December Wage Arrears Plummet 40%

Wage arrears in Russia declined 39.8 percent in December after nearly doubling the month before as a surge in budget spending helped companies secure funds to pay their staff.

Total unpaid wages fell to 4.7 billion rubles ($142.6 million) on Jan. 1 after jumping 93 percent the month before, the State Statistics Service said Wednesday in an e-mailed statement.

"November saw the peak of uncertainty," said Maxim Oreshkin, head of research at Rosbank. "Companies held wages to build up a security cushion."

Russia is facing its biggest economic challenge in 10 years as the global slowdown pushes down the price of oil, gas and metals -- the country's chief export earners. Industrial output shrank an annual 8.7 percent in November, the biggest contraction since the 1998 economic collapse.

Spending rose to 1.4 trillion rubles in December from 843 billion rubles the month before, the Finance Ministry said Tuesday.

"More than a trillion rubles" entered Russia's financial system last month, Oreshkin said. "All this money entered the economy and created additional demand. Some companies got money for the work they had already carried out, and payments started to move more actively in the banking system."