In terms of labor composition, what changed this past year?
I think that it remains mostly the same. Around 20 percent of people are engaged in various types of informal work – these jobs are relatively stable. Some may work on a formal basis, but their labor contracts are not enforced – they are not protected. Then there are what I call “free-entry jobs,” or jobs that you can get very easily and where turnover is high. Many Russians work in the retail and service sector, which includes large chains and very small shops. These firms have very high turnover and permanently post vacancies. Men can work as taxi drivers and women can work in large retail chains. There is plenty of low-quality work like this that people can get if they want it. But since they cannot live without some kind of income, many take these jobs thinking it will be temporary, before they can find better work.So these low-quality jobs act as a sponge for people who find themselves unemployed?
Yes, you need a large pool of jobs to absorb extra labor. Even if people cannot find work at a large or medium-sized firm, they can find employment or self-employment within this absorbing segment of the economy, which includes micro businesses, small businesses, and even some corporate employment, but with free-entry jobs.At the same time, according to a recent survey by Russia’s central bank, many enterprises are reporting worker shortages. They can’t find enough qualified workers.
In my view, this is just the unwillingness of employers to provide better wages to prospective employees. Let’s not forget the laws of supply and demand. If any resource or good is in demand, then its price should increase. A labor shortage can occur if labor is physically limited, which is not the case in Russia. Fixed wages can also be to blame. But again, this is not so in Russia, where wages are extremely flexible. So, what’s the problem? You need to pay more and offer better work conditions, and then people will come to you.Just as it has mobilized soldiers, the Kremlin has also sought to mobilize the economy for its war effort, as well as to stave off the effects of sanctions. What’s the capacity of Russia’s labor market to shift employment – in other words, to move workers from one place to another?
Here we should separate what we expect to happen from what we can see happening in reality, that is, based on the available data. In the current situation, where the government is calling for import substitution, we would expect a relocation of workers from technologically more advanced industries and enterprises to those that are less advanced. The economist Branko Milanovic called this “technologically regressive import substitution
.” To get a sense of how this process is playing out on the ground, we need more time. The available macroeconomic data don’t tell us anything about enterprises that are shifting production to more technologically primitive goods – for example, an auto manufacturing plant in Tolyatti that switches from making Renault vehicles to old style Ladas. We need special surveys and research on this specific plant to understand what’s happening. Whereas looking at the economy overall doesn’t tell us much.Then how can the state manage employment? What instruments does it have at its disposal to relocate workers into industries and enterprises it considers more vital?
When I look at the employment structure in Russia, I don't see any resources available for relocating workers. Let’s say you want to get involved in import substitution. That means you need to build new factories. And to build new factories you need additional labor. But where do you get this labor? I personally have no idea. At the same time, there are two ways to move labor. First, you can use totalitarian methods and move people around as though they’re not human – as though they’re just raw materials. That’s what the Soviet Union did under Stalin. Otherwise, you need to create market incentives for people to move on their own. But when you do this, some industries will see unemployment rise, since you need to boost employment in other industries.
In other words, to stimulate job relocation you need to do what the Russian state always avoids – increase unemployment. You would need to create enormous incentives for people to change jobs. As of now, I don’t see any significant relocation taking place. According to Rosstat, just 5 million people work in large and medium-sized firms in the manufacturing industry. That includes all manufactured goods – food, tobacco, textiles, furniture, automobiles, aircraft, and so on.
This means that there is very limited capacity to relocate workers within the industry sector. Workers from other sectors may have no manufacturing specific skills.If the Russian government did take major steps to relocate workers, would it be easier to coordinate that policy with large enterprises?
Sure, it would be easier. But it’s still quite difficult. An enterprise employing many people and that wants to increase the number of work hours – thereby boosting production – would still need to significantly increase its labor force. In some individual cases, it can be done. But generally speaking, I don’t see there being enough resources available.Do workers today have any leverage to demand more from their employers or the state?
It depends on the workers. Trade unions in Russia are almost non-existent, so there’s no collective bargaining going on with employers. But maybe there are negotiations on an individual basis. If workers want to demand anything, then they need to have some kind of strong bargaining chip. They need to possess highly important skills. They need to be difficult to replace. But that happens on an individual level since most workers lack the kind of skills that make them irreplaceable.What additional problems would a potential second wave of mobilization create for the labor market? Or even a gradual – and therefore less visible – recruitment campaign.
I think mobilization will have greater long-term impacts on the labor market and demography.