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The increase in non-monetary payments in Russia is the output of both a tight monetary policy and the persistence of the soft budget constraint. The State, by allowing fiscal arrears and in-kind payments, and the enterprises, by using wage arrears as a way of accommodating the budget constraint, make a short term arbitrage which favours the level of employment and further delay in restructuring. Unemployment is positively correlated in the long run with fiscal and wage arrears, but in the short run, any increase in the latter has a positive impact on the fluctuation of employment. Classification JEL: E5 P2