Labor shortage in the Russian economy: A macroeconomic estimate

Abstract

Problems of the labor market and employment in Russia have more than once been discussed in the literature. 1 Until recently, these studies focused on labor demand, which affected the labor market situation during the economic crisis. Among the most significant features of this period, the following were especially noteworthy: a low labor demand, which determined the negative dynamics of employment and a high tension in the national and the majority of regional and sectoral labor markets; localized and inconsistent growth trends in employment; an intensive and unregulated labor redistribution from the public sector to the market sector; insufficient investments in material production and the budgetary nonproductive sector; and a decrease in the real incomes and compensations of the majority of the population, the compensations being regularly passed on a large scale. Employment uncertainty and low compensations generate decisions that affect the country's demographic development: refusal to have children, postponed delivery, abortions, and divorces, catalyze the development of crime and alcoholism, and instigate suicides. Unfavorable and hazardous labor conditions and fatigue to the point of exhaustion (when people combine jobs) lead to health deterioration and premature mortality.As for labor supply, one of the main factors behind the growing tension in the labor market and the increasing unemployment in the 1990s was an upsurge in the working-age population. Thus, employment was developing under reduced labor demand and increased labor supply.The conditions in the Russian labor market have changed radically, and the above vectors have reversed. First, the recent economic growth resulted in greater labor demand and employment. Second, a contraction of the working-age population will be inevita-1 See also publications in Problemy Prognozirovaniya [1][2][3][4][5][6][7]. ble starting in 2006 [8]. Third, certain employment imbalances in the labor distribution by employment area appeared. Fourth, a low average compensation prevails in the economy, which coexists with considerable differences between industries, and this hinders full labor reproduction. Moreover, the existing compensation discrepancies instead of decreasing continue to increase. Finally, the quality of the labor potential is noticeably deteriorating. Consequently, a situation where increasing labor demand will be matched by decreasing labor supply is quite possible. Hence, in the future, the Russian economy in general and its industries and regions in particular are likely to face a shortage of the most crucial productive factorlabor. For some of the industries and regions, this shortage will be especially acute, because it will be not only quantitative but also qualitative and structural. The above proves the topicality of the labor shortage problem and its quantitative and qualitative assessments in the national and regional labor markets of Russia. 2The quantitative assessment of labor shortage in the Russian national labor market primarily involve...

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