Unemployment in Russia has fallen, but citizens continue to survive

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In September, the unemployment rate in Russia has reached multi-year lows, and down to the 4.5% target. In August, I recall the figure was 4.6%, and even then, observers said that the unemployment rate in the country is close to minimum values. That’s just the population is still teetering on the brink of survival. Why, then, negligible unemployment does not increase employment and, consequently, the welfare of citizens?
It’s pretty simple. Low Russian unemployment in the conditions of very weak by global standards of economic growth is a purely domestic story. First, a significant amount of the population works part-time. This so-called part-time, a lot of them, and they create the illusion of prosperity in the employment sector. Work part time has a downside – low pay levels. In fact, the picture looks like the following: functionality, which could be charged to one employee performs two or three. Salary is appropriate. Second, in the Russian reality, a lot of people are still employed in enterprises that depend on complex factors – contracts, season of public policy.
It is understood that in the conditions of the Russian economy basic characteristics of the labour market should not accept the level of unemployment (statistically it is quite stable, since in this case fluctuations in the limits of 0,1-0,2% not important), and the dynamics of wages. In 2014 the Russian economy and the employment market to adapt to changing conditions and the changing trend was stressful, and on that basis employers prefer not to lay off workers massively, and to preserve jobs by cutting wages. Talk about government “unprecedented” wage growth this year to comment on the won’t – grounds for boasting here.
The output is a pretty mixed picture, where unemployment is stable in a global sense, there is weak economic growth is fragile, inflation declined to a record “rock bottom”, but later went out again into growth, and the level of real disposable income fell 4.5 years. What a contradiction here? Most likely, that the economy is not creating new jobs to employ the labor resources needed. In Russia, the level of employment is just over 60% compared to 65.9% in October 2017, and labour productivity has been estimated at 1.5% with 4.8% in 2008. These figures just show a more or less objective state of Affairs.
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Anna Bodrova,
Senior analyst,
Alpari