In Russia, a Recession-Plagued Town Revolts

After waiting half an hour in a line of 20 people at the dusty ATM, Eduard Markov finally walks away with his old leather wallet bulging with rubles. Like thousands of others in the northern Russian industrial town of Pikalyovo, the 44-year-old clay-quarry worker had not been paid in three months. But now he at least has enough to buy the basics — meat, vodka, noodles, oil and fruit — from shops that just a few days ago were empty of customers.

For three months, Pikalyovo’s citizens had been living in crippling poverty after the town’s recession-hit cement and brick factories started closing down. Thousands of workers were laid off, and almost overnight nearly 25% of Pikalyovo’s 20,000 residents were unemployed. After making several pleas to their employers for back pay — at one point crashing a meeting at the mayor’s office to demand their jobs back — the workers turned to desperate measures. On June 2, they staged a strike along a major highway linking the city of Vologda to St. Petersburg, blocking the route for hours. Finally Moscow took notice, and Prime Minister Vladimir Putin flew in by helicopter to force local politicians and factory owners to pay the town’s workers the money owed them. Now Pikalyovo’s shops, cafés and banks are doing good business again, but as the recession sweeps across Russia, small single-industry towns all over the country are just one factory closure away from suffering the same plight. (See 10 things to do in Moscow.)

“You wouldn’t have seen anything like this — people were fed up and angry,” says Alexander Plush, 41, another former factory worker standing in line at the ATM. Plush had worked for 17 years at one of the Pikalyovo cement factories until it closed a few months ago. “Before we got paid, people were living on bread and water and the food they could grow in their gardens this early in the year,” he says.

The situation was so bleak that according to Russian media, people in Pikalyovo were forced to eat wild plants, while the city’s hot water was shut off after residents couldn’t pay their bills. When Putin came in to save the day, he saw p.r. potential in Pikalyovo’s distress. During a nationally televised meeting in the town, the Prime Minister scolded local officials and factory owners, including billionaire tycoon Oleg Deripaska, a onetime Kremlin favorite whose investment company Basic Element owns the town’s BaselCement factory. “You have made thousands of people hostage to your ambitions, your lack of professionalism — or maybe simply your trivial greed,” Putin said.

Yet even Putin’s harsh words and the disbursal of pay have not put an end to the feeling here that the crisis will continue. “It’s unlikely the situation will change. Receiving our pay was a small gesture, a short-term solution,” says Denis Yershov, a former employee at the local electricity plant who helped block the road last week. “I’ll be happy when we have work again. I’ll be happy when we have stability and I’m able to feed my family.”

Yershov’s sentiments — and those of nearly everyone else TIME spoke to in Pikalyovo — are playing out at checkout counters in shops all over town. “People are only buying the cheapest brands. It’s like they don’t believe the change will last,” says Oksana Gavrilova, a staunch Putin supporter who had worked at the EuroCement factory for eight years before she was laid off. Leaning down into a nearly empty cooler to grab a kielbasa, she says, “Without the factories, Pikalyovo is nothing.”

And she is right. Pikalyovo is one of hundreds of cities across Russia whose populations are supported by just one factory or one industry. If that factory or industry is wiped out by the global economic downturn — as Pikalyovo’s was when the price of cement dropped and Deripaska’s company Basic Element put half its workforce on forced leave — the whole town is sent into a tailspin. (See pictures of the global financial crisis.)

As Russia’s unemployment figure passes 7.7 million, or 10.2% of the economically active population, residents of small towns all over the country are struggling and looking for solutions. In Pikalyovo, they may have found one. “By blocking the road we’ve set a precedent,” says clay-quarry worker Markov. “It was an effective action, and the police did not arrest us or beat us. We are not afraid of the authorities anymore, and we will do it again.”

Others are taking note. Last week, Gavrilova’s cousin called from the Siberian city of Irkutsk to ask if Pikalyovo was “leading a civil war” and to say that the situation was similar in her city, where workers were holding a hunger strike over unpaid wages at the local pulp mill, also owned by Basic Element. This time it took no prodding from Putin for Deripaska to announce plans to pay out some $2.8 million in back wages to about 2,000 workers. (See pictures of Russia celebrating Victory Day.)

According to the daily Nezavisamaya Gazeta, the protest in Pikalyovo has also prompted Putin to announce the creation of “crisis teams” made up of members of his majority United Russia Party to monitor joblessness in every region. On Tuesday, Russian President Dmitri Medvedev launched a set of meetings aimed at preventing further protests such as those carried out in Pikalyovo and later said he will sack regional employers who fail to tackle unemployment themselves and instead pass the responsibility on to Moscow.

Whether these new measures will work remains to be seen. For now, Pikalyovo’s union leaders have shown how effective community action can be, and as people across Russia lose patience with what many see as the government’s mishandling of the financial crisis, it’s likely the fires of protest will spread.

Read “Medvedev’s Grim View of Russia’s Economy.”

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