IS RUSSIA REALLY BECOMING A THIRD WORLD COUNTRY?
UNEMPLOYMENT RISKS IN THE TIME
OF POST-SOVIET RESTRUCTURING
Vladimir Rukavishnikov, Moscow
Since the collapse of the communist political regime in August 1991, a large
range of governmental reforms have affected the national economy of Russia.
They are usually introduced by the term 'restructuring'. It includes changes such
as privatisation of the former state-owned enterprises, liberalisation and deregu-
lation of the labour market. Macro-economic and financial stabilisation is part of
the plan too. Many of these changes are elements of well-known structural ad-
justment packages used by the International Monetary Fund in Third World
One may argue that measuring the success of restructuring depends on where
somebody’s social and economic position is situated. The creation of mar-
ket-type economy was announced as the goal of reforms, because economic re-
structuring was closely linked with other components of the reconstruction of
the entire political, economic and social systems of Russian society. Experts as-
sociate progress in the transition to free market economy in Russia with the rap-
id privatisation of property out of state control, and with the growing connection
of Russian economy to the global financial networks. The fast and large-scale
privatisation was an action that over-killed the former socialist economic order
and the old way of state management of the national economy. But it did not
bring about the expected rise of Russia's GDP. Restructuring in post-Soviet
Russia, like in many Third World countries, brought economic decline in its
The official statistics reveals that the transition to market economy results in a
great decline of the living standard of the bulk of the population. After correct-
ing for inflation, the average real disposable income of Russian households de-
clined over 62 percent between 1990 and the beginning of 1999. The emerging
of few percents of really rich people notwithstanding, the predominant part of
the nation consists of poor people, and the living standard for the majority is still
far below what they had before the fall of state socialism.
However, it is fair enough to say that restructuring in post-Soviet Russia was
initiated as a response to an economic crisis, which symptoms had become tan-
gible by the end of the so-called perestroika period. Russia's industrial and agri-
cultural production and the purchasing power of the Ruble began stagnating in
the early 1980s. Despite all structural reforms, in the 1990s they have drifted
downward ever since.
One difficulty in tackling this theme should be touched upon right at the be-
ginning. The hardships of unemployment, the rising cost of living, and similar
difficulties seem inevitable in capitalist economies. Many economists devote
their lives to the study and to the search for solutions to these problems. How-
ever, sociologists feel that the economists' approach has its limits, and cannot
yield genuine and comprehensive understanding of the above-mentioned prob-
lems. They can be understood only in their broad social and political context. It
makes no sense to study unemployment and other economic problems of transi-
tional societies apart from their social and political backgrounds.
Together with the official statistical information and the results of na-
tion-wide surveys, the empirical basis of this paper is formed by the data of the
survey of the long-term unemployed in the city of Tver, carried out under the
auspice of the author in December 1998-January 1999. The sample size was 300
respondents who were registered by the Tver city Department of the Federal
State Employment Service as long-term unemployed.
The city of Tver is the administrative centre of the Tver region and might be
considered as a typical big Russian industrial city. Therefore, we can tentatively
generalise some conclusions drawn from the analysis of data collected in this
city to the situation in other big Russian cities and, at least to some extent, to the
country as a whole.
2. Unemployment in Russia: The General Outlook
What often surprises the outside observers of the Russian transition to market
economy is how few people are officially registered as unemployed. When
matched against the contemporary standards of Europe and North America, the
Russian data are low figures indeed. The number of people officially registered
as unemployed by the Federal State Employment Service by December 1998
was 1.9 million people, or 2.6 percent of the economically active population. By
the end of 1992 the share of Russians aged over 16 who were officially regis-
tered as unemployed by the Federal State Employment Service was less than 1
percent of the economically active population. This share was growing with a
low pace: 1.1 percent in 1993, 2.2 - in 1994, 3.2 - in 1995, 3.6 - in 1996, 3.5 - in
1997, to 2.6 percent in 1998.
According to the State Statistical Committee of the Russian Federation
(Goskomstat), the number of economically active people in Russia during the
time of restructuring decreased from 75.3 million in 1990 to 72.6 million in
1998. The number of employed population in 1998 was 64.0 million (ibid.). It is
equal to nearly 43.5 percent of the general population. Since 1990 the number of
employed declined by over 11 million! Such tremendous figure is a direct effect
of policy of restructuring.
