September 2, 2013
The Cost of the World Cup
FZ-108 primarily threatens hundreds of thousands of Russian workers
A serious discussion has erupted since the contents of the notorious “2018 World Cup Law” (or FZ-108, for short)* were revealed to the general public. The focus of the discussion has been the consequences of removing restrictions on employing migrant laborers and the possibility of their runaway exploitation if the law’s clauses on voluntary contracts (which place them beyond the reach of a number of articles in the Labor Code) are enforced.
However, the people most threatened by FZ-108 are Russian citizens.
When the discussion of FZ-108 was getting underway, many in Russia were disturbed by the fledgling campaign against “illegal migration” recently undertaken by law enforcement and local authorities in several areas of the country, a campaign involving police raids and mass imprisonment of migrants in special camps, where they were forced to live almost on the bare pavement, without electricity and other basic conveniences. Given this background, it was unsurprising and even natural that the public would pay more attention to the clauses in FZ-108 dealing with the employment of foreign nationals and stateless persons. The perception exists that the law has nothing to do with Russian citizens.
But is this really true? The answer is simple: no, it isn’t!
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Major sporting events like the World Cup always entail the generation of tens of thousands of jobs in construction, light industry, building maintenance, catering, retailing, transportation and so on. Yes, these jobs appear only for a few years, but wise use of such opportunities can give the economy a stimulus for decades to come. Increasing employment leads to growth in domestic spending and private savings, which, in turn, improve demographics. These are the three pillars of sustainable economic development.
But all that happens only when the new jobs are decent, meaning the wages they pay allow people to spend money, including on major and long-term purchases (e.g., home appliances, furniture and cars), and maybe even take out a home loan, and the terms of employment enable them to feel confident in the future, save money, and start and raise a family.
However, the wording of FZ-108 makes it clear that none of these things are expected to happen in Russia. Instead, the authorities are planning to tackle the job of preparing and staging the 2018 World Cup with slave labor, thus definitely ruling out any positive effects both for workers and the economy as a whole. The only outcome of this championship will be the personal gain of a few.
Why is such a conclusion warranted? The fact is that FZ-108, unlike, say, FZ-310 (which deals with the 2014 Sochi Olympics),** expressly stipulates significant exceptions to labor laws, exceptions that will diminish job quality. They are mainly concentrated in the controversial Article 11 (Chapter 4), “The Characteristics of Work Related to the Staging of the Events.”
First, Article 11 gives employers the right to establish long working hours unilaterally (Section 1).
Second, Article 11 allows employers to define the manner of payment for work at night, on weekends and on public holidays without regard to the stipulations of Articles 154, 113 and 153 of the Labor Code. Moreover, this can be done through collective bargaining, through the inclusion of such clauses in individual employment contracts or, more generally, through the enactment of “local regulations,” that is, yet again, unilaterally (Sections 2 and 3).
Third, overtime pay is abolished. Employers may simply compensate for overtime by “providing additional leisure time,” but the wishes of workers are not taken into account, and Article 152 of the Labor Code is effectively revoked (Section 4).
Finally, Section 5 abolishes such nonsense as the provision of elective annual leaves at times convenient for workers (such guarantees are given in Article 122 of the Labor Code, for example, to women before and after maternity leave). Like the rest of the lives of employees, holidays are governed by the “work plans of relevant organizations for preparing and staging the sporting events.”
However, as Vladimir Yurasov, a partner at the Moscow law firm Knyazev and Partners, rightly noted during an interview on RBK-TV, all these rules are clearly contrary to the Russian Federal Constitution. Article 37 of the Constitution states that everyone has the right to remuneration for work without suffering any form of discrimination, and that employment contracts guarantee workers statutory working hours, weekends and holidays, and paid annual leave, as stipulated by federal law. FZ-108 assumes that if workers are employed in the “preparation and staging” of the World Cup, this may very well serve as grounds for discriminating against them in terms of compensation, working hours and the right to paid leave and time off. In this case, “local regulations” are declared primary, rather than the Labor Code and Constitution.
Of course, these draconian measures do not apply to all workers in Russia, only to “FIFA employees, FIFA subsidiaries, FIFA business partners, confederations, national football associations, the Russian Football Union, the Russia 2018 Organizing Committee and its affiliated organizations, whose work activities are related to the staging of events.” The most interesting phrases in this clause are “FIFA business partners” and “work activities [...] related to the staging of events.” Let us consider them in the order they appear.
