From: MSN NicknameEagle_wng  (Original Message)    Sent: 3/13/2007 12:45 AM
Labor Shortage Puts Russian Economy at Risk
By Natalya Alyakrinskaya The Moscow News
Within a decade, Russia could be confronted with an acute manpower crisis
 
Russian: Работа становится волком

Within the next few years, Russia may be facing a serious crisis on its labor markets. According to the Health and Social Development Ministry, by 2010, the country's workforce will fall by almost 9 million, from 74.5 million to 65.5 million.

This scenario sounds even more disastrous when we factor in that Russia is losing over 700,000 working-age people every year, due primarily to high mortality and low birth rates. Add to this the low level of labor mobility and labor flexibility, poor work ethics in certain parts of the country, and the poor condition of employee vocational and training systems, and the picture gets darker.

The concept of labor market development for 2007-10, presented three weeks ago by Health and Social Development Minister Mikhail Zurabov, is supposed to rectify the situation. However, at the very best, this plan can only be described as a declaration of intent, whereas Russia's labor market is still in chaos.

Labor Imbalances

Today, Russia's labor resources tend to be concentrated in the central parts of the country, which is creating a monstrous imbalance nationwide.

The outflow of labor is the worst in Siberia and Russia's Far East: In January-September 2006, according to the Social Development Ministry, more than 371,800 people (75 percent of them within the legal working age) left these regions.

Almost 40 percent of labor in the Primorye Territory is concentrated in the city of Vladivostok, while the rural and remote areas are in crisis. The Far East constitutes 30 percent of Russia's total territory, but has less than 5 percent of its population. It has substantial natural resources which could stimulate economic activity and employment, but investors are not interested: There is almost no one left to employ there.

The situation in the Southern Federal District, meanwhile, is exactly the opposite: The labor supply greatly exceeds demand; approximately 20 percent of the working-age population is unemployed. According to the Independent Institute of Socio-Political Studies, for example, only 36,000 people are employed in the Republic of Ingushetia (17 percent of the working-age population, as compared to Russia's average of 74 percent). Chronic unemployment continues to dog Dagestan, Ingushetia, Kabardino-Balkaria, and Karachayevo-Cherkessiya, where the share of long-term unemployed job-seekers exceeds 65 percent. In Ingushetia, unemployment amongst the youth is stuck around 93 percent.

Against this backdrop, the situation in the Central Federal District looks almost ideal: In January-September 2006, according to the RF Health and Social Development Ministry, the share of investment in fixed-capital assets in the district was 23.7 percent of the country's total, while the number of employed people constitutes 27.7 percent of Russia's total employed. People keep coming to Moscow, St. Petersburg and other big cities not only for jobs: Central Russia is seen as a guarantee of a better life, acquiring almost a mythical status, which is not an insignificant factor in labor migration.

Vertical Disintegration

Needless to say, this situation did not occur yesterday. Problems related to Russia's manpower shortages and labor imbalances began to appear at least 15 years ago. But Mikhail Zurabov's ministry only reacted last year, when the state introduced a program to encourage ethnic Russians from the former Soviet republics to resettle in Russia.

Under the program, resettlers will be entitled to receive between 40,000 and 60,000 rubles ($1,500-2,300), depending on where the individual wants to reside.

So far, however, there have been few takers. In the Irkutsk Region, where the population fell by 18,000 in 2006, the authorities are anxiously waiting to fill 15,000 vacancies. Thus far, however, less than 100 people have contacted the local migration service. The main reason for this lack of enthusiasm seems connected to the housing problem, which the resettlers will have to solve on their own. Temporary accommodations will be provided at hotels or dorms, but only a handful can acquire permanent housing, which is prohibitively expensive.

In some instances, resettlement can cause even greater problems for the labor market, for example, in Russia's Far East. Experts argue that although the authorities encouraged resettlement to the Primorye Territory, they failed to create more jobs. Unemployment there remains very high.

There are also question marks over another change initiated by the Social Development Ministry: As of this year, all Russian employment centers, which earlier answered to the Federal Labor and Employment Service, have been placed under the control of regional authorities.

"Now we do not have any instruments to pursue a federal employment policy," said Yevgeny Gontmakher, head of the Social Policy Center at the Russian Academy of Sciences Institute of Economics. "Whereas before, the employment service was a vertically organized structure, now there will be 88 employment policies and 88 labor markets."

According to Gontmakher, the regions are unable to cope with these problems alone: "Imagine tiny Ingushetia trying to rectify its labor market. There must be a unified federal policy that would stimulate labor migration... Remember how it was in the past: Workers migrated all over the country, building various installations in different parts of the USSR before returning home. This experience should be studied."

Too many Specialists?

Meanwhile, even Central Russia is confronting a crisis, as experts warn about an oversupply of specialists in certain fields.

"Large numbers of teachers are trained in Russia, many of whom are unable to work in their specialties after graduation," says Rostislav Kapelyushny, deputy director of the Moscow School of Economics Center for Labor Studies. "Meanwhile, the number of school children has been steadily falling."

Kapelyushny believes the number of teacher-training colleges should be reduced and their standards upgraded.

There is even more disturbing news: occupations that have until now been seen as status symbols - primarily lawyers, economists and managers - are no longer in much demand. Zurabov himself acknowledged recently that a higher education is no longer a pass to a well-paid job. Consider: 16 percent of unemployed in the 25-29 age bracket (over 100,000 people) have a higher education. Since the early 1990s, the number of higher educational institutions has doubled, while the number of students has increased 130 percent.

Gontmakher believes that the only solution is to subject the mushrooming private educational institutions to rigid certification procedures.

"The state should only provide free training programs at colleges and universities that make the grade," the expert says. "Everything else should be available for a fee."

Vocational education and training has also been affected by a stubborn fact: The share of skilled workers in Russia's total workforce is a mere 10 percent - as compared to 50 percent in Europe. Jobs considered to be menial and non-prestigious are filled by immigrants, whose number, according to some sources, is as high as 10 million. In this situation, the government seems to contradict itself: While attracting immigrants with the one hand, it denies them the opportunity to work with the other (remember a recent government resolution restricting the employment of immigrants in the retail trade sector).

According to Andrei Isayev, chairman of the RF State Duma Committee for Labor and Social Policy, to improve the situation on the labor market, it is essential to establish a decent minimum wage, i.e. one close to subsistence level.

Without this, it is impossible to formulate a sensible labor policy.
http://english.mn.ru/english/issue.php?2007-9-9