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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

Thursday, July 31


Develop your leadership abilities during a lecture by famous Russian author and coach Radislav Gandapas. The event starts at 9 a.m. at 5 Lodeinopolskaya Ulitsa. The price for entry is 20,500 rubles ($570).


Relax and enjoy a Parisian atmosphere with some romantic and laidback jazz tunes during the Night of French Music at Lenny Jam Cafe, 63 Ligovsky Prospekt. The entrance fee is 250 rubles ($7).


The Womens Business Club is hosting a Beauty Brunch where participants are invited to discuss the latest news in the beauty industry and listen to lectures by professional stylists in the business.



Friday, Aug. 1


Bikers from all around the world will gather to take part in a parade, extreme shows and rock concerts during the International Biker Festival that revs its engines today and runs through Aug. 3 near Olgino Hotel, 4/2 Primorskogo Shosse.


The Peter and Paul Fortress will be turned into an open-air cinema today and tomorrow as part of the 5th International Short and Animation Film Festival. A huge screen across the fortress walls will air short films non-stop with board games, photo sessions and other activities also on offer for visitors. For more information, visit www.opencinemafest.ru



Saturday, Aug. 2


Gatchina Palace Park Museum will host its second annual Night of Light, an impressive audio-visual show across the night sky. Tickets are 600 rubles ($16).


If graphic design is more your thing then check out Illustration Day, where you will be able to visit an exhibition, attend lectures by professionals and even show experts some of your own work. The event starts at noon at Zona Deystvia, 73 Ligovsky Prospekt. The entrance fee is 350 rubles ($10).



Sunday, Aug. 3


History lovers shouldnt miss the chance to see reenactments of World War I battles in Pushkin at noon. Besides exciting war scenes, visitors can enjoy live music, historical costumes, an equestrian show and a fancy-dress parade starting from the Moscow gates.


Garage Sale, the popular and growing flea market where nothing is priced over 500 rubles ($14.11), starts today at noon in Loft-Project Etagi, 74 Ligovsky Prospekt. Be sure to get in early to score a bargain. Entry costs 50 rubles ($1.40)



Monday, Aug. 4


Continue the working week with a calm and steady mind with a free yoga lesson at 7 p.m. in the Bukvoyed store at 23A Vladimirsky Prospekt.



Tuesday, Aug. 5


Visit The Romanov Dynasty doll exhibition today, where more than fifty porcelain dolls depicting Russian rulers, and made by Olina Ventzel, will be on show. The exhibition continues through Aug. 31 in Sheremetyev Palace, 34 Fontanka Naberezhnaya.



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