Saturday, September 30, 2017

Russian Government to Blame for Looming Labor Shortage, Moscow Experts Say

Paul Goble

            Staunton, September 30 – The Russian authorities blame demographic shifts over which they supposedly have no control for a looming labor shortage in the country, but in fact, some of which reflects an effort to distract attention from their own mistakes in this area, according to leading Moscow experts. 

            Indeed, Rosbalt commentator Dmitry Remizov says, many of them think that Economic Development Minister Maksim Oreshkin’s talk of labor shortages of 800,000 each year in the future “borders on incompetence” because it isn’t demography that is holding back the economy: it’s the economy that’s affecting demography (

            Vasily Koltashov, the head of the Moscow Center for Economic Research, says that the economic crisis has lowered incomes and with it “the desire to have children, second, third, and sometimes even the first. That is, the material conditions of life have gotten worse and this has given rise to the decline in the population.”

            But, he points out, there isn’t going to be any contraction in the size of the working-age population. There is only going to be a decline in the share of that population made up by holders of Russian passports. Businesses will get more workers to come from abroad, although that will create other problems.

            According to former deputy labor minister Pavel Kudyukin, what needs to be done is to increase productivity, although that will require investments no one knows how to pay for, and to ensure that immigration continues at high levels, despite a shortage of people ready to come and the opposition of many ethnic Russians to that.

            Oleg Shein, a member of the Duma’s labor committee, says that “problems of the Russian labor market aren’t the result of the demographic situation.”  Instead, they reflect two other problems the government isn’t addressing: the lack of opportunity for workers to improve their skills and premature deaths among working-age Russian men.

            Indeed, he points out, the burden of non-workers Russian workers now have to carry is smaller than in Soviet times because there are fewer children although there are more pensioners.  At the end of the Soviet period, each 1000 workers had to “carry” 780 non-workers. Now, each 1000 only has to pay for 725.

            But premature deaths among males is the biggest problem.  It means that the working life of Russians is much shorter than in other countries, 15 years less than in France and 12 years less than in the US.  According to Shein, the government is to blame: it doesn’t invest in healthcare or ensure incomes are sufficient to guarantee good diets.

            And the Russian government is failing to spend money on education and especially on retraining older workers, the Duma deputy continues, investments that other governments do more frequently and more generously and that Moscow needs to make if it is to move forward.

            Nikita Krichevsky, a senior scholar at the Moscow Institute of Economics, says that Oreshkin strikes him as being like the little boy who cried “wolf!”  If the minister sees problems, he should be proposing solutions rather than simply complaining.  On the one hand, Krichevsky says, Oreshkin’s words are overly alarmist.

            But on the other, he fails to recognize that modern economies are seeking to do with fewer workers by introducing automation and robotics.  Unfortunately, the economist continues, the Russian government seems content to blame demography rather than to face up to its responsibilities.

            “Of course,” he says, “if you dig a hole not with an excavator but with shovels, then you need to have many workers. But in order to shift from hand labor, one must first produce this excavator and teach people to work on it.”  Those are things that the current Russian government isn’t doing.  For it, that is “too difficult.”

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