RUSSIAN AND WESTERN observers have long predicted that unemployment and the concomitant fall in living standards will create major headaches for Russia's leadership. To date, though, the catastrophic decline in industrial production that has accompanied market reforms has not resulted in mass unemployment. Enterprises have not faced genuine budgetary constraints, and managers have tended to institute shorter working hours or grant compulsory vacations rather than lay off employees. Whether the present situation continues in 1995 or unemployment finally emerges on a large scale depends on several factors - including the willingness of workers to continue to put up with low real wages and the government's commitment to radical economic reform.

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