Alexander Afanasyev, a veteran worker at Russia's largest car plant, fears he could one day be stabbed by a friend.

But it isn't paranoia that fuels that fear. The threat of job losses and starvation is spreading fast in the Russian Detroit on the Volga river.

Carmaker AvtoVAZ (AVAZ.MM), faced with plunging car sales, is preparing to cut a quarter of its workforce, or 27,600 people, in the largest round of job cuts in a single Russian city.

Details of the cuts are likely to be made public on Wednesday and those fears could turn into a loathing of the authorities, testing the ability of the government of Prime Minister Vladimir Putin to avoid unrest as sharp recession follows a decade of boom.

It could get really ugly, said Afanasyev, 50, an assembly line worker and an active member of AvtoVAZ's trade union, which is tentatively planning protests on October 17.

What if, for example, I'm not fired and my redundant mate, who stood beside me on the assembly line, 'greets' me at my front door as he knows I'm still getting money? asks Afanasyev.

AvtoVAZ, a Soviet-era behemoth that still produces some clunky Lada models on outdated 1960s equipment, has grown used to decades of state money injections to stay afloat.

Hopes of modernization soared when France's Renault (RENA.PA) bought a quarter of the state-run firm for over $1 billion two years ago, but the crisis delayed many of Russia's restructuring plans as budget revenues fell amid the recession.

Putin came to AvtoVAZ six months ago to pledge $1 billion in state support to avoid what he described as the General Motors scenario, when 34,000 people were fired.

Russian jobless rates have eased in recent months from their five-year high of 9.5 percent, but a new wave is feared.

With state money quickly spent paying off debts and an expected net loss of over $1 billion this year, AvtoVAZ management was forced to cut working hours and wages as a last resort to avoid mass layoffs.

But the slowly brewing frustration in the one-factory town of Togliatti may easily turn into anger.

I don't think people will be smashing shop windows ... I think they (workers) have already decided what to do. If it becomes too tough, they will block the M5 highway, said an official at Togliatti mayor's office, who asked not to be named.

The road is one of the main arteries between Moscow and the Urals. In June, Putin traveled to Russia's north to rebuke aluminum tycoon Oleg Deripaska after protesters in a small town blocked a road over unpaid wages.


The Russian car market had been on its way to becoming Europe's biggest last year before the crisis reversed a decade-long consumer boom and shut down cheap financing.

Overall sales have halved and those of AvtoVAZ have fallen by 44 percent despite getting some support from the rouble's devaluation, as analysts say the government has been slow in spurring demand.

This will be no excuse, however, for officials and managers at Togliatti, the top recipient of state aid in 2009, if Putin has to return to the town of 730,000 inhabitants amid protests.

Work is under way to avoid another snap visit by Russia's most influential politician, who enjoys his tough-guy image.

Officials say public service jobs, such as street cleaning, will be abundant for unemployed workers, many of whom still use hammers to fine-tune Ladas on assembly lines.

But Tatyana Merkulova, deputy head of Togliatti's employment center, says she does not share this enthusiasm as she has only 1,400 vacancies for 12,000 jobless, in sharp contrast with 6,000 vacancies for 2,000 jobless a year ago.

I really don't know what we will do, she confessed when asked about the big new wave of job cuts.

Street cleaners are paid 4,000 roubles ($132.5) per month in addition to their jobless benefits of 4,900 roubles. Last year's average wage at AvtoVAZ was 20,000 roubles.

Alexander Borisov, 29, an assembly line worker, says he can barely feed his wife and newborn baby despite still working at AvtoVAZ, as he will get a reduced wage of 8,000 roubles this month, of which half will be used to pay his rent.

Sometimes I have only a few kopecks left and it drags on and on. Something like 100 roubles for a day, sometimes 80, he says. That is enough to buy three bottles of beer.

Officials hint they might have a last-minute plan.

I don't think AvtoVAZ will die, Finance Minister Alexei Kudrin said on Tuesday, adding it was the last time the state would help AvtoVAZ, possibly by increasing its stake from the current 25 percent, but will also demand a big restructuring.

The powerful head of Russia's top bank, state-run Sberbank (SBER03.MM), German Gref, also said this month there might be a role for AvtoVAZ in Sberbank's joint deal with Canada's Magna (MGa.TO) to run German carmaker Opel.

Pyotr Zolotaryov, the leader of AvtoVAZ's trade union, says authorities have no other option but to meet the demands.

We will find instruments ... to force the employer to agree with our arguments ... There are different strikes, including sit-ins for example. This is when people come to work and don't go home, he said.

(Writing by Dmitry Zhdannikov, editing by Will Waterman)

($1=30.19 Rouble)