HAVING failed to pay its workers any cash wages for 13 months, the Akhtuba factory in Volgograd decided to pay them for February in kind. Unfortunately for the workers, the kind of product Akhtuba had to hand was “the Adam”, a rubber dildo, into the making of which the firm had diversified in 1993 when it ran out of customers for its marine navigation equipment. Workers who tried to sell their Adams to the local sex shop found out in ten minutes what it had taken their superiors four years to twig: that the market had moved on to electronic vibrators, and inert dildos were unsaleable even in Volgograd.

The Akhtuba case ranks for the moment as the most bizarre payment-in-kind story to have emerged from Russia's benighted labour market, displacing January's tale of Siberian workers who were paid in coffins and the plight of workers at another Volgograd factory who were paid last year in bras. But to be paid in kind, or late, or not at all, has become a fact of life for millions of Russian workers. The purported shortage of cash has reached almost surreal proportions, accompanied by a boom in barter and IOUs--and rising anger.

Sensing that public patience is finally running out, President Boris Yeltsin put a promise to eliminate pay and pension arrears at the centre of his “state of the nation” speech last week. It will be a popular promise, if kept. But Mr Yeltsin's ministers have made and broken such assurances repeatedly. Governments, federal and local, are among the worst offenders, accounting for a fifth of the $9 billion in unpaid wages owed to workers at the end of January. That total has more than doubled in a year.

An index of hardship is provided by a cinema in Altai, Siberia, which allowed customers to pay two eggs for a ticket. When eggs ran short locally, the price of entry was payable in empty bottles. On a larger scale, tax officials say that across the fuel and energy industries, only 20% of transactions are settled in ready money. The balance comes, if at all, in barter, bills of exchange, mutual offsetting of debts, and tax credits.

The Russian-European Centre for Economic Policy, a monitoring unit sponsored by the European Union, estimates that barter rose as a proportion of all industrial sales in Russia from about 10% in mid-1993 to 40% by the end of 1996. In some industries it is almost universal. The Boston Consulting Group cites the case of a car firm which is settling nine-tenths of its bills this year by bartering finished vehicles. Faced with firms protesting a lack of cash to pay taxes, federal and local governments allow factories to settle their obligations with cans of paint or newly-assembled lorries.

Russia's cash shortage is a selective affair. Almost all the anecdotes it provokes come from the traditional manufacturing sector. Barter helps industry evade tax, because barter income can be detected only by studying the whole of a firm's activity and inventory, not merely its bank account.

More firms would pay their debts in cash if the system obliged them to do so. But Russian law is weak, officialdom is malleable, and few penalties await managers who shun their obligations. Non-payment of wages is tolerated the more readily because it keeps unemployment down. If everyone who worked had to be paid a cash wage, unemployment would spike far, far above the current rate of about 9.3%.

There is no shortage of cash in the new, largely informal private sector, which is dominated by service industries. And a forecast inflation rate of 12% this year is proof that there is no “shortage” of roubles. The problem, counter-intuitive as it might sound to workers in Volgograd, is a lack of demand for roubles. The currency of choice is the American dollar, for which Russia is probably the biggest overseas market. That is what Russians prefer to buy with their wages, whether paid in roubles or dildos. Although the rouble has held its international value, in January this year a quarter of Russian household income was spent purchasing dollars.