BOFIT Viikkokatsaus / BOFIT Weekly 2017/37

From 2009 to 2016, support to single-company towns, or monotowns, were arranged on the basis of presidential or government decrees. The development programme for monotowns was only approved in late 2016. A study by the Federal Accounts Chamber (FAC) found the programme lacking in terms of comprehensive scope, concrete measures and long-term objectives. FAC noted overlapping functions and insufficient coordination. At the federal level, the programme involves e.g. 12 ministries and 9 lenders (including 4 large state banks). Monitoring statistics are compiled by 4 federal authorities without unification. Several relevant monitoring indicators were only decided early this year. Information on the companies forming a town is often partly confidential.

The FAC said it was not possible to sort out the results of support measures, noting that no federal executive authority has reliable information even on the amount of support granted. Transfers from other government budgets to monotowns equalled 0.6 % of total consolidated government budget spending in 2010–16. Of that, 30 % went to the 8 largest monocities. Besides budget money, support has been provided in the form of credit and tax reliefs. Monotowns have made agreements on co-financing infrastructure projects and have established zones of accelerated economic development.

The number of towns officially listed as monotowns has declined slightly since the 2009 recession, and now stands at 319. A town is defined as a monotown if it has over 3,000 inhabitants and one industrial firm (excluding oil & gas production) accounts for at least 20 % of employment in the town during five years before the listing. The monotown distress ranking (three categories) uses such criteria as termination of a town company, the number of lay-offs planned by a town company, prospects for a town company's industry, the local unemployment rate and town residents' assessments of local conditions compiled in official surveys. 100 monotowns are currently ranked as problem towns (75 in 2013). Nearly 150 are classed as having a risk of deterioration, and over 70 are classed as stable. The FAC says the list needs updating.

61 of Russia's over 80 administrative regions have monotowns. In over 200, and in over 70 problem towns, the town company's industry is machinery, equipment & transport vehicles, metals, mineral extraction or forest industry.

The officially listed monotowns had 13.6 million inhabitants or 9.3 % of the Russian population at the start of 2017. Monotowns stood for 8.5 % of the employed and 11 % of the unemployed nationally. The town companies represent 5–6 % of goods supplied nationally and they employ one million workers, or 1.5 % of the employed. Almost 3 % of the Russian population lives in the problem towns. Three monocities have populations in excess of 500,000, of which two are problem cities. FAC's own separate survey found that 70 % of monotown residents find the living conditions unfavourable or barely tolerable and that 60 % would like to move elsewhere. Under 8 % found the measures of local officials adequate. The FAC reports that the population of monotowns has decreased in recent years and the real volume of goods supplied by the town companies shrank by about 6 % during 2015–16.