Challenges and Prospects for the Russian Labour Market

2 September 2021

Challenges and Prospects for the Russian Labour Market

CONCLUSIONS

Individuals and their needs are at the heart of the labour market

“When we are discussing the labour market, we must always keep in mind that we are talking first and foremost about people. People want to be happy and successful, start a family, and live comfortably. That thing we dryly refer to as self-fulfilment is actually a question of the choices people make in life,” Deputy Chairman of the State Duma of the Federal Assembly of the Russian Federation Irina Yarovaya.

“We are seeing significant improvements in labour conditions. This is clear from the fact that even the outward appearance of builders has changed dramatically,” Vice Rector of the National Research University Higher School of Economics Lilia Ovcharova.

“The secondary vocational education system is seeing very high demand from young people today. In 2020, around 60% of school leavers went on to enter the TVET system for further study. This would have been hard for us to imagine even ten years ago,” First Deputy Minister of Education of the Russian Federation Alexander Bugaev.

“We are now seeing a growing trend for self-employment, and have reached our target of almost 3 million self-employed people. These are citizens who have chosen to pursue their professional activities on their own terms… According to our forecasts, we will reach 10–11 million self-employed across the various sectors of the economy by 2030,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov.

The situation in the labour market is a reflection of global challenges and transitions

“Low-paid and unskilled labour has ceased to be a competitive advantage. This is something we will be forced to reckon with in the near future. We are aware of the trends. Russia is lagging around 20 years behind our rivals,” Vice Rector of the National Research University Higher School of Economics Lilia Ovcharova.

“What sets Russia apart is its changing demographics, its ‘demographic hole’. There are certain issues associated with climate change and resource scarcity that will impact the labour market in the longer term. Urbanization also has a role to play in this process,” President of Moscow School of Management SKOLKOVO Andrey Sharonov.

“We now find ourselves at the peak of the fourth industrial revolution, and the pace of change is only accelerating. This means that professions, jobs, and requirements for training personnel are changing drastically,” General Director of Professional Skills Development Agency (WorldSkills Russia) Robert Urazov.

“If we look ahead to the coming decade, we see that levels of education among working-age citizens are increasing. While around 24% of citizens had neither a higher education or secondary vocational education qualification in 2020[J1] , the equivalent figure today is 19%,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov.

The Russian labour market has overcome the consequences of the coronavirus pandemic

“Russia’s unemployment rate is now back at pre-pandemic levels. As of 1 August, unemployment in the country stood at 4.5%... In the period before the pandemic there were 30,000[J2] people working remotely in Russia. During the pandemic we saw this figure rise to 11% of the working population, corresponding to around 5–6 million people. Today, taking into account the recovery of the labour market and the removal of the majority of restrictions, around 2.8–3 million people continue to work remotely. This suggests that employers and our employees have felt the benefits and attraction of remote work and are still working from home. This is a long-term trend that is impacting and will continue to influence the labour market as a whole,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov.

“The pandemic marked the first time that we have emerged at the other end of a crisis without seeing reduced wages. It is the first time in 20 years… We have seen a reduction in people’s incomes, but there has been no reduction in wages in the private sector. For me, this is confirmation of the fact that we have begun to move away from the Russian labour market model to a model characterized by increased wages and productivity,” Vice Rector of the National Research University Higher School of Economics Lilia Ovcharova.

PROBLEMS

The labour market deficit is hindering economic development and growth in quality of life

“Average losses as a result of the so-called skills mismatch account for around 6% of global GDP. Try to picture that in terms of Russian GDP and you will see that we are talking about a very large figure. This is what we are losing in the here and now,” General Director of Professional Skills Development Agency (WorldSkills Russia) Robert Urazov.

“We have lost 15 million jobs across the private sector over the last 20 years, and these losses have been accompanied by decreasing wages,” Vice Rector of the National Research University Higher School of Economics Lilia Ovcharova.

“Looking at this region specifically, we can identify a dual problem. There is not only a shortage of qualified personal, but a shortage of personnel in general, with negative population growth, migration out of regions and additional challenges characterizing this part of Russia,” President of Moscow School of Management SKOLKOVO Andrey Sharonov.

“We somehow have this ingrained perception that becoming a manager is better than being a construction worker. As soon as we move beyond this everything will be fine, I am certain of it,” Deputy Minister of Construction, Housing and Utilities of the Russian Federation Nikita Stasishin.

A lack of education among jobseekers complicates matters

“During the pandemic there was a significant increase in the number of citizens registered at job centres, with the figure peaking at 3.7 million. Today, there are around 1 million people on the books at employment centres, but a breakdown of those currently registered shows us that 58% of these citizens have neither a higher education or secondary vocational education qualification. Long-term educational programmes should be looking to target these citizens,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov.

“47% [of university graduates] don’t work in their field. This means that the state isn’t seeing a return on the funds it’s investing in people… There is no mechanism allowing school leavers to properly respond to the expectations of employers, with an understanding of where they can expect to be in five years, that there are people waiting to employ them and happy to provide a guaranteed job with certain perks,” Deputy Chairman of the State Duma of the Federal Assembly of the Russian Federation Irina Yarovaya.

“Employment services lack nuance when dealing with unemployed people, seeing people as unemployed whether they are a woman with a small child, a pre-retiree, a recent graduate or somebody who have been employed as a worker for many years. They are all unemployed in different ways,” General Director of the All-Russian Research Institute of Labour of the Ministry of Labour and Social Protection of the Russian Federation Dmitry Platygin.

“We have traditionally focused on primary training alone. For example, all educational reforms look exclusively at the student and the school pupil, which is to say the person receiving an education for the first time. What the experience will be like for adults is never discussed. There are certain problems affecting adult learning institutions,” General Director of Professional Skills Development Agency (WorldSkills Russia) Robert Urazov.

SOLUTIONS

Investing in knowledge and competencies will help to stabilize the labour market

“The Ministry of Science and Higher Education and a number of leading Russian universities are building a programme for the development of resource centres throughout Russia. These centres will be partnered with the largest universities in Russia. The first one has now opened on the campus of RANEPA in Moscow… WordSkills programmes allow for the introduction of technology into the educational process and for the skills that applicants acquire throughout the learning process to be assessed and evaluated at the end of the training programme on the basis of a practical exam in real-world conditions,” Minister of Labour and Social Protection of the Russian Federation Anton Kotyakov.

“There will always be demand for renewed knowledge and competencies, and those who invest in lifelong education are the ones who are winning today. I would also like to say that the potential for incentivizing households to improve their education has already been exhausted, which is why companies are already investing in education in our competitor nations, and are beginning to do so here too,” Vice Rector of the National Research University Higher School of Economics Lilia Ovcharova.

“We must create a public platform for vocational education where requests for employee-sponsored training can be posted…. My proposal for the Far East is that every investor who comes here and becomes an ASEZ resident is permitted to use budgetary funding to seek out specialists for the enterprises they are building here in the Far East,” Deputy Chairman of the State Duma of the Federal Assembly of the Russian Federation Irina Yarovaya.

For more information, visit the Roscongress Foundation's Information and Analytical System at roscongress.org.

Challenges and Prospects for the Russian Labour Market

Read more