The State Statistical Committee of the Russian Federation uses the definition
of unemployment recommended by the International Labour Organisation
(ILO). Goskomstat's estimates of the actual unemployment rate are based on da-
ta of surveys. The number of unemployed by December 1998 was 8.6 million
people (Socialno-economicheskoe polozhenie Rossii,. 1998: 280). According to
calculations based on the Goskomstat data, the share of unemployed among the
economically active population increased from 4.8 percent in 1992, 5.6 - in
1993, 7.5 - in 1994, 8.8 - in 1995, to 9.3 - in 1996, 9.7 - in 1997 (Rossiiskii
statisticheskii ezsegodnik, 1997: 689), to 11.8 percent in 1998. The Russian
proportions of people who were actually without work are comparable with
those in other transitional economies (Mitev et al., 1998: 115;
Socialno-economicheskoe polozhenie Rossii, 1998: 280):
Unemployment rates in post-communist transitional
Country 1995 1996 1997 1998
Czech Republic 2.9 3.5 5.0 6.0
Hungary 10.4 10.5 10.0 9.0
Bulgaria 11.0 12.5 16.5 19.0
Poland 14.9 13.6 11.9 11.5
Romania 8.9 6.1 9.2 9.0
Russia 8.8 9.3 9.7 11.8
Source: Data on the unemployment rates in Central and Easter European Nations cited from
Business Center Europe, The annual 1997/98 (Mitiev et al , 1998:115). The 1997 data were
preliminary estimates and the 1998 data - prognosis. The .Russian data were drawn from the
Goskomstat reports (Rossiiskii statisticheskii ezsegodnik M., Goskomstat RF, 1997, p.689
Socialno-economicheskoe polozhenie Rossii. M., 1998, #12 p. 280).
While official unemployment rates are lower than those in some advanced
capitalist countries and in many Third World nations, bad as these official fig-
ures are, the reality may be even worse. Because of the way the rates are calcu-
lated, many of the actually unemployed are not counted. Many of those who lost
their job but have not received the official status “unemployed” for personal
reasons and who have given up looking for a job are not considered unem-
ployed. One could add many economic migrants, refugees and forced settlers to
this category. Those workers who were compelled to take unpaid long-term va-
cations staying in ranks and files of the employed population are not registered
too. Being formally employed, they do not have jobs in reality. Likewise, those
who want full-time permanent jobs but are able to find only temporary part-time
work are not included in unemployment figures.
Some experts insist that the real rate of unemployment is near to 14-15 per-
cent of the economically active population, including in this number graduates
of high schools and higher education institutions, together with officers and sol-
diers, discharged from the Armed Forces, who are not registered as unemployed.
The pessimistic estimate for the future is 16-17 million actually unemployed
people. It is too much for Russia's 147 million population.
It should be noted that there are rather different views among experts con-
cerning latent unemployment. Officers affiliated with the Federal State Em-
ployment Service on local levels often evaluate the rate of latent unemployment
in their region as a pretty small one. Some economists use the discrepancy be-
tween the figures presented by the Federal State Employment Service and the
figures published by the State Statistical Committee of the Russian Federation as
estimates of latent unemployment (Mesentseva, 1998 :170). However, such a
difference might be considered only as the lowest estimate of latent unemploy-
ment. Some arguments in a support of this view have been just presented.
The Russian Federation is a very vast country. During the recent years the re-
gional rates of unemployment in most of the agrarian republics have been much
higher than the nation's average - in Dagestan, Chechnya, Tuva, Kalmikia, Altai,
etc. Due to the weakening of economic links with the cotton-producing repub-
lics of Central Asia, the rate of unemployment in the traditional centres of the
textile and light industries in the middle of the European part of the Russian
Federation was high. The closure of mines and the slow-running process of
conversion of the military-industrial complex resulted in the continuing increase
of unemployment in various regions. In some industrial regions of Siberia and
the Far East, the Urals and the Volga areas, as well as of central and
north-western parts of Russia the regional rates were also higher than the mean
proportion for the country.
