Russian State Corporations: Top Margin Vs Penny-Ante Salaries

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The annual financial report of Russia’s space agency Roscosmos for the year 2018 was just finalized and published.

The average salary of an employee at the headquarters of Roscosmos for 2018 was 396,000 rubles per month (approx. $6,000). It had exactly 605 employees at the central office.

“The average monthly wage of corporation employees for 2017 is 382 thousand rubles, for 2018 – 396 thousand rubles,” the explanations to the financial statements of the company said. At the same time, only 550 employees worked in 2017.

These numbers only present the salaries of those in the office, workers at industrial enterprises that fall under Roscosmos aren’t included.

The annual report also indicates the amount of payments for the “core management personnel” of the state corporation.

In 2018, in the form of salaries and bonuses, the top management of the company received 557 million rubles (approx. $8.5 million), and in the form of “short-term remuneration” – 643.9 million rubles (approx. $9 million). These were approximately 7% lower in 2017.

The amount indicated in the annual report includes not only the salary of employees, but also the payment of the annual bonus for the end of 2017, special allowances, material assistance to employees and taxes.

The head of Roskosmos Dmitry Rogozin for 2018 declared income of 29.5 million rubles (approx. $450,000). Moreover, with such income, the head of Roscosmos did not even get into the top five richest employees of the state corporation and took only seventh place.

The highest income in 2018 was declared by the financial director of Roscosmos Dmitry Belenov (57.4 million rubles, or approx. $880,000) and the chairman of the scientific and technical council of Roscosmos Yuri Koptev (48.6 million rubles, or approx. $744,000).

Assistant to Russian President of Vladimir Putin, Andrei Belousov in December 2017 said that 220,000 people were employed at Roscosmos, taking into account all of its subsidiaries.

If the salaries of all employees working in Roscosmos subsidiaries are accounted for, the average salary falls down to 59,700 rubles (approx. $915). This amount includes salaries of engineers, technicians, production personnel and their management.  In fact, real salaries of engineers, technicians, and production personnel are 1.5 times lower – about 39,800 rubbles (approx. $612).

Astronaut salaries were also revealed. A candidate for an astronaut receives a salary of 60.9 thousand rubles (approx. $930), an astronaut – 63.8 thousand rubles (approx. $980), an instructor receives 88.4 thousand rubles (approx. $1,350).

At the same time, employees who are in space are paid a lump-sum cash reward, and their salary grows to 69.6 thousand rubles (approx. $1,070).

In addition to salary, astronauts receive various allowances – 25% of the salary if they successfully fulfill their duties, as well as allowances for seniority, academic degree, etc. According to the adviser to the head of the Cosmonaut Training Center Sergey Zaletin, the average salary of the Russian astronaut, taking into account the allowances, reaches 170 thousand rubles (approx. $2,600), and after several flights it can grow up to 300 thousand rubles (approx. $4,600). Even in this case, the salary is still much lower than the average salary of people at the Roscosmos central office.

Over the past years, Roscosmos has appeared in the center of a series of scandals related to the massive mismanagement of funds. The Accounts Chamber of Russia identified violations in the Russian space industry in the amount of approximately 50 billion rubles (approx. $769 million) throughout 2018. The Accounts Chamber says that in 2017, the department revealed 151 facts of irregularities in the work of Roskosmos for a total of 785.5 billion rubles (approx. $12 billion).

Roscosmos’ clean profit in 2018 was 9.7 billion rubles (approx. $149.5 million). In 2017, this number was 4.191 billion rubles (approx. $64.5 million).

A yawning gap between salaries of key research & development sector personnel and those of office workers is something ordinary for Russian state corporations.

According to some data, the average salary of an employee in management and executive departments of Rosatom (specializes in nuclear energy) and its subsidiaries is about 350,000 rubbles (approx. $5,400). At the same time, the average salary in the company and its subsidiaries showed in reports is about 74,000 rubbles (approx. $1,140). In this case, the average salary of engineers, technicians, and production personnel is even lower. Average salaries for employees involved in the real production, research and development is around 35,000-40,000 rubbles (approx. $540-615).

Rosatom’s clean profit in 2018 was 228.5 billion rubble (approx. $3.515 billion).

The average salary in another Russian state corporation, Rostec, in 2018 was 49,500 rubles (approx. $760). Rostec is a holding conglomerate that specializes in consolidating in strategically important companies, mainly in the defense and high-tech industries. Rostec’s clean profit in 2018 was 128.1 billion rubbles (approx. $1.97 billion).

Russian sources report that profit of non-production subsidiaries impact significantly the pricing of Rostec products on the international market. Almost every product of Rostec passes 2-4 non-production subsidiary companies prior to reaching the market. This increases its cost for buyers by several times. At the same time, companies really involved in the production of weapons and other high-tech products receive only 30-50% of the funds received by Rostec after selling their products.

In Russian state corporations, employees of the R&D and real production sectors are clearly underpaid, while various office staff (even excluding so-called “core management personnel”) receives improperly large salaries and bonuses. This, as well as, a wide practice of involving non-production subsidiaries (in some cases involved in shady schemes) play a negative role in the development prospects of key fields of the Russian economy.

Recently, the Russian leadership has undertaken a series of steps to reveal and combat funds mismanagement and corruption schemes in the space industry. It is possible that soon similar campaigns could be launched in other key state-linked corporations and projects.

MORE ON THE TOPIC:

• Billion Rubles Violations Discovered In Roscosmos In 2018 Actually Lower Than 2017’s 800 Billion

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