Siberian steel city cuts pay to fight crisis

By Robin Paxton

NOVOKUZNETSK, Russia (Reuters) - The working week, like the winter days in this Siberian city, has become shorter since the global financial crisis paralyzed its heavy industry. Pay packets have been cut by a third or more.

Novokuznetsk's half a million residents, over 60 percent of whom depend on the steel, coal and aluminum industries, dare not contemplate the alternative -- mass redundancies -- as they struggle to repay bank loans taken out in more prosperous times.

"If nothing changes, we will come up against more serious consequences in February or March," Alla Semyonova, director of the city's employment center, told Reuters. "People have not yet fully grasped what is happening here."

Novokuznetsk, 3,000 km (1,875 miles) and four time-zones east of Moscow, was booming when demand for steel produced by its two giant mills reached record highs early this year. The sudden reversal in the world economy has hit hard.

Yevgeny Sobolev, head of the city's labor inspectorate, said up to 80 percent of the city's employed were now working a four-day week. "This should mean a decrease of one-fifth in salaries, but they are being cut by 50 or 60 percent," he said.

Outside his office, disgruntled employees, mostly from the service sector, queued to voice their complaints.

Billboards and local radio stations advertise 40 percent discounts on furniture and shops offer half-price jackets and boots. A loaf of bread, however, costs 4 rubles more than before the crisis, said retired steel worker Anatoly Karpetsky.

"I'm a pensioner. I've been wearing the same pair of boots for 10 years. But I need to buy groceries every day," Karpetsky, 82, said as he trudged through the snow with a shopping bag.