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The High Price of Long Vacations

Published: January 15, 2014 (Issue # 1793)


Russians enjoy longer holidays than people in any of the other 40 countries tracked by the travel website Hotels.com, combining the generous 28-day paid vacation required by the labor law with 12 days of official public holidays adds up to 40 days per year, compared to 36 days off work for second-place Italy.

Some aspects of such long vacations are undoubtedly positive. A long summer vacation combined with more than a week off at the start of the year and a holiday many people create for themselves in early May gives families more time together and allows them to travel abroad. In theory, this should remedy the pernicious effect of the Soviet-era Iron Curtain and make younger Russians more knowledgeable about the world, more tolerant and open-minded. The shrillness of the current xenophobic campaign in the state media, attacking the West in general, may be the Kremlins desperate, irrational attempt to stem the tide of pro-Western sentiment among well-traveled Russians.

But many who stay home actually hate the extended New Year holidays. They complain about the hangovers after drinking, wasteful spending and boredom. But there is also a broader economic impact of generous vacations, which is similar to what Russia experienced under communism and which could come to haunt it once again in the near future.

Whether or not people worked longer hours in the Soviet Union is beside the point. Pay was low, but productivity was even lower. They pretend to pay us and we pretend to work, went the popular saying. Much time was wasted on party meetings and indoctrination, and the system itself was economically inefficient. The Soviets mined coal and ore to make machinery to mine more coal and ore. The added value of such activity was negligible.

Once communism collapsed and Russia became integrated into the world economy, the economic value of Soviet communism was appraised by the market. The result was a sharp devaluation of the ruble. The Soviet ruble went from parity to the dollar artificially set by the state, or about 10 rubles per dollar on the black market, to the equivalent of about 33,000 rubles to the dollar, which is what the Soviet ruble is worth today. This destroyed all savings accumulated during the Soviet era and made a mockery of pensions.

Russia is now relatively wealthy once more. Its gross domestic product is valued at more than $2 trillion based on purchasing power parity, not much lower than Britain. Unlike the Soviet era, it is market evaluation, not an arbitrary figure set by state planners. But to a large extent, Russias elevated GDP reflects high commodity prices, notably oil, which in turn have been inflated by the U.S. Federal Reserves relentless printing of dollars.

Meanwhile, productivity in Russias non-oil economy is generally low. Where productivity is higher, such as in the automobile and food-processing industry, it is also largely a reflection of petrodollar-driven consumer demand. Moreover, even in those industries unit labor costs are high, since employers have to pay for government-mandated fringe benefits and generous vacations.

If oil prices drop, Russia may suffer a decline in wealth similar to the one that occurred after the fall of communism, albeit on a smaller scale. In particular, falling oil prices would require a devaluation of the ruble, with sharply negative consequences for dollar-denominated national accounts.

This is not a far-fetched scenario but something that happened several times to Venezuela, Algeria, Mexico, Indonesia and other oil producers even to the Saudis in the early and mid-1990s.

Alexei Bayer, a native Muscovite, lives in New York. His detective novel Murder at the Dacha was published by Russian Life Books in 2013.





 


ALL ABOUT TOWN

Wednesday, July 23


SPIBAs Legislation & Lobbying Committee invites everyone interested in the practical aspects of courts and procedural law to todays Legal Debating Club at 9:30 a.m. at the Mertens House, 21 Nevsky Prospekt, office 506. Visit spiba.ru for more details.


Take advantage of the sunny summer days and participate in Beach Games 2014, which runs through July 27 in Sestroretsks Dubki Park.



Thursday, July 24


Liliana Modiliani, a well-known Russian stylist, will talk about choosing clothes that fit during her lecture at 7 p.m. at the Pryamoy Efir art club, 13 Viborgskoe Shosse.



Friday, July 25


Discuss Russias economic and political prospects for 2014 during a Business Breakfast organized by SPIBA at 9.30 a.m. in the Bank Saint-Petersburg office at 64


Malookhtinsky Prospekt.


Start your weekend with adorable miniature pigs at the Squealing Pig festival at 7 p.m. this evening in the Karl & Friedrich restaurant, 15 Iozhnaya doroga, on Krestovsky Island.



Saturday, July 26


Hundreds of brand-new and retro cars, drag and drift shows, test drives and karting are planned for the Avtobum-2014 festival, which will take place in front of the RIO shopping center at 2 Fuchika Ulitsa.


Participants in todays SaniDay Summer competition will impress visitors with their hand-made, unusual and hilarious boats, which will race at the Igora Resort near the 54th kilometer on Priozerskoe Shosse.


Metro Family Day will include both serious lectures for adults and master-classes for children, making the event interesting for the whole family. To participate, come to Kirov Park on Yelagin Island.


Photography will be the focus of todays Photosubbota, which features lectures by famous photographers, meetings with photo schools and studio representatives, and participation in a photography competition. The event starts at noon at Petrokongress, 5 Lodeynopolskaya Ulitsa.


If you like cycling, make sure to visit the Za Velogorod Festival with its retro bike exhibition, market and live music. The second round of the Leningrad Criterium race will also take place during the event at Petrovsky Arsenal in Sestroretsk.



Sunday, July 27


Navy Day will be celebrated with a weapon and military transportation exhibition, self-defense master classes and concerts. The event starts at 1 p.m. in the 300th Anniversary Park of St. Petersburg.



Monday, July 28


Dont miss a chance to see the latest achievements in robotics during the RoboDom interactive show, exhibiting more than 150 robots. The show will be at BUM centre, 22/2 Gzhatskaya Ulitsa, until Aug. 3. The entrance ticket costs 350 rubles ($10).



Tuesday, July 29


A video of a Queen concert from 1986 will be shown today at 8 p.m. in Yaschik, 50/13 Ligovsky Prospekt.



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