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Number of Employees Receiving Social Benefits and Guarantees in Russia Has Decreased

People with higher salaries — executives and qualified professionals — enjoy better benefits, such as free healthcare, vacation packages and other preferences

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In Brief

The Situation: Benefits packages play a key role in the choice of a workplace, with over 73% of Russians considering this to be an important factor in their employment.

In Fact: The system of corporate social benefits and guarantees has changed in Russia. The volume of social services, payments and reimbursements has decreased, as has the coverage of employees in companies across all types of ownership.

Now in More Detail

Polina Kozyreva and Alexander Smirnov, sociologists from HSE University and RAS, studied the situation in 2000–2018. Data from the Russian Longitudinal Monitoring Survey (RLMS–HSE) shows instability and negative dynamics. The number of citizens not using the guarantees provided by law remains significant. Employers continue to cut non-salary spending on personnel, while approaches to benefit distribution worsen the problem of inequality. The results were published in The Journal of Social Policy Studies

What Is It About?

‘Social guarantees’ refers to payments and services that employers must provide for employees or may provide voluntarily in line with company policy. Since the fall of the Soviet Union and the transition to a market economy in Russia, this system has been changing — its volume has shrunk, doing so particularly quickly in the mid-1990s. In 1992–1995, the coverage of employees with various types of reimbursements decreased by 5–30%, and the number of social facilities owned by enterprises fell by 90%.

 

Today, benefits packages fall into three groups of benefits and guarantees:

 Obligatory (provided for by law): payment for sick leave, maternity leave and regular annual vacation leave

 Non-obligatory, but traditionally widespread: free medical care at medical institutions owned by the employer; reimbursement for meals, trips to vacation centres, summer camps, etc.

 Additional (at the employer’s discretion): medical insurance for employees and their family members; interest-free loans for construction and renovation; reimbursement for rented housing; corporate mobile phone, etc.

How Was It Studied?

The researchers analysed the results of the RLMS–HSE, which includes nationwide representative household surveys that have been carried out since 1994. The question ‘Do you receive the following social benefits at your current job…?’ was included in the surveys for 2000–2010 and 2018. The researchers compared data from 2000, 2006, 2010 and 2018.

What Did They Find?

The coverage of non-obligatory benefits (those not guaranteed by the state) has decreased since the 1990s, but their range has become more varied. This was particularly true from 2000–2007, when numerous new companies sprang up and needed to solve personnel problems and establish their competitive advantages.

The 2008–2009 global economic meltdown and ensuing crises worsened the situation: companies actively optimized their production and cut costs, including the contents of benefits packages.

There have been quite a few contrary examples, the authors say. But generally, the decrease from 2000–2018 was as follows:

 The share of those who received loans for housing construction or renovation at their main job decreased from 14% to 2.5%

 The share of those who had access to free or co-paid pre-schools for their children decreased from 13.5% to 3.1%

 The share of those who went to vacation centres or sent their children to summer camps reimbursed by the company decreased from 44.2% to 15.8%

 The share of those who had an opportunity to get free medical care at company-owned institutions or co-paid care at other institutions decreased from 37.7% to 16.6%

 The share of those who had their commuting costs reimbursed decreased from 14.4% to 8.1%

 The share of those who received free or discounted meals decreased from 14.4% to 8.1%

‘Sometimes, employers stop fulfilling their earlier obligations to provide such benefits because they realise that there are no negative consequences of doing so,’ the researchers note. The only outlier is the willingness to pay to improve employees’ professional skill level. According to the RLMS–HSE, every four to five employees mentioned the educational practices at their companies annually.

The situation with obligatory (under law) benefits and guarantees has stabilized since the 1990s, but there has still been a decrease in this area. In the 2000s, these benefits were available to about 89–91% of employees, while in 2018, they were available to 73–88%.

One in seven employees did not receive regular paid vacations or sick leave at their main job, and one in four did not get maternity leave.

While there has been a general trend towards cutting social benefits, there are differences depending on the form of company ownership. Such support is more considerable in public companies, while private companies often prefer to pay higher salaries instead of providing benefits packages.

Companies that operate under foreign capital offer social benefits and reimbursements more often than fully Russian-owned private companies.

Employer-reimbursed education is a benefit offered mostly at public and foreign companies. Public companies offered it to 34.8% of employees in 2018, compared to 30.4% in foreign companies. Russian companies lag behind with 15.7%.

Compared to public companies, private businesses offer medical care or free care at company-owned institutions half as often. But the public sector is slightly behind foreign companies: 25.5% vs. 27.5%.

Companies with foreign participation are ahead in several areas:

 Free meals or discounts for meals: provided to 21% of employees (more than twice as often as in other companies)

 Reimbursement for rented housing: provided to 5.1% (five times higher than Russian private companies and twice as high as public ones)

 Reimbursement for mobile communication and internet: provided to 12.3% vs. 5.3% (private) and 3.1% (public)

 Loans and credit for construction and renovation: provided to 5.1% (about twice as high as other types of companies)

Volume is not the only problem — the distribution of benefits within companies is also an issue. Often, ‘more’ does not mean ‘better’.

The scope of benefits grows in tandem with career growth. Benefits are most often given to executives and highly qualified professionals. Low-qualified workers earning the lowest salaries get benefits less often, despite needing them the most. This contributes to growing social inequality, as confirmed by the results of the study.

The scholars divided the survey participants into several cohorts depending on the ratio of income to median salary, and compared the levels of social packages received at their workplaces.

The results speak for themselves. For example, free medical care or partial reimbursement of medical care is available to one in ten individuals from the lowest-income cohort (salaries 0.75 of the median and lower). In the highest-income cohort (more than double the median), it is available to one in three employees.

9.6% of low-income and almost 26% of high-income employees have opportunities to get free vacation trips or summer camp trips for their children. Company-funded education is offered to about 16% in the first cohort and over 33% in the second. In the low-income group, reimbursement of commuting expenses is three times less common, that of pre-school costs for children is two times lower, and reimbursement for meals is 1.5 times lower.

Why Is It Important?

Social benefits are a sensitive issue for everyone involved — employees, employers and the state. Academic conclusions based on large-scale population surveys can help find better models of relations in the labour sphere, overcome inequality, prevent violations of employees’ rights, and develop a more effective social policy in Russia.
IQ
 

Authors of the study:
Polina Kozyreva, Director of the HSE Institute for Social Policy Centre for Longitudinal Studies, First Deputy Director of the RAS Institute of Sociology
Alexander Smirnov, Leading Research Fellow at the RAS Institute of Sociology 
Author: Svetlana Saltanova, January 24