3. Public Perception of the Threat of Unemployment
The dynamics of the Russian public opinion towards the growth of unem-
ployment is presented in Table 2. The majority of nation, 65 percent of re-
spondents, distinguished it as the most serious national problem in 1998. It
should be noted that the share of Russians regarding the rise of unemployment
as one of the most important national issues reached the level of half of the pop-
ulation in 1994 and slowly rise up to its peak in 1998.
The unemployment rise, recently emerging in post-communist Russia as an
urgent issue, has stunned the Russians. This issue occupied the second position
among the 15 most urgent problems on the top of the list of most urgent prob-
lems since 1997. In 1998 it was also on the second place - right after the prob-
lem of delayed wage payments that concerned people most of all (67 percent).
Some 43 percent of employees interviewed by the Russian Centre for Public
Opinion Research (VCIOM) in September 1998 reported about a risk of a sig-
nificant reduction of the personnel because of their enterprises' tough economic
situation (Kupryanova,1998:22). 15 percent of the respondents evaluated the
probability of their dismissal using the words 'it is very possible', and 29 percent
- 'there is such a prospect'.
Some people prefer to leave enterprises before their dismissal on grounds of
reduction of personnel. This means that the army of the unemployed will con-
tinue to grow. Despite the fact that a large number (40 percent) of interviewed
workers do not see the jeopardy of dismissal, the feeling of uncertainty con-
cerning job stability is widely spread.
The Russian public opinion on unemployment as a social problem,
1992-19981 (in %)
Febr. Jul. Jul. May May Jul. Jul.
1992 1993 1994 1995 1996 1997 1998
The rising of unem- 22 31 56 50 55 54 65
ployment is the most
urgent national prob-
lem (% of those inter-
The rank of unem- 3-5 5-6 3 3 3 2 2
ployment in the list of
most urgent national
problems (according to
the number of re-
spondents who have
mentioned this prob-
Source: Ekonomicheskie I sozialnie peremeni. Monitoring obschestvennogo mneniya.
Informazionnyi bulleten.( Interzentr). Rossiiskii zentr izucheniya obschestvennogo mneniya
(VZIOM)(Economic and Social Change. The Monitoring of Public Opinion. Bulletin of Infor-
mation. (InterCentre). The Russian Centre for Public Opinion Research (VCIOM) (Bi- Month-
ly, in Russian), 1993, #4, p. 60-61; 1994, #5, p. 58; 1995, #4, p.57; 1996, #4, p.58-59; 1997,
#5, p. 47-48; 1998, #5, p.57.
Sergei Kalashnikov, Minister of Labour and Social Development of the Rus-
sian Federation, in one of his interviews (30 September, 1998) said that he did
not consider the rise of unemployment as the Number One problem for today's
Russia. Thus the popular perception of the risk of unemployment is not compat-
ible with the view of top bureaucrats. Yet, he agreed that nobody knows the real
scale of this phenomenon.
There is a correlation between the public perception of unemployment risks
and the existence of the so-called 'disguised unemployment' in many former
state-owned enterprises. Thinking about disguised unemployment, one should
bear in mind that many enterprises were characterised by a redundancy of per-
sonnel and underemployment in the recent Soviet times. In this respect no great
changes occurred during the time of restructuring. Using the terms "redundancy"
and "underemployment” we just want to point out that there were plenty of cases
where two or three people were doing the work that could be done by one em-
ployee. Economic restructuring inevitably should end such practices.
Analysing data of the above-mentioned national survey, carried out in Sep-
tember 1998, sociologists wanted to find out the present-day workers' prefer-
ences: either to stay at the same place despite the irregularly and incompletely
paid wages, or, to be discharged with subsequent registration at the employment
service and unemployment benefits, as well as the expectations for finding a
new work place in the case of dismissal. It has been found out that over 40 per-
cent of the interviewed workers anticipated mass dismissals at their enterprises,
which may affect them personally (Kupriyanova, 1998). Taking the anticipation
of dismissal in the near future of those who were working part-time and with
wages unpaid into account, the scholars have evaluated the size of disguised
unemployment. The calculations showed that it varied in the range from 13 to 38
percent of the employed (Perova, 1998). These figures might be interpreted as
indirect indicators of the number of those Russian workers who are under the
risk of unemployment on grounds of reduction of personnel.
