Transforming Post-Communist Political Economies (1998) / Chapter Skim
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9 Social Policy and the Labor Market in Russia During Transition
9 Social Policy and the Labor Market in Russia During Transition
Pages 223-244
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From page 223... ...
In this context, an appropriate structure of social policy can contribute to greater labor market flexibility and efficiency, whereas inappropriate policies can result in rigidity and inefficiency. Appropriate social policy can also ensure that the full burden of the transition does not fall upon the shoulders of the most vulnerable groups.
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From page 224... ...
It also meant that the labor process itself was inefficient: productivity was low, and the structure of employment appeared "old-fashioned" by comparison with that found in Western Europe. The Russian government has attempted to reconstitute the framework of social protection and to reform labor market institutions to bring them more into line with the structures found in advanced industrial economies.
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From page 225... ...
The final section presents a summary of the discussion and draws conclusions about the effectiveness and flexibility of labor markets in transition economies. TRANSITION AND THE SOCIALIST LABOR MARKET The labor market and the labor process in the Soviet Union differed from what was to be found in industrial market economies.
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From page 226... ...
Reconstitution of the social security system has been a necessary precondition for transition and for the emergence of more flexible labor markets. The performance of the Russian labor market has been affected by a number of factors apart from the employment policies of the Russian government and its reform of social policy.
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From page 227... ...
It was not adopted as a result of the budgetary crisis experienced in transition economies. Rather, it was a response to the widespread belief that planners undervalued social services and hence were always prepared to reallocate resources out of such sectors as health care in order to achieve plan targets in the productive sphere.
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From page 228... ...
and Goskomstat Rossiia (1996:277-78)
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From page 229... ...
These concerns have led the Russian government to relieve enterprises of formal responsibility for the payment of many social insurance benefits. More important, perhaps, they have resulted in a determined campaign to persuade enterprises to divest themselves of their social assets.
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From page 230... ...
In a market economy, such a policy approach is associated with significant distortions and considerable inefficiency. The Russian government has moved quickly to eliminate price controls on a broad range of foodstuffs and many other consumer goods.
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From page 231... ...
For this reason it is worth noting changes to the code of labor law that have recently been adopted by the Duma. Even though Western labor economists do not believe the guarantees contained in the Soviet Labor Code constituted a serious restriction of managers' ability to dismiss workers, the recent revision of the code eliminates many of those guarantees.
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From page 232... ...
It has attempted to strengthen the formal rights enjoyed by management with regard to both hiring decisions and the labor process. Finally, it has reconstituted the agencies responsible for the implementation of active labor market policies.
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From page 233... ...
These figures show that in 1992, the register contained approximately a one-seventh of total unemployment; by 1996, coverage had improved substantially, but the register still contained only about two-fifths of those classified as unemployed according to ILO definitions. In 1992, about two-thirds of the registered unemployed were in receipt of unemployment benefits.
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From page 234... ...
. The apparent failure of the FES may help explain why so large a proportion of the unemployed is found to be in poverty, a statistic that casts doubt on the effectiveness of this component of the social safety net.l5 Doubt must also be expressed about the contribution made by active labor market policies to any increase in the effectiveness with which the labor market reallocates labor.
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From page 235... ...
I have not been able to locate detailed figures on changes in the size distribution of enterprises in the economy as a whole since the beginning of the transition, but available data show that the number of enterprises in industry rose from 26,900 to 138,000 between 1990 and 1994; the average number of employees in industrial enterprises fell from 781 to 126 over the same period (see Goskomstat Rossiia, 1995:310~. It also was reported by Goskomstat Rossiia (1996:690)
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From page 236... ...
In short, not only has there been considerable structural change in the Russian economy, but there also has been a substantial movement of employees out of those sectors which traditionally employed the bulk of Soviet workers. At the same time, there has been an increase in employment in trade and catering, in other services, and especially in the financial and information technology sectors (see Goskomstat Rossiia, 1996:23~.
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From page 237... ...
It is this at least as much as the persistence of soft budget constraints that has permitted employment to remain as high as it has. Real wages declined by almost three-fifths between 1990 and 1995 (see Goskomstat Rossiia, 1995:77; 1996:10~.
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From page 238... ...
The final column of Table 9-5 shows that this differentiation is made up of inter- and intra-sectoral components. It probably reflects the introduction of price signals to attract those with scarce skills to particular positions; it also surely contains some component of reward for the "risks" taken by top managers.
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From page 239... ...
Arrears can only compound the problem of low pay. The analysis of the Russian labor market provided in this chapter has so far not attempted to estimate the impact of the informal economy on either employment or living standards.
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From page 240... ...
. 22As evidence of the problems faced by this survey, it is interesting to note that average monthly income in 1995 was estimated to be 284.2 thousand rubles per capita according to the Family Budget Survey; according to the national income accounts, per capita money income was reported to be 532.9 thousand rubles (Goskomstat Rossiia, 1996:32,101)
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From page 241... ...
Transition to a market economy also required the revival of the price mechanism. On the one hand, this has involved the abandonment of price controls; on the other, it has involved an ongoing review of the state's social programs.
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From page 242... ...
A combination of the willingness of Russian workers to accept cuts in real earnings, soft budget constraints permitting enterprises to operate at a loss for considerable periods, and managerial paternalism (leading to the use of enforced leave or wage freezes rather than mass dismissals) has enabled the economy to adjust to the new economic environment.
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From page 243... ...
1997 Rossiiskii Statesticheskii Ezhegodnik 1996. Moscow: Goskomstat Rossiia.
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From page 244... ...
Rutkowski, J 1996 Labour market policies in transition economies.
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