Monday, August 31, 2020

Unemployment in Regions and Republics Far Larger Problem than in Major Russian Cities, Inozemtsev Says

Paul Goble

            Staunton, August 28 – For the Russian Federation as a whole, unemployment is not now at a catastrophic level, but for regions and republics outside the major metropolitan areas, it has become one and must be a subject of first-order importance if the economy is to recover and unrest is to be avoided, Vladislav Inozemtsev says.

            That is because outside the major cities, small and mid-sized businesses form a larger share of economic activity, the Russian economist says; and they have been hit far harder by the current economic crisis than have the major corporations which are centered in the cities (

            Inozemtsev says that unemployment in Russia displays three other significant differences as compared to this problem elsewhere:

            First of all, the economist argues, the gap between those without work and those receiving unemployment compensation is far larger in Russia than elsewhere. That means that the loss of work has a larger and more direct impact on the economy in that country than in Western ones.

            Second, “the growth of unemployment in Russia in recent months … doesn’t correlate with other measures of the labor market.” Instead, unemployment has grown even as the number of people working has increased as well. That is an indication that many more people in Russia are on the sidelines as it were of economic activity.

            And third, and related to this, there are in Russia “an unthinkably large number of people who exist beyond the limits of the formal labor market.” In 2013, there were 38 million such people; now, the number is estimated to be 20 million. Just how large that is can be gleaned by recognizing that if that pattern held in the US, 56 million people would fall into that category.

            These patterns suggests two conclusions: On the one hand, if Russia is to address its unemployment problem, it must recognize that this problem is different than it is in other countries and that what works elsewhere may not work in Russia. 

            And on the other, Moscow has significantly less interest in addressing the problem of unemployment than do regional elites, creating yet another divide between the center and periphery that is likely to have political consequences both within the regime and between the population and  the powers that be. 

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