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Regular version of the site

Major trends in the Russian labour market and its medium-term prospects

Priority areas of development: economics
2013
The project has been carried out as part of the HSE Program of Fundamental Studies.

This report summarizes the results of an applied research project on the Russian labour market conducted by the Centre for Labour Market Studies in 2013. This set of studies allowed us to clarify the present state of the Russian labour market and highlight its distinctive characteristics that define the current features of its development. The authors identify minimum wage regulation and informal employment amongst the most serious structural problems of the labour market.

Research object of the surveys presented in the report is the dynamics of the labour force, employment and unemployment rates, minimum wage rate, job creation and job destruction.

Research purpose of the surveys is the comprehensive analysis of major current and medium-term trends on the Russian labour market.

Empirical base of the research is provided by official data collected by the Federal State Statistics Service (“Rosstat”). The studies presented concentrated on the period of the 2000s. However the researcher’s prime interest was focused on 2012-2013 since by that time economic growth had almost stopped and the Russian labour market had to look for ways to adapt to the new reality. The authors also used the data of the Russian Labour Force Survey for 1999-2013 conducted regularly by Rosstat. Important information was also provided by 9-21 rounds of the large panel Russia Longitudinal Monitoring Survey – Higher School of Economics [1] (RLMS-HSE) covering the period of 2000-2012. The set of questions for analysis of the informal side of the Russian labor market that was added into the core questionnaire of the RLMS-HSE survey in 2009 provided additional insights into the consequences of Russian informal employment.

Research results showed that demographic factors will provide a key impact on the Russian labour market in the coming years. Intensive aging and the low birth rate will result in a sharp decline in the labour supply and an increasing demographic burden on the working population. The employment rates growth during the 2000s was accompanied by negative structural changes. The number of “bad” jobs characterized by “shadow” wages and a low level of social security engagement increased while employment in the high-performance sector of the Russian economy declined. Current minimum wage regulation also leaves room for improvement. Analysis of changes in the structure of Russian employment indicates that the regulatory burden is excessive for many segments of the labour market. High hiring costs lead to a reduction in labour demand in the formal sector. Taken together with low unemployment benefits it results in an increase in informal employment. However it is also important to highlight that the very presence of informal employment should not be regarded as absolutely negative feature of Russian employment. The results show that there are no rigid barriers between formal and informal employment on the labour market and informal income levels compare quite well to formal ones.             

Implementation of the research results

The results presented in the report can be used in policy recommendations since they are primarily concerned with current and medium-term trends in the Russian labour market. They also provide new empirical results that contribute to the understanding of contemporary features of Russian labor market mechanisms.


[1] http://www.hse.ru/rlms/

 


 

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