. Often, payment is made only after the harvest is sold.

In Karachay–Cherkessia, rural residents experience the same difficulties obtaining land for rent. In addition, the creation in the mid-2000s of two new districts (Abaza and Nogay) created favourable conditions for various machinations and abuses by local and republic-level authorities.

Umar Konchev, one of the leaders of the Abaza public organisation says that ‘during the formation of the Abaza District, the village of Kubin lost about 300 hectares of its land and almost lost the Southern Greenhouse complex (75 hectares), which was returned to the local self-government of the village only because it belongs to Moscow and has a legal address in the capital’.

The same story was repeated during the re-creation of the Nogay District in Karachay–Cherkessia. Muslim Uvizhev from regional newspaper Cherkes Kheku (Homeland of the Circassians) says that ‘when the Nogay District was recreated, land with a budget-filling sugar plant in the village of Erken-Shakhar (once one of the four largest sugar enterprises of the USSR) and most of the arable land were taken from Adyge-Khabl. Thus, thousands of residents of the Adyge-Khabl District remained without means of subsistence and today they are forced to look for money on the side’.

Official data and real unemployment

According to Kabardino-Balkaria’s Ministry of Labour, from 2015–2017, the number of people officially registered as unemployed increased from 8,600 to 35,700 people. Statistics regarding unemployment in Karachay-Cherkessia look even worse, reaching 11% of the population in September 2017.

However, as of February 1, 2018, official data from the employment services show the unemployment rate in Karachay–Cherkessia was only 1.6% — a more than tenfold decrease.

Small business in the streets of Nalchik (Aslan Urumov /OC Media)

All of the experts OC Media spoke with agreed — the ministry’s data regarding unemployment in Kabardino-Balkaria does not correspond with reality. ‘It’s clear that it’s impossible to take into account all unemployed people’, Marat, an employee of the ministry said. ‘As a rule, even in economically prosperous regions of the Russian Federation — Novgorod and Orel regions, Kamchatka and Yamalo-Nenets Autonomous District — there are 2–3 times more unemployed people than the numbers registered in [Karachay–Cherkessia]’.

Marat says that when Arsen Kanokov was head of the republic, ‘the employment services of Kabardino-Balkaria received from the local government an unspoken instruction not to register newly unemployed people under various pretexts. “Fake” statistics, as well as annual job fairs held by the employment services, are designed to demonstrate to Moscow the successes of responsible departments and the leadership of Kabardino-Balkaria in general in creating new jobs.’

Migration losses

In both republics, the outflow of people is increasing. In 2016 alone, net migration from Kabardino-Balkaria was almost 2,500 people. In Karachay–Cherkessia, according to migration data for January–May 2017 (the most recent available) 661 more people left the republic than entered during this time. These processes are continuing, meaning the collection of taxes in the budgets of both republics has significantly decreased.

Askhat Mechiyev, a former journalist born in Kabardino-Balkaria and now an employee of a travel agency in the capital, says one of the main reasons for the drain of young people from the republic is that wages are among the lowest of all subjects of the Russian Federation. In his opinion, employers create low-paying jobs only in order to get additional subsidies and other preferences from the state. ‘In addition, an employer always benefits from the turnover of staff, where workers do not have time to organise themselves and put forward any demands. Well, the youth today does not want to go to work for pennies, and seeks earnings outside the republic’, he says.

According to Mechiyev, the reason for his departure from the republic was the lack of career prospects, since all promising posts go to people with connections, and a ‘mere mortal’ never rises above a certain level.

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