Every day, Emelyanov and his staff have to take time out from tending patients to fill out official log books on health and hygiene. It’s repetitive and pointless work but required by law — and vital if Emelyanov, who has co-owned his Moscow clinic since 1992, wants to avoid a hefty arbitrary fine from inspectors, The Associated Press reported on Tusday.
Along with many of the small struggling businesses in Russia, Emelyanov knows this comes with the territory.
“Regulatory authorities, armed with current rules and regulations, are free to do whatever they want with us,” he said. “Every inspecting body is tailored to levy fines from businesses. Even if you abide by all the rules, they will always find something to fine you for.”
There are growing concerns that Russia’s burdensome bureaucracy and corruption are holding back the country’s economy, which has become increasingly reliant on massive oil and mining companies.
According to the International Monetary Fund, Russia is the world’s eighth-largest economy — just behind Brazil — with an annual gross domestic product of some $2m. While it exports a large part of Europe’s and Asia’s energy needs, it also helps fill in the order books of companies across the globe.
However, as leaders of 20 of the world’s biggest economies gather in St Petersburg for their annual summit this week, Russia is raising concern. The country’s economic growth has been on a downward path since the start of last year.
The Economic Development ministry estimates it will only be 1.8 per cent this year — the slowest rate since 1999. Economic Development Minister Alexei Ulyukayev has also warned of the risk of recession.
With Russian oil and gas exports slowing, the best hope lies with small and medium-sized businesses, Ulyukayev said in an interview with the Kommersant business daily last month. “Russian exports can no longer be the key driver of economic growth,” he said.
But businessmen like Emelyanov claim the government isn’t backing its words with action.
When President Vladimir Putin was campaigning to win his third term as president in 2012, one of his promises was to increase the pay and benefits of state employees — who make up to 40 per cent of Russia’s total workforce. Soldiers saw their pay more than double last year, while teachers got a 14 per cent raise. While this lavish spending has improved the lives of millions of Russians, it has put a strain on the country’s budget.
The private sector has seen its tax burden increase. The government has doubled employers’ contributions to the state-run pension fund, which small business association Opora estimated had caused about half a million small businesses, or 15 per cent of the total, to shut down.
“Putin is trying to understand what’s going wrong, but he doesn’t get it,” said Yana Yakovleva, who heads the advocacy group Business Solidarity.