• A
  • A
  • A
  • ABC
  • ABC
  • ABC
  • А
  • А
  • А
  • А
  • А
Regular version of the site
vision

Russian won’t allow themselves to become unemployed

The Russian labour market is very mobile. People change jobs often, exiting the labour market only to enter it again. Those who are temporarily out of work do not manage to become officially unemployed since such a move would make no economic sense. Around a third of all unemployed Russians are outside of the governmental and statistical realm, according to the Director of HSE’s Centre for Labour Market Studies, Vladimir Gimpelson, and a Junior Research Fellow in the Centre, Anna Sharunina

In the modern world, people rarely remain in the same position for long – people periodically change or lose their jobs, leaving the labour market and returning to it again. Changes in job status oftentimes occur in less than a one-year interval, and throughout one’s working life, a person goes through more than one employment record book.

According to statistical data, long-term hiring and firing figures in Russia ‘swing’ around 30% of all employed Russians, which shows intense workforce turnover. This allows the Russian labour market to be characterized as highly dynamic.

At the same time, employers often complain about the rigidity of labour legislation, which prevents them from promptly responding to the economic environment. This includes firing employees quickly and using fixed-term work contracts extensively. Further, in a number of regions and localities, there is a lack of mobility on the labour market due to prevailing socioeconomic factors. For example, workers in monotowns are practically unable to choose their jobs or find alternatives. They also prefer to keep the job they have.

Vladimir Gimpelson and Anna Sharunina decided to find out what actually happens on the Russian labour market. The researchers aimed to identify the dominating factors on the market – mobility or stability – as well as what causes employment and unemployment figures to move. The results of the research were summarized in the article ‘Flows on the Russian Labour Market: 2000-2012.’

The authors note that analysing the dynamics of the labour market sheds light on the overall mechanisms of its functioning. In addition, the impact of these mechanisms on economic growth and productivity can be evaluated. ‘Researchers have repeatedly been drawn to questions of whether Russian employees are mobile, to what degree, and in which directions, but [these questions] remain open and largely depend on the selected perspective. At the same time, the answers have an obviously practical significance,’ Gimpelson and Sharunina posit.

Empirical analysis of the state of the labour market was carried out based on data from the Russia Longitudinal Monitoring Survey – Higher School of Economics (RLMS-HSE) for 2000-2012. It was no accident that this specific timeframe was selected, the researchers say. This period was unique in its significant macroeconomic diversity, as it covers a phase of rapid economic growth, the 2008-2009 crisis, and a period of post-crisis adaptation.

Three key statuses and their transformation on the Russian labour market were studied: employment, unemployment, and inactivity (when a person officially does not work and is not looking for a job through an employment office). The study’s authors figured out how often Russians change and lose jobs, register as unemployed, leave the labour market, and return to it.

Short-term unemployment

The researchers' main conclusion is that movement between employment and official and unofficial unemployment is extremely high in Russia. People often switch jobs and quickly find another one for various reasons.

In addition, 90% of employed Russians (around 60% of the total selection) maintain their status from year to year, but they are fairly active in changing jobs and positions. Among those with government jobs, labour mobility is lower. In private business and the informal labour market, up to a third of employees switch jobs more than once a year.

The remaining individuals without work return to the labour market quickly – just fewer than 20% of unemployed Russians were without work for more than a year. The study showed that 50.9% of people found work within a year, while 30.2% stopped looking for work officially and never found a job. In effect, they officially became economically inactive, though they could work informally.

Additionally, 60% of officially unemployed people had lost their jobs, while 40% of the officially unemployed were outside of the formal labour market, but decided to look for a new job. In other words, most Russians are in the working group of people or the economically inactive group. There is also an active interchange between these groups.

Gimpelson and Sharunina found that it was mostly women who left and re-entered the labour market, which mostly occurred for three reasons.

First, women enter the labour market relatively later than men and leave it earlier. This means that some men might not end up on the selected age categories of analysis. Second, due to a higher mortality rate for working age men, men are more likely to fall out of the selection group. Finally, women move among these statuses more, largely due to time off work to have children and temporary breaks in employment, the authors of the study found. 

Conversely, men keep their jobs more than women (68% versus 54%), while women become unofficially unemployed more often (29% versus 17%).

Seemingly low unemployment

According to the research conducted, the phenomenon of stably low unemployment in Russia, even during times of crisis, largely stems from the fact the majority of people do not go to unemployment offices and do not declare themselves officially unemployed. Around a third of all unemployed Russians are outside of the governmental and statistical realm. Among the unofficially unemployed are pensioners and housewives who have completely left the labour market for good, as well as students and trainees who have just entered the market (or who regularly move between employed and unemployed status) and temporarily unemployed individuals such as mothers with small children or ‘young’ pensioners fully capable of working. In addition, 16% of the unofficially unemployed find work within a year and just below 4% become officially unemployed.

The authors of the study believe that the large share of unofficially unemployed stems from a lack of any benefits for them. Small allowances – which are also fairly difficult to receive – bring unemployed people to find any available job as fast as possible, and with this they hold back the unemployment level. And those who do not aim to find any job at any price also disregard the benefits of the unemployed since there is not much use for such benefits.

 

December 17, 2014