The Russian economy will not be able to survive without immigrants. The dire warnings issued by politicians will not solve the need for more hands. If Russian citizens want to lead happy, prosperous lives, they will have to put up with immigrants. Otherwise, they will face the consequences of economic decline.
Illegal immigration has been a major issue on the country’s political agenda in recent months. Reports of immigrant arrests sound more like dispatches from the frontline lately. Nearly all political forces in the country have come out with proposals to deal with the problem, each one harsher than the last.
No one can deny this is a problem that needs to be addressed. But let’s look at some facts.
Immigrants currently generate 7.56% of Russia’s GDP, or 8.25 trillion rubles, and these figures are likely to grow in the future.
We are about to feel the consequences of the 1990s demographic crisis, when the Russian population declined at a rate of one million people a year. While in 2011 Russia had 635 unemployables per 1,000 working-age people, by 2030 that ratio will rise to 831 per 1,000.
By 2050, the labor shortage is expected to reach 10 million people.
In other words, the Russian economy will not be able to survive without immigrants. The dire warnings issued by politicians will not solve the need for more hands. If Russian citizens want to lead happy, prosperous lives, they will have to put up with immigrants. Otherwise, they will face the consequences of economic decline.
It’s time to accept that prohibitive measures are not working and won’t work in the future. The only solution is to reform our immigration policy to encourage businesses to operate transparently, and immigrants to obtain legal status.
It looks like the government has finally realized this.
The Federal Migration Service has drafted legislation that includes our initiative to end the quotas on hiring foreign labor and replace them with caps for each industry. This is a major breakthrough.
Think about it: how can an employer know, a year in advance, what kind of workers and from what countries it will need? Country quotas, which force businesses to take country of origin into consideration when evaluating their need for immigrant labor, are simply irrational. “We need 100 foreign woodworkers” is a normal request. “We need 70 Chinese and 30 Uzbeks” is anything but.
Ending the quotas – if the bill is passed by parliament – will reduce administrative barriers and eliminate the corrupt practice of intermediaries demanding bribes to do the paperwork for a foreign worker.
To hire an immigrant, employers often have to pay shady intermediaries from 15,000 to 40,000 rubles. Immigrants end up working for meager wages, which makes their position little better than slavery. Officially they are paid equal salaries with Russian citizens, but in reality, they make far less because the difference goes to the mediator as a kickback for obtaining the quota.
The new system proposed by the Federal Migration Service is far more effective.
If, for example, the government sets a 30% cap on immigrant labor in construction, employers will be able to use foreigners to fill 30 out of every 100 jobs. The rules for calculating the caps still have to be worked out, but this is a technicality. We believe that the ratios and caps need to be flexible, not fixed. Ideally, businesses themselves should determine how many foreign workers they need and what qualifications they should have.
Yet, there are some problems to be addressed in the new law.
First, how can we prioritize the hiring of Russian citizens over foreign workers? One idea is to require that employers post existing job openings on their local labor exchange for one to two months. If there are no Russian applicants for the position in that time, the employer is free to hire immigrant labor. As it stands, the employer is required to obtain confirmation from the exchange that no Russian citizens want this job. We believe this requirement is excessively onerous and opens up the door to corruption. Confirmation can be withheld to illicit a bribe.
Reforming immigration policy is a long-term project, but Russia faces a more pressing problem – what about the immigrants who are already working in Russia illegally? This problem needs to be addressed without delay.
No one knows the exact number of immigrants working in Russia, with estimates ranging from 3.6 to 11 million. More than half of them are here illegally. They are accused of many evils – increasing crime, refusing to integrate in society and failing to observe health codes. But these problems are not products of immigration – they stem from these immigrants’ illegal status.
The best solution is to try and get all immigrants working in Russian into a transparent legal framework instead of deporting them. The high cost of deportation absolutely needs to be considered.
The business ombudsman’s office drafted the illegal immigration amnesty initiative after considering similar experiences in other countries, including the United States, Greece, Italy, France and Australia.
Amnesty means granting legal status to all immigrants who are already in Russia, provided they meet a number of conditions.
An immigrant will be required to have a contract with an employer, to register with the tax authorities and to obtain an individual taxpayer number.
The employer, in turn, will have to purchase a migration policy for the employee that covers health insurance, third-party liability and the cost of deportation if the worker violates Russian law. We believe that the employer should be also required to pay social security contributions for the immigrants (we recommend reinstituting the unified social tax). These costs will add up to some 30,000 rubles a year.
But, all things considered, the employer will ultimately benefit from the changes. Workers will cost employers 10%-12% less because they will not have to pay off intermediaries and engage in corrupt practices. Newly legalized immigrants will be paying taxes to the Russian budget, and they will likely think twice before jeopardizing their valuable legal status by committing a crime. According to our estimates, about 3.6 million people will be able to work legally in Russia as a result.
I want to emphasize that we are not taking about granting illegal immigrants Russian citizenship. Nor do we think that labor migration is sufficient grounds to apply for citizenship. Employment contracts with foreign workers should not exceed three years.
We must make sure that we craft policies that rule out the need for a second round of immigration amnesty in the future. These policies should make registration and working in Russia easy, convenient and transparent. The hiring of illegal workers has to be made unprofitable.
According to our estimates, amnesty will immediately generate 74 billion rubles, and support similar levels of tax revenue each year after that.
As you can see, amnesty for all immigrants is justified both economically and politically. It is in the interests of the Russian government and society. Now it is up to us to show the political will to make the right decision. Although the idea of amnesty is out of step with the mood of the majority of the country at the moment, it will benefit everyone in the end.
This artile was firstly published in Московский Комсомолец