As Article 2 of the law explains, a “FIFA business partner” is a “legal or natural person that has a contractual relationship with FIFA or its subsidiaries and is involved in events.” The list of such individuals and companies could prove to be quite long, because all commercial partners (including sponsors and licensees), suppliers, agents, broadcasters and so on will be included. Moreover, the provisions of the law apply not only to the “business partners” themselves but also to their subcontractors and subsidiaries.
Because preparations for the World Cup have just kicked off, the list of “FIFA business partners” is still incomplete. At present, for example, we know the names of only three companies that will serve as corporate partners to the 2018 World Cup: Coca-Cola, Hyundai-Kia and Anheuser-Busch InBev. In all, FIFA will have thirty-four such partners by 2018. Of course, all these companies have subsidiaries and subcontractors—personnel and temp agencies, construction and security companies, cleaning and catering companies, firms involved in maintaining equipment and buildings, supplying brand-name goods, producing and placing ads, and so on.
Another way to assess the scope of the problem is to compare the 2018 World Cup with another sporting event that will be hosted by Russia, the 2014 Winter Olympics in Sochi. We already know the names of all its suppliers, partners and licensees. Let’s take a look at the list.
• Worldwide Partners of the Olympic Games: Coca-Cola, AtoS, Dow Chemical, General Electric, McDonald’s, OMEGA, Panasonic, Procter & Gamble, Samsung, Visa
• General Partners of Sochi 2014: Aeroflot, Megafon, Rostelecom, Bosco di Ciliegi, Volkswagen Group Rus, Sberbank of Russia, Russian Railways, Rosneft
• Official Partners of the 2014 Olympic Games: Ingosstrakh, PwC
• Suppliers of Sochi 2014: Avaya, Baltika, EF English First, Kommersant Publishing House, Abrau Durso, Adecco Group, EXECT Business Training, Kelly Services CIS, Detech, Microsoft Russia, GAZ Group, Scania-Rus
In addition, nearly seventy companies have signed licensing agreements with the Sochi 2014 Organizing Committee.
It is obvious there will be no fewer companies wishing to link their logos to the World Cup. Only unlike the employees of Olympics partners, employees of FIFA’s business partners will be forced to waive many of their workplace rights.
But perhaps only a small number of workers will be affected by this restriction of rights? Unfortunately, the wording of the law gives no grounds for such a hypothesis. The law mentions employees whose work is related to the preparation and staging of the World Cup. However, the wording is utterly unspecific. How do we differentiate the work a company does in preparation for the World Cup from its other activities? For example, Coca-Cola produces beverages emblazoned with the World Cup logo. Does this constitute work performed as a FIFA business partner or not? Can it be construed as having to do with the preparation and staging of the World Cup? What about cellular network development work done by mobile phone companies? Or the introduction of new direct flights by air carriers? Without going out of our way to abuse common sense, we can construe nearly all commercial activity by FIFA business partners as preparation for the World Cup.
Of particular concern is the more than probable inclusion among the business partners of such companies as Adecco Group, EXECT Business Training and Kelly Services CIS – that is, companies still operating in the legal gray zone of personnel services. Given that Bill No. 451173-5, better known as the law banning contingent labor, which has already suffered serious damage and almost been stripped of its original intent, was returned for a second reading in the State Duma, the de facto support and promotion of these companies by official Russian sporting organizations and state agencies looks like a targeted attack on the quality of employment.
How many Russians will be affected by these measures at the end of the day? If we accept the flawed logic of FZ-108, we can agree with Russian Sports Minister Vitaly Mutko that the concept of the World Cup has been developed and adopted by FIFA in such a way that almost seventy percent of the country’s population will be involved in preparing for it and staging it.
Does this mean, as some journalists have predicted, the return of serfdom? The answer depends largely on the actions of the trade unions.
* The full text (in the original Russian) of the Russian Federal Law “On the Preparation and Staging of the 2018 FIFA World Cup and 2017 FIFA Confederations Cup in the Russian Federation and the Amendment of Certain Russian Federal Legislative Acts” can be found here: http://www.rg.ru/2013/06/11/chempionat-dok.html
** The full text (in the original Russian) of the Russian Federal Law “On the Organization and Staging of the Twenty-Second Olympic Winter Games and Eleventh Winter Paralympic Games of 2014 in Sochi, the Development of Sochi as a Mountain Resort and the Amendment of Certain Russian Federal Legislative Acts” can be found here: http://www.rg.ru/2011/06/06/olimp-dok.html