According to the mentioned survey, despite low and irregular payments,
about half of the workers (49 percent) preferred to keep the job which they had.
Nearly one fifth (18 percent) said they would prefer to quit if the wage arrears,
part-time working or unpaid leaves would be not halted in the visible future.
Only 36 percent of the interviewed were sure that, if dismissed, they would eas-
ily find another job in their profession. (Kupriyanova, 1998).
The value of a stable job has significantly grown for the workers during a
time of economic restructuring. This is a positive psychological effect of the re-
structuring. At the same time, too many Russians dread the future due to risks of
unemployment. Yet, people have to anticipate unemployment and even learn to
What kind of people have lost their jobs as a result of the rise in unemploy-
4. A Case Study of Long-term Unemployment in the City of Tver2
Unemployment and related phenomena can be regarded from different per-
spectives, i.e. those of the idle worker, the bureaucrats running the restructuring,
the employment agencies, etc. In this paper, the author tried to adopt such a
multiple- perspective view. In order to achieve a better understanding of the
problem area, we turn to a study of long-term unemployment carried out in the
city of Tver in December 1998 -January 19993.
General parameters of unemployment in Tver. In 1998 the official average
rate of registered unemployed in the entire region was about 1.3 - 1.4 percent of
the economically active population, which was lower than Russia's average rate.
In the regional capital - the city of Tver - the rate was 1.4 percent of the labour
force. According to the available labour statistics, by the beginning of Novem-
ber 1998 in Tver's region more than 97 percent of the registered unemployed
received benefits. The rate of unemployment varied from 4 to near 1 percent
among districts of the region due to peculiarities of district's economic profiles
(it was lower in the agricultural areas). The average ratio of the number of un-
employed workers to the number of job vacancies was 5 to 1.
The situation on the labour market in the Tver region basically resembles
what is happening in many industrial areas of the Russian Federation. The aver-
age duration of unemployment in Russia in 1998 varied around 5-6 months. Ta-
ble 3 displays the proportions of unemployed workers with different duration of
unemployment in the city of Tver and the Tver region in 1995-19984.
The change of the situation on regional labour markets is a reaction to the fi-
nancial crisis which occurred in the autumn of 1998 and the continuing stagna-
tion of the entire national economy. By the end of 1998 the total number of va-
cant jobs in Tver region declined at least by one-third compared to the same fig-
ure at the beginning of the year, because many enterprises reduced their person-
nel due to the persisting economic crisis (Labour and Employment, 1998: 4):
Duration of unemployment in Tver City and Tver Region, 1995-98 (In %)5
Duration of 1995 1996 1997 1998
Tver Tver Tver Tver Tver Tver Tver Tver
region city region city region city region city
Less than 1 12.4 8,1 12.9 18,3 12.7 12,0 15.4 15,6
1-4 41.5 57,9 36.4 42,1 35.2 36,5 35.6 45,4
4-8 24.8 23,0 23.8 19,8 23.3 23,3 25.9 22,5
8 -12 14.6 10,2 19.8 15,4 20.4 19,0 17.5 11,8
Over1year 6.7 0,8 7.1 4,4 8.4 9,2 5.6 4,4
Average, 5.2 4,0 5.6 4,7 5.6 5,6 5.1 4,4
Source: The Tver Regional Department of the Federal Employment service. Bulletin "Labor
and Employment". № 11(73) , 1998, p.4; The Tver City Department of the Federal Employ-
ment service, official information.
Demographic structure of long-term unemployment. Table 4 presents the
age pyramid of the sample of long-term unemployed interviewed in the study
carried out in the city of Tver in winter 1998/1999. Middle-aged people form the
majority of the long-term unemployed. The share of young people among the
long-term unemployed is rather small as well as the portion of senior citizens.
