In March 2009, Russian wage arrears rose a further 8.3% to reach a three-year high, according to the Federal Statistics Service.

The problem now affects half a million people and is an indicator that many businesses are struggling to maintain cash flow. The total arrears stood at 8.755 billion roubles [US$262 million] on 1 April 2009, compared with 8.087 billion roubles on 1 March 2009.

The problem is worsening but is still nowhere near the level it reached during the last Russian recession in 1998 when arrears totaled US$3.8 billion.

Some 94.5% of the arrears were caused by businesses not have enough cash to pay their workers, with the remaining arrears due to local or federal funds not being paid or received on time.

Almost half the firms that are having to resort to arrears are manufacturing companies, who have suffered because of a reduction in demand on both a domestic an global scale.

As unemployment and wage arrears continue to increase, analysts fear that there will be a return to widespread protests.