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Why Russia Can Pay Millions To Public Sector Bosses

Moscow, red light-green light
Moscow, red light-green light
Siranush Sharoyan

MOSCOW - Only a couple of years ago, government jobs were lucrative and only for the highest-ranking executives in Russia. But that is changing, and now the public sector is aggressively competing in the job market, offering competitive salaries and poaching talented employees from private companies.

In Russia, unlike in Europe or the United States, even public companies are not required to disclose their executive compensation packages, but there are legends circulating about what those packages might include, and occasionally numbers will turn up in publicly available documents.

At the end of last year, Forbes ranked the highest paid CEOs in Russia, and the top five spots were occupied by representatives of state-owned companies. At the top of the list was Andrey Kostin, the head of a state-owned VTB bank, who was paid nearly $30 million a year – approaching the likes of Jamie Dimon, CEO of JPMorgan Chase, who was paid $42 million. It is worth noting, though, that Kostin’s bank is 10 times smaller than JPMorgan Chase.

This is a pattern seen throughout Russian business –executive compensation in line with western pay, even though the Russian companies in question often are far smaller and less competitive.

“Russian top managers often defend their pay by saying that their analogues outside of Russia make similar amounts,” explains Konstantin Borisov, CEO of Support Partners. “But first of all, they are not taking into account the company’s competitiveness, which is often much lower in Russia then the Western equivalents. Secondly, Western managers are often much more experienced than Russian managers – Western managers have often worked for a company for 20 years before taking the helm, while in Russia – one minute you’re a member of parliament, the next you’re running a state-owned company. It’s a big question whether or not these business people understand those differences,” says Borisov.

But while it is perhaps not surprising that the top ranks are paid handsomely, state-owned companies have also started to pay more mid-level managers substantially above average. At the end of last year, oil company Gasprom’s average remuneration, excluding top-management, was around $3,000 per month, more than three times the average salary in Moscow. Other state-owned companies paid their mid-level employees even more handsomely.

A new era in the job market

“After the 2008 crisis, the government became the country’s main businessman,” explains Borisov. “Everyone remembers how, in the mid-2000s, the most talented job-seekers went to work for transnational and western companies, because the pay was better and the projects were more interesting. Now those same people are coming back to work at state-owned companied. You could say it’s a new era in the Russian labor market,” he says.

The aggressive recruiting by the government could heat up the labor market to such an extent that private companies can’t compete – something that Oksana Feshenko, a labor expert, says is already happening. Ekaterina Ilina, a partner at Boyden, gives an example, “it’s crazy when a human resource director, even at a very big company, is making 15,000 to 20,000 euros per month. In Europe, that’s the kind of salary you would give a CEO who is responsible for a multimillion euro business and has a huge responsibility.”

According to Borisov, the government can operate like this because it is flush with cash thanks to the high gas prices. But at the first hint of a crisis, salaries are likely to plummet.

Nowhere has the government been more aggressive than in the media sector. This is the case with Russia Today, the state-owned TV channel specially created in 2005 to help build a positive image for Russia overseas. The government has given these media companies huge subsidies, allowing them to give substantially more money, and stability, to well-known journalists from private media companies, which in turn lends credibility to Russia Today and other state-owned media.

Announcements about journalists going to work for the state-owned media are frequent, although representatives from state-owned media denied that there was any sort of pattern or that they were buying up journalists from the private market.

According to Vasilii Gatov, vice-president of the Publishers’ Guild, there is another important factor for journalists. The state-owned media offers a buffer with the government, and journalists can better understand the restrictions they should work within, while working in private media can be like a stroll through a minefield.

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A Refuge From China's Rat Race: The Young People Flocking To Buddhist Monasteries

Unemployment, stress in the workplace, economic difficulties: more and more young Chinese graduates are flocking to monasteries to find "another school of life."

Photograph of a girl praying at a temple during Chinese Lunar New Year. She is burning incense.

Feb 20, 2015 - Huaibei, China - Chinese worshippers pray at a temple during the Lunar New Yeat

Frédéric Schaeffer

JIAXING — It's already dawn at Xianghai Temple when Lin, 26, goes to the Hall of 10,000 Buddhas for the 5:30 a.m. prayer.

Still half-asleep, the young woman joins the monks in chanting mantras and reciting sacred texts for an hour. Kneeling, she bows three times to Vairocana, also known as the Great Sun Buddha, who dominates the 42-meter-high hall representing the cosmos.

Before grabbing a vegetarian breakfast in the adjacent refectory, monks and devotees chant around the hall to the sound of drums and gongs.

"I resigned last October from the e-commerce company where I had been working for the past two years in Nanjing, and joined the temple in January, where I am now a volunteer in residence," explains the young woman, soberly dressed in black pants and a cream linen jacket.

Located in the city of Jiaxing, over a hundred kilometers from Shanghai, in eastern China, the Xianghai temple is home to some 20 permanent volunteers.

Unlike Lin, most of them only stay for a couple days or a few weeks. But for Lin, who spends most of her free time studying Buddhist texts in the temple library, the change in her life has been radical. "I used to do the same job every day, sometimes until very late at night, writing all kinds of reports for my boss. I was exhausted physically and mentally. I felt my life had no meaning," she says.

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