Age structure of the long-term unemployed
in the city of Tver
Age < 20 20 - 25 - 30 - 40 - 50 -54 55- 60 60 +
(years) 24 29 39 49
tion in 0.3 3.3 9.7 22.0 37.7 21.7 5.0 0.3
The majority (about 70 percent) of all officially registered unemployed per-
sons and nearly one-half of all unemployed workers in the Russian Federation
are women. Thus one may say unemployment in Russia has a "women face" (see
also Mesentseva, 1998). It is also true for the Tver region where in 1998 about
70 percent of the unemployed workers were women. In our sample of long-term
unemployed in the city of Tver, 79 percent are women. The age of many (about
one-third) of long-term unemployed women in the Tver region is close to wom-
en's pension threshold (55 years).
Job preferences. Generally speaking, the workforce in Russia is well educat-
ed and vocationally trained, especially in industrial urban areas. In the Tver re-
gion about 14 percent of the unemployed have higher education (university lev-
el) and nearly 30 percent - a semi-high education (vocational college level). In
the sample of long-term unemployed in Tver, nearly 40 percent have higher ed-
ucation and 36 percent - semi-high education. Half of the men in the sample
have higher education. There are engineers (18 percent of the sample), teachers,
physicians and lawyers among the unemployed. About 40 percent are managers
on various levels - heads of large collectives and smaller teams with 5 members
Most unemployed women and men performed non-manual work before they
lost their jobs. They all prefer to get white-collar jobs again. However, accord-
ing to studies, it is a rule that twice more unemployed men, compared to women,
express the eagerness to perform "any kind of job for good money" (Kartashev
& Danovsky, 1998:46).
According to the statistics of the regional Department of the Federal State
Employment Service, about 85 percent of the vacancies in 1998 were blue-collar
jobs. Employers are looking basically for workers who are able to do manual
work. In such circumstances the chance for well-educated aged unemployed
women to get a new office work is pretty small.
There has been a severe shake-out in the manufacturing sector in the Tver re-
gion due to the crisis and the policy of restructuring. However, about one-half of
long-term unemployed left their job 'according to their own will', and only
one-third was dismissed on grounds of reduction of personnel or other adminis-
Looking at figures, one can easily arrive at the conclusion that the majority of
the long-term unemployed have achieved their present status voluntarily. It
seems that the greater part of the present clients of the employment service wish
to get guarantied social benefits on a regular basis. Such a conclusion might be
paradoxical, but it should be argued that the analogous proportions were dis-
closed in other surveys (See Khasaev, 1998). According to results of regular
surveys in Moscow, since 1992 the number of long-term unemployed, who pre-
fer to quit due to personal reasons is rapidly increasing. In 1996 it was much
higher than the number of unemployed dismissed on the grounds of reduction of
personnel: 43 percent against 31 percent of the total number of the unemployed
(Kartashev & Danovsky, 1998:45). In 1996 this share was more than twofold
higher compared to the figures of 1992, when over 70 percent of the registered
unemployed were dismissed on grounds of reduction of personnel.
Status change and expectations of the unemployed. People rank one another
on the basis of their occupation, education, prestige and income. The work
which people do helps them to define their place is society as well as their per-
sonal options. It also has a profound influence on their psychological state. Alt-
hough some people try to separate their personal identity from their job status,
this is difficult to achieve.
All over the world at the bottom of the heap both in terms of prestige and in-
come are the unemployed and the under-employed (those who can find only
part-time or temporary work). A sense of inferiority or inadequacy is common
among these people. Nearly half of the long-term unemployed admitted that
their present social status is lower than that of their father at the same age. In
sum, about 40 percent of the respondents evaluated their status in terms 'low' (30
percent) and 'very low' (10 percent).
Almost all respondents in the Tver sample reported a negative change of their
well-being during the year preceding the survey. Negative expectations con-
cerning the plausible change of the family's well-being in the nearest future were
expressed by 38 percent of the long-term unemployed. Only 14 percent believed
that their financial situation would improve.
"Hope dies last" - says the Russian proverb. It should be also mentioned that
half of the interviewed (53 percent) had no definite plans for the future, and
one-third (35%) dreamed "just to survive". The rest wanted to fight for a better
destiny. The proportion of optimists was bigger among the younger people.
