Sunday, April 18, 2021

Russia’s Demographic Decline will Limit Its GDP Growth to Under Two Percent a Year, HSE Study Says

Paul Goble

            Staunton, April 15 – The decline in the working-age population of the Russian Federation over the next 10 to 15 years will limit long-term economic growth to 1.4 to 1.8 percent a year over that period, according to new research carried out by Moscow’s Higher School of Economics.

            Ilya Voskoboynikov, the director of the HSE’s Center for Research on Productivity and one of the authors of the report, says that demographic decline means that “the share of workers older than 40 is growing while that of those who are younger will decline” (snob.ru/news/niu-vshe-demograficheskie-problemy-ogranichat-dolgosrochnyj-rost-ekonomiki-rossii/ and conf.hse.ru/2021/news/461691704.html).

            The latter may have received training in the latest technologies but the former must be retrained if they are to make a greater contribution; and in Russia today, Voskoboynikov continues, that is not happening at anything like the amount that the country’s economy needs. Only about 15 percent of Russian workers are being retrained at all.

            In the private sector, that figure is even lower: companies there are spending only about 0.3 percent of their earnings on retraining personnel, a shortcoming that is reducing the ability of these workers to make a contribution to growth and development. What companies should be doing is retraining older workers, exactly what they are not doing.

            This failure to retrain workers in turn has a cascading effect on the economy as a whole, the HSE researcher says. It further reduces the technological level of production, reduces investment, and means that workers move about ever more often rather than developing their skills.

            Only about 13 percent of Russian companies are currently involved in active retraining efforts, Voskoboynikov says, something that puts Russia in the mid-range of all countries but means that it will fall ever further behind the advanced countries its leaders routinely compare themselves with.

            In 2014, he reports, national wealth per capita amounted to about 190,000 US dollars. Of this, 90,000 was formed by human capital. And that figure was below the worldwide average of 108,000 US dollars. Since then the situation has gotten even worse. Older workers must be retrained because the number of new workers is now in Russia ever smaller.

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