Russians Get by With Barter and 'Pig' Pay as Leaders Debate

Paying coal miners their wages in pork for lack of money might be innovative economic thinking.

Not paying miners - or doctors, teachers, or soldiers - anything at all for months may lead to economic chaos.

Not all Russian workers can do what the managers of some Siberian coal miners did, using the mines' surface area to breed salaries: pigs. Millions of workers in the country's bloated civil service and troubled private sector are living without pay - many for more than a year.

Continuing wage arrears - analysts estimate that workers are owed about $10 billion - undermine foreign confidence. It is one of the factors in Russia's ongoing financial crisis. But the turmoil on Moscow's trading floors over billions of rubles is not understood by ordinary citizens, who scramble to buy food.

Russians saw the state-controlled institutions and economy collapse in a shock-therapy transition to capitalism under Western guidance after the Soviet Union disintegrated in 1991. But adjusting businesses to free-market forces is taking time.

"Russia lacks a developed market system," says economist Anvar Amirov, who estimates that only 2 percent of all payments in Russia, including wages, are settled in cash. "Beyond the Urals, money does not exist at all."

Larry Summers, assistant secretary of the US Treasury, is more optimistic about Russia's achievements so far. "Half the business-to-business is carried out by barter," he said during a recent visit to Moscow. But he added: "I think evidence is that Russia has some way to go."

Until capital flows are common in rural areas, people have to rely on family loans, eat what grows in their vegetable garden, or sell or barter with the products companies pay them in.

Take the case of one elderly woman, who declined to be named. She makes a regular trip from her hometown of Tambov to Moscow, where she sells her working daughter's "salary": small clay pots, teacups, and decorated vases.

The elderly woman carries two heavy cartons on the night train, which takes 12 hours to cover the 250 miles northwest to Moscow. She returns the same night on a ticket costing 52 rubles ($8.50).

Normally, she sells in an alley close to Tsvetnoy Boulevard metro station. It lies in the busy center of Moscow but off the main street, where competitors harass her and corrupt policemen either confiscate her goods or fine her for not having a license.

On a small scale, the woman is forced to operate outside the formal economy, beyond the reach of the tax man. Others do it on a larger scale. Analysts say Russia's "gray economy" is booming. They estimate that it could be as big as 30 to 50 percent of the official gross domestic product.

PART of the government's anticrisis plan is to increase the overall standard of living so that ultimately the impoverished masses - who now can not even pay for their rent, electricity, or food - will become part of Russia's taxable population.

Over the past few years, Yeltsin saw proposals for key reforms, such as bills to simplify the tax system and privatize land, blocked by the Communist- and nationalist-controlled Duma, the lower house of parliament.

The core of the crisis of nonpayment of salaries is in fact a tax crisis, Mr. Amirov says. "The economy works, but as a shadow economy. So the state can not collect the taxes, and cannot send the money into the different sectors to restructure them."

In a move to improve tax collection, President Yeltsin has appointed the former finance minister, Boris Fydorov, as chief tax collector.

Mr. Fydorov has announced plans to target the top earners of the country to make sure they will pay what they owe the state. This step must introduce a culture of paying taxes, unknown during Soviet times.