Alienation from politics. The spread of political apathy and distrust in demo-
cratic institutions should be mentioned among the main cultural consequences of
the poor state of democracy in this country (Ester et al, 1997). About one-third
of the interviewed (35 percent) took part in the recent local elections, and
one-half participated in the 1996 presidential election. Nonetheless, they did not
feel the individual may influence politics in this country. Views of the kind:
"Politics should be left to politicians", and "Plain people's actions cannot change
the established order" were and are widespread among the unemployed. The
bulk of the interviewed did not believe in the effectiveness of rallies and
demonstrations, organised by the unemployed, and expressed no intentions to
participate in such actions. According to the opinion of 70 percent of idle work-
ers, collective protest actions would not end in an improvement of the situation
of unemployed people.
Unemployment - the slip to poverty. Unemployment and poverty go hand in
hand. Half of the sample (49%) has classified their family's financial conditions
as "poor, hard, serious". 15 percent of the interviewed reported they could not
make ends meet. One-fifth of the interviewed had to sell property in1998 and 13
percent were planning to do the same in the next year. About 5-6 percent gave
their private apartments and summer houses for rent in order to get extra in-
It should be noted that the size of social benefits for the long-term unem-
ployed in Tver at the time of survey varied in the range from 720 Rubles ($33)
to a maximum of 814 Rubles ($37) a month, or to about one dollar a day. The
average benefit overall the total array of unemployed was 414 Rubles ($19) or
about 50 cents a day. By the way it was a bit bigger than the average pension
(over 300 Rubles, or $14).
Feelings. A strange mixture of feelings "Hope for a better life” and simulta-
neously “fear of the coming days" was chosen as a characteristic of their psy-
chological state by the relative majority of long-term unemployed (60 percent),
when the respondents were asked about their perception of the future. The re-
maining 40 percent split into three additional groups with salient psychological
features. 13 percent of respondents, thinking about the future, felt "fear", 7 per-
cent - "indifference", and only 20 percent reported about their "self-confidence".
The observed diversity of feelings and expectations concerning the future re-
flects the variety of psychological types of unemployed people, each with vari-
ous attitudes towards the lost job and views on how to cope with unemployment.
(See also Kartashev & Danilova, 1997).
The loss of a job may have devastating psychological consequences. Feelings
of boredom, uselessness, and despair are common. Some frustrated workers
suffer serious mental consequences. Studies carried out in many countries show
that rates of such stress-related problems as suicide, alcoholism, mental disorder,
heart disease, and high blood pressure are significantly higher among the unem-
ployed. Unemployed workers are also more likely to lash out at those around
them. An increase in unemployment increases child abuse and violence between
husbands and wives. There are no reasons to think that the psychological con-
sequences of the loss of job in Russia are different from those in other countries.
Generalising, one may say that all above mentioned can also be regarded as risks
of transformation and consequences of restructuring.
5. How to Cope with Unemployment?
The different opinions and proposals about how to cope with unemployment
can be grouped into two broad categories. The first category includes studies on
the behaviour of unemployed and proposals for better adjusting of those who
appeared to be unemployed to the new capitalist environment. The second cate-
gory contains ideas about ways to improve the activity of the employment ser-
vice and recommendations on how to improve the national economy and to re-
verse the negative economic tendencies.
In present-day Russia the majority of those who have lost their job are seek-
ing for a new one through a combination of the following methods:
(a) Using their personal network of acquaintances, relatives and friends.
About 43 percent of the long-term unemployed in the city of Tver moved along
this most popular way, and the fifty percent of those interviewed by VCIOM in
September would like to apply with the help of their friends (Kupryanova, 1998:
23). Most respondents from our sample were sure that one's chance to get a job
depends mostly on his or her network of acquaintances, then on age and educa-
tion characteristics, and, on the third place, on gender, manners and nice-looking
appearance of the applicant.
(b) Applying for assistance to the local bodies of the federal employment ser-
vice and to private personnel agencies. In our sample about two-fifths (39 per-
cent) came for a new job to the state employment departments. According to
VCIOM data, the proportion of those workers who plan to apply to the federal
employment service for a job ‘in the event of such kind of emergency’ is in-
creasing: from 3 percent in June 1991, to 14 in November 1992, 21 in Janu-
ary1993 to 25 percent in September 1998 (Kupryanova, 1998: 25). Only 2 per-
cent of VCIOM respondents reported they would apply to private agencies.
