Today, Russia has more than 14 million public sector employees working in spheres such as education, health care, culture, and governance. One out of every five people employed in the Russian economy, one out of three Russians working for any type of organisation, and two out of five employees of large and medium-sized enterprises in Russia are public sector employees.
Jobs in the Russian public sector tend to pay some 30-40% less than similar positions with commercial companies; nevertheless, many Russians prefer the former. Anna Sharunina examined how local demographics and the economy can influence average salaries in and out of the public sector in Russian regions.
Her research is based on data from the 2005, 2007, 2009, and 2011 Salaries by Occupation surveys conducted by Rosstat once every two years since 2005 with an annual sample of approximately 750,000 observations. The survey collects salary data on employees of large and medium-sized enterprises and organisations in all Russian regions and in major economic sectors, except agriculture, forestry, fisheries, finance, and public administration. It covers all types of employees, including temporary and seasonal workers, except the CEOs and anyone who was employed in a part-time position during the survey month (October).
Sharunina set out to examine whether certain region-specific characteristics, such as regional per capita GDP, public sector’s share in total employment, local unemployment rates, and the extent of urbanisation, could help explain differences in pay across regions and economic sectors. She also considered regional demographics, such as population density and the percentages of people below and above the working age, and certain characteristics of regional budgets, such as the share of public sector salaries in consolidated regional expenditures and the share of federal subsidies in consolidated regional revenues.
She found that public sector employees are better off in regions with fewer users of public sector services and fewer public sector jobs, larger federal subsidies, and high unemployment. As an example, the pay gap between public sector and private sector employees was 10% in Kaliningrad Oblast, 32% in Orenburg Oblast, and 20% in Moscow Oblast.
"The pay gap between similar jobs in public and private sectors is wider in regions with a higher proportion of local people using public sector services," notes Sharunina. However, public sector jobs tend to pay more in regions with good financial health and a higher proportion of federal subsidies in the local budget.
Sharunina concludes that region-specific factors can reduce the public/private pay gap by some 4%-5%, and in the best case scenario, public sector salaries are only 20% lower than those in similar private sector jobs (Kaliningrad Oblast, where the gap is even smaller, is an exception).
Sharunina also found that public sector employees were much more likely to have access to a variety of other benefits, such as shorter work hours: one in three public sector employees, compared with only one in ten private sector employees, works less than 40 hours per week.
According to Sharunina, many educated Russians prefer public sector jobs; some 40% of public sector employees, but only 26.7% of those in the private sector, have university or college-level education. Similarly, 32.2% of public sector workers, as opposed to 27.4% of those in the private sector, have formal vocational training.