UPDATE: PM says Russia can pay wages of bankrupt firms via new fund

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CHITA, Sep 9 (PRIME) -- The Russian government may out a compensation mechanism for employees of bankrupt companies from a special fund, Prime Minister Dmitry Medvedev said at a meeting on labor protection on Friday.

“A situation when a company goes bankrupt and does not pay money to a worker is quite widespread, he must be compensated for the lost wage,” Medvedev said.

He said that the existing mechanism of salary compensation after the sale of property of a bankrupt firm does not serve the purpose because there is often not enough property to meet all obligations.

“We can consider a mechanism based on special funds,” he said.

According to Medvedev, wage arrears in Russia have totaled 3.5 billion rubles as of August 1.

“This is a disgrace, there must be no such cases at all,” he said. “Everyone must receive a reasonable salary, fully and on time, this is an axiom.”

He said that wage arrears account for about one percent of all monthly salaries.

“In practically all cases this is due to the lack of own funds of organizations,” he said.

Medvedev said that everything has been done to solve the problem: there is a road map to control timely wage payments and the administrative responsibility for non-payments was toughened.

“Such issues must be controlled by corresponding supervisory organizations, the prosecutor’s office,” he said.

Medvedev said that he will order ministries to consider introducing a higher priority for salaries payments over taxes. “I remind you that (the Civil Code) stipulates that if there is not enough money on the account, transactions to pay salaries are made on a third-priority basis… We need to carry out a final legal expertise and if it gives a full picture of reasons to change the civil legislation, we must do this.”

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