(c) Applying directly to employers and chiefs of personnel departments. In
our sample only 13 percent favoured this option. The number of VCIOM re-
spondents who would like to use this variant is declining: from 23 percent in
1991 to 14 percent in 1998.
(d) Looking through lists of vacancies announced in newspapers and broad-
(e) Creating personal advertisements. In our study 25 percent used this variant
in the past and 29 percent would like to publish their personal ads in the coming
There are also unemployed people looking for a job abroad. The number of
such people cannot be large for plenty of obvious reasons. Only 5.0 percent in
our sample reported about their failed attempts to start a new working career
Reducing unemployment is a continuing concern of governments around the
world. Russia is not an exception to the rule. Due to a short period of our deal-
ing with this problem, we cannot say that most federal and local governmental
programmes met with long-term success. But there are visible positive results of
the retraining program. In October 1998, 443 idled workers from the Tver re-
gion attended short-term job retraining courses in order to learn a second profes-
sion. About 90 percent of the retrained got a new job.
The job retraining programmes are becoming more and more widely used by
the Russian Federal Employment Service. The idea is a simple one: teach the
unemployed persons skills which are demanded in the new economic environ-
ment, so that they can find new jobs or start their own small private business. In
the latter case they are provided with a small non-reversible credit by the gov-
ernmental agency. Examples of such practice can be found in St. Petersburg and
Although this approach seems to be rational and bearing in mind the ultimate
aims of the present-day policy, it has its limitations. Self-employment in the in-
formal sector cannot be seen as a general solution to the problem of mass unem-
ployment. A small number of the present-day unemployed are courageous
enough to go to small private businesses. Around 8.0-10 percent of our sample
tried unsuccessfully to become entrepreneurs in the past and the same number
wants to start a self-employed business in the future.
Yet, many governmental efforts to deal with such pressing problems are un-
der-funded and ineffective. The principal ideological point determining the la-
bour policy is whether the government is responsible for providing jobs for an-
yone who needs them, or not. A variety of answers to this question will be dis-
cussed in the next section.
6. The Dispute on Governmental Guarantees for Job for Everybody Who
Should the government guarantee a job for anyone who wants to work? Dur-
ing the 'good old times' of state socialism this question sounded as rhetoric. It
was a time of total employment, and the Soviet law prosecuted those who did
not want to work. Since 1992 there is no such law and the situation on the labour
market has drastically changed. Today, like in many countries, in post-Soviet
Russia there are three groups of people with different views on this vital prob-
lem. A significant part of the Russian people up to nowadays believes that the
answer to the question must be positive despite the radical changes in Russia's
social and economic system. The minor part stands on the directly opposite posi-
tion. And, of course, there are people without any definite opinion.
A very small number of the unemployed in our sample (8.0 percent) agreed
with the opinion "Unemployment is good for our economy", while the vast ma-
jority (73 percent) accorded with the opinion "Unemployment is harmful for the
economy". We feel the observed proportions reflect the balance of views in the
society as a whole, yet we have no survey data to prove this hypothesis.
Most Russians believe that there is hardly anything more inefficient for the
national economy than the waste of the productive energy of millions of
well-educated, professionally trained and willing to work people, who had been
dismissed from their jobs. To make matters worse, many people believe that the
rise of unemployment during the period of the transition to a market economy is
likely to diminish the intellectual capital of the nation to a significant extent. In
fact, many unemployed suffer a decline in self-esteem. Alcoholism increases
sharply among the unemployed. Divorce rate increases, and children become
victims to family disasters caused by the parent's unemployment. Criminals are
often recruited among workers laid off their job.
