Russia’s poor institutional foundation and expensive labor do not fit the existing commodity-based economic model, which requires the cheapest possible workers – immigrants. We are witnessing a giant pro-immigration campaign, with some even claiming that immigration will “save Russia.”
In 2007, there were 4.6 million officially registered unemployed in Russia. That number rose to 6.4 million in 2009, or over 8% of the country’s economically active population. Now, although the unemployment rate is down to its former level (around 5 million unemployed), the quality of employment has fallen significantly.
Note that the figures cited here do not include latent unemployment or temporary, seasonal employment. Now that a second wave of the economic crisis – or a new and more serious phase of the crisis – is looming ahead, unemployment may shoot up to 8-10 million people, or 12%-15% of economically active population, in the next three years.
Russia’s poor institutional foundation and expensive labor do not fit the existing commodity-based economic model, which requires the cheapest possible workers – immigrants. We are witnessing a giant pro-immigration campaign, with some even claiming that immigration will “save Russia.” In fact, a commodity-based economy with a distorted employment structure is a sign of a slave-owning system, in which there is no demand for qualified workers. At the same time, people are reluctant to take low-paying jobs, so officially, there are job openings in the system, although they do not meet people’s needs.
The UN International Labor Organization introduced the term “decent work” a long time ago. This does not mean abstract vacancies, but jobs that bring in a decent income and fall under the current understanding of a prestigious occupation with advancement opportunities. In Russia today, the workforce is grossly underfinanced through wages. For example, Russians are being repeatedly offered mortgages, but to be able to service these loans, they need to make three or five times what they make now.
Another example is construction for the September 2012 APEC summit on Russky Island off the coast of Vladivostok. There has been mass unrest among construction workers who are mostly immigrants from Central Asia. Locals will not take these jobs because they get fewer rights than they might get elsewhere in the region, and the pay is 60%-85% lower.
Another important problem is job placement of university graduates and other young professionals. Most of them work outside their field of specialization because of low pay. In most cases staffing problems are not rooted in a shortage of qualified professionals: the problem is that professionals are not offered decent work.
No more than 15% of university graduates have jobs in their chosen fields. As a result, after spending five years studying to be an aircraft engineer, newly graduated engineers have to find office job with a bank or a commercial company. The young professional goes on to change jobs at least every two years on average. They float from one company to the next instead of going to work for a company that needs their specific skills and making a successful career there in 5-10 years.
Older generations have similar problems. People over 40 are having a hard time finding employment, which, according to the ILO, suggests a huge shortage of openings for highly skilled jobs rather than a shortage of personnel.
Take the Sverdlovsk Region for example: three years ago, average wage in industry was 8,000 rubles a month, while the average across the region was 15,000 rubles. This explains why people are justifiably reluctant to take industrial jobs.
The number of immigrants is on the rise along with the demand for them in the economy, because cheap, unskilled labor helps industrial companies achieve their production goals more efficiently.
At the same time, the skills of the Russian workforce and the country’s human capital in general are on the decline. The quality of education in the country is eroding both in schools and universities. Russia has no systemic shortage of personnel; but it faces a deficit of people who are willing to work hard for unacceptably low pay. This is the cause the so-called shortage of personnel in 95% of cases.
The most highly skilled professions and occupations are deteriorating. For example, the number of people employed in machine-tool engineering has fallen by 93% in the past 20 years. Even assuming that the industry had been overstaffed in the Soviet era, a 93% reduction is too much. As a result, the skills of the Russian population are declining.
Let’s dispel any illusions about Russians moving to other countries for work. In most cases, emigration lowers their living standards and status. Although the situation is not as bad as it was in the early days after the collapse of the Soviet Union, when university professors were hired as taxi drivers in New York, today’s immigrants suffer a decline in status nevertheless.
Even as regards “brain drain,” people who had mid-level and senior positions at Russian R&D companies, usually get jobs that are one or two steps lower when they emigrate. Still, people prefer working abroad for the sake of better career prospects and more generous social benefits, because that much was guaranteed, at least until very recently. The main reason Russians choose to emigrate now is uncertainty about Russia’s future, the ongoing degradation of the Russian economy and lack of outlets for their professional potential.
According to estimates, 1.5-3 million people left Russia over the past decade. No precise figures are available because people do not necessarily give up their Russian citizenship, but rather move to another country under a 5-10 year contract. Almost all of them have university degrees, and many have PhDs.
According to some experts, about 20,000 PhD holders left Russia over the last 25 years. The Soviet Union had invested heavily in training these highly skilled professionals; and now the rest of the world is reaping the benefits for free. Meanwhile, Russia is getting a host of unskilled CIS immigrants in their stead. Not only is Russia losing highly skilled professionals, its economy lacks demand for these skills in the first place.