Jan 30, 2021
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Request for Justice: Small Business Climbs The Pit

Request for Justice: Small Business Climbs Out of the Pit

Photo: Elena Afonina / TASS

The demand for social justice is growing in Russian society. Sociologists also state this, and a new wave of rallies that swept across the country demonstrated this.

The Kremlin also sees a similar request, about which Vladimir Putin said unequivocally in his speech at the Davos Forum: “Growing inequality is splitting society, real problems give rise to intolerance and discontent.”

The political effect is obvious – it is the growing popularity of left-wing patriotic parties. But experts told the Free Press about how the demand for justice will affect economic and business processes.

Independent financial expert Alexey Bushuev:

– There will be enough politics in the new year. Even small movements can turn out to be tectonic shifts. So, we clearly saw that the government, under direct pressure from the president, was forced to actually stimulate demand instead of a tough monetarist policy (we save on what we can and accumulate reserves). The textbooks call this “throwing money from a helicopter.” Given the restorative effect this has had on the economy, we can expect the experience to be repeated in various forms.

“SP”: – And how exactly?

The most obvious choice: these are direct benefits from the federal center to citizens for some simple and meaningful purposes – for children, for pensioners, especially on the eve of elections. It is straightforward and easy to count. It is simply not possible to arrange complex time calculations.

Another group of “surprises” may be the restructuring and freeing up of entire niches, where there will be room for new players, and above all for small and medium-sized businesses.

SP: Do you think that on the eve of the elections the authorities will be ready for serious economic reforms?

Attention, it seems to me, will be paid to sectors where government intervention is increasing in one way or another and next to them. As they say, in a glass with large nuts there is always a place for seeds. And in our situation, it may turn out that half of the nuts have been taken out and a lot of space appears. This can solve a whole range of political (jobs, social lifts for young people) and economic issues – knocking out unnecessary intermediaries and corruption margins.

A serious innovation may be the emergence of a state low-corruption investment program for civilian sectors. For example, in the field of medicine, medical equipment, science, which along the chain will give impetus to contractors.

“SP”: – You mentioned the change in the government’s monetarist course. Will the financial drift continue under the influence of social protest demand?

I think that the main systemic factor in the financial industry will be the need to “grow” competent clients. The Bank of Russia noted that the country has sold up to 600 billion rubles of “muddy” financial products. If the margin on them was at least 20%, then the economic losses of investors become comparable to the losses of investors in pyramids in the nineties. And this is also one of the triggers for change.

Change is scary. Always. This is normal. But whoever is the first to deal with fear has a chance to ride the economic elevator as high as he dares.

General Director of the Rocket Work platform Anastasia Uskova I am sure that social and political changes will affect primarily small business.

“The government sees small and medium-sized businesses as a powerful tool for driving the economy and increasing tax collections,” says Uskova. – Benefits and indulgences not only keep businesses afloat, but also force entrepreneurs to “whitewash”, so that the course to support domestic entrepreneurship will most likely continue.

“SP”: – At the same time, even the official data for 2020 is not just pessimistic, but tragic: 950 thousand individual entrepreneurs have stopped their activities. While it appeared one and a half times less – only 605 thousand. In fact, there is a lot of small business.

– You know, it is very difficult to predict the situation of small business now. It is clear that without the support of the state, business, faced with a prolonged decline in household income and consumer activity, will continue to incur losses.

Together with it, the supply on the labor market will also thin out, since small and medium-sized enterprises in our country create a quarter of all jobs. In addition, the moratorium on bankruptcy is no longer in effect; the deferred taxes of last year must also be paid now. And where to get the money, if the incomes of most small entrepreneurs by the end of the year sank by almost 17%, it is not clear!

“SP”: – Perhaps this year will bring a massive “migration” of entrepreneurs to the self-employed?

– Given that the conditions for the self-employed will not change until 2029, it is clear that their number will only grow in the future. Ease of registration, no mandatory insurance premiums, and a low tax rate, along with access to government support and concessional loans, make the new tax regime more popular. And not only among yesterday’s individual entrepreneurs seeking to reduce tax costs.

Self-employment is also attractive for large businesses. Cooperation with self-employed within the framework of short-term contracts and one-time jobs is much cheaper for companies than with an ordinary “physicist” and allows you to optimize personnel costs, which is important when everyone has to save.

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