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Employers Not Interested in Migrant Workers' Experience and Education

In Russia, the demand for migrant workers is highest in economically developed and resource-extracting regions, in areas with low population density, and in construction and industrial companies. Employers prefer to hire low-skilled migrants with no education beyond secondary school and limited work experience of less than a year, since these workers are much cheaper than locals. These are some of the findings from a study by Elena Vakulenko, Assiant Professor at the Department of Applied Economics, HSE Faculty of Economic Sciences, and HSE student Roman Leukhin.

Due to the demographic crisis and a shortage of blue-collar workers in the country, Russian companies need labour migrants. While Russian colleges and universities train numerous economists, lawyers and psychologists who often end up working in other jobs such as retail, one-third of the country's industrial companies report shortages of blue-collar workers. Many Russians choose not to do blue-collar jobs, perceiving them as low-status occupations. People would rather be employed in low-ranking office jobs than work as drivers or cooks, regardless of the pay.

According to experts, no amount of effort to mobilize the local workforce can fill more than 50% of the need caused by the demographic crisis and the decline in the country's working population – at least, before 2030. Thus, Russia will still need migrant workers and a well-designed migration policy based on an assessment of Russian firms' actual need for foreign workers and taking into account the specific characteristics of regional labour markets.

Vakulenko, Assistant Professor at the Department of Applied Economics, HSE Faculty of Economic Sciences, and HSE student Leukhin attempted to determine the actual demand for foreign workers in Russia, to what extent different industries, companies and regions require foreign workforce, what are employer preferences for migrant workers and how much they are prepared to pay migrants. The researchers published their findings in the paper 'Study of the Demand for Foreign Workforce in Russian Regions Using Applications for Quotas'.

The study was based on data from the Russian Federal Service for Labour and Employment and the Federal State Statistics Service (Rosstat), including 1.5 million people, and from the Ruslana database of Russian firms. For a closer look at firms which use migrants, the researchers combined the 2011 data from Ruslana with the 2012 data from employer applications for migrant quotas.

Vakulenko and Leukhin admit, however, that the accuracy of their findings is limited, since between 5 and 7 million migrants, according to various estimates, work in Russia illegally. "While the data we use for the analysis do not provide an accurate estimate of the demand for migrant labor, they still give us an indication of the demand structure, influencing factors, and average wages paid to migrants," Vakulenko and Leukhin explain.

Migrants Attracted by the Russian North

The study suggests that the demand for migrant workers is higher in economically developed and resource-extracting regions and in regions with low population density. Thus, the leading regions in attracting foreign workers include the Yamalo-Nenets Autonomous District (the ratio of quota applications to the regional population stood at 11.1% in 2012), followed by the Nenets Autonomous District (8.6%), the Chukotka Autonomous District (8.1%), the Jewish Autonomous Region (7.2%), and the Sakhalin Region (7.1%). In Moscow, the ratio of quota applications to the number of people employed stood at 3.1%; in the Moscow Region it was 3.9%, and in St. Petersburg it was slightly higher at 5,9%.

According to Vakulenko and Leukhin, migrants are particularly in demand where the local workforce is scarce.

The construction and manufacturing industries were found to have the highest demand for migrants; almost half (45.8%) of all migrant quota applications were in construction, 13.5% in manufacturing, and 10.6% in the wholesale and retail trade.

There were very few quota applications in education, healthcare and finance.

Cheap Labour

Most foreign workers are employed in low-paid, low-status jobs. Larger companies often request unskilled workers with no education beyond secondary school and limited work experience of one year or less; small and medium-sized businesses have a greater demand for skilled workers. According to Vakulenko and Leukhin, migrants in Russia make up for the shortage of local workers in low-skilled occupations. 

Thus, 42,3% of quota applications fell under the category of 'skilled workers of large and small industrial enterprises, arts and crafts, construction, transport, communications, geology and exploration of mineral resources', 25% of applications required 'unskilled workers', and 12.6% concerned 'machinery operators and assembly fitters'.

All other factors being equal, Russian businesses are more interested in internal rather than external migrants, according to the study’s authors. Employing Russians migrating from other regions is easier and cheaper, as employers can avoid the red tape of applying for permits to use foreign workers. Companies hire foreigners only when the perceived benefits outweigh the costs and prefer to recruit skilled and well-paid staff from among internal migrants.

Migrants are paid an average monthly wage of 12,000 rubles – about half the Russian regional average, but this number does not take into account education, qualification, industry and other factors. The highest wages of more than 30,000 rubles are offered to migrants employed in finance, mining, and education, and the lowest wages of some 8,000 rubles are paid in the agricultural sector.

Quotas Not Based on Economic Need

Vakulenko and Leukhin conclude that the current system of planning migrant quotas and distributing migrants across the country is not informed by regional macroeconomic indicators and therefore it often fails to address the actual needs of the local economy.

 

 

October 29, 2015