Real Estate

During the Soviet era enterprises provided a range of social services to enterprise employees, including housing, kindergartens, recreational facilities, and health care clinics. In the middle part of this century the push to industrialize and modernize Russia led to the creation of enterprises in otherwise underdeveloped parts of the country. Because the capacity of local government (where it existed) in these areas was often insufficient to provide social services for the increasing labor force, and in order to attract employees, these areas developed into "company towns" with the enterprise providing nearly all social infrastructure. Even as these underdeveloped regions developed into urban areas, enterprises, indirectly supported by government subsidies, continued to provide these services to attract and keep employees.

The attitude of the federal government and enterprises to the provision of social services to employees has changed dramatically in the past few years with the government's efforts to reorient the Russian economy along market principles. The major program of reform affecting enterprises has been privatization of production facilities and related assets and divestiture of the enterprise's social assets. Given the amount of enterprises' resources devoted to provision of social services and maintenance of social assets, the privatization program assumes that after divestiture, substantial resources will be rechannelled into the enterprise's production and management activities, increasing the overall efficiency and profitability of the enterprise.

This article deals with housing and related infrastructure facilities, the largest social asset possessed by enterprises. Beginning in the early 1990s the federal government has mandated that privatizing enterprises divest