According to three-fourths of the interviewed in Tver, the society as a whole
is primarily responsible for the very fact of unemployment of individuals who
want to work. Such a fact should be considered mainly as a 'defect of society',
and not as a 'fault of the concrete person who has become unemployed'. The
majority of the unemployed maintained this point. A tiny minority, about 5% of
the respondents, supported the opposite view. One may notice that the socialist
attitudes towards the phenomenon of unemployment and the paternalist function
of the state are deeply rooted in mass consciousness in Russia. But in reality the
restructuring in transitional Russia was based on IMF receipts and mac-
ro-economic concepts drawn from theories of liberal economy, not from social-
Adherents of Yeltsin's policy in early 1990s argued that the proposal to pro-
vide a job for everyone is just one of the old-fashioned socialist ideas, which
sounds nicely, but simply cannot be implemented in practice. They emphasised
the fact that officially unrecognised unemployment has existed during the pre-
vious decades despite the state guarantee of total employment.
Russian bureaucrats doubt whether unemployment can or should be elimi-
nated, although they agree that the extremes of unemployment are a symptom of
crisis in the economy. In their view, those unemployed who want to work must
be provided with re-training and psychological help, so that they can find their
place in the new Russia's capitalist economy and support themselves. The main
point in this set of arguments is that unemployment is functional for society and
economy, and moreover that some unemployment is necessary for the mainte-
nance of a certain tension on the labour market. According to liberal economists'
logic, the absence of a free workforce may 'undermine the self-reliance and ini-
tiative of the people'.
For those economists who run reforms in the 1990s, the rise of unemployment
in the time of transition to a market economy is a predictable and inevitable
consequence of a restructuring which the society must swallow. According to
the Russian laws, the government should not attack unemployment by creating
new governmental jobs, i.e. jobs in the non-private sector, but must support the
development of private business.
In a popular weekly magazine Argumenti i Facti (January, 1999, N1) the
readers met with the declaration that even in today's Russia 'anyone who really
wants to work always can find a job'. In our view, such a general statement is
based on misunderstanding of the real gravity of the situation on the national
labour market. The situation on the regional labour markets is gloomy enough as
well. In many regions finding a job adequate to one's demands is not an easy
task. The predominant part of the interviewed in Tver have evaluated the capac-
ities of both the state-owned firms and the private enterprises to provide extra
jobs as very limited.
For the majority of long-termed unemployed, the basic duty of the govern-
ment is a financial support of citizens in case of unemployment. Job security
should be primarily a concern of the government or the federal law, not of the
individual - this is an opinion expressed by more than half of the interviewed in
Tver. Only about 11 percent claimed the opposite point of view, and approxi-
mately one-third supported the view that both the state and the individuals
should be equally responsible for this issue.
As our Tver study has clearly demonstrated, the problem with many of the
Russian unemployed is that they want to get well-paid office jobs and refuse the
lower-level and manual jobs that are available. Some bureaucrats, advocates of
liberal reforms, asked in public: Why should taxpayers subsidise this kind of ar-
rogance? And, indeed, there were and are grounds for such a position.
But the ordinary people say: Why do bureaucrats blame the women with
higher education, who form the relative majority of long-term unemployed, for
their aspiration to get a job adequate to their experience and qualification? In
fact, these women are genuine victims of the politics of economic restructuring.
They are responsible neither for the current economic crisis, nor for the industri-
al policy of the previous authorities. And they suffer more than other people,
both economically and psychologically.
The variety of co-existing views reflects the ideological cleavage of the Rus-
sian public mind, the breaking value conflict concerning the ultimate societal
goals and means of economy's transformation that split the entire society (See
also Rukavishnikov, 1994; Ester et al., 1997; Rukavishnikov et al., 1998). In
fact, unemployment is as much a political problem as a problem of economy and
society. It is hard to imagine effective solutions to such mutually correlated so-
cial problems as unemployment, poverty and crime without effective political
actions. In this respect the debates concerning the fight against unemployment in
post-Soviet Russia resemble the ones in other societies.
7. Concluding Remarks
Today's post-Soviet Russia belongs to the middle-income countries and ac-
cording to its GDP per capita actually looks like a developing nation. Is Russia
really transforming into a Third World country? Making comparisons and
measuring changes and trends depends on the point of view.
The relatively large share of people with semi-high and higher education di-
ploma among those who lost the job is the first important trait of present-day
Russia's unemployment, that drastically differentiates it from the Third World
countries. The large portion of well-educated and qualified white-collar women
among the unemployed is the second significant feature by which Russia differs
from many other nations. In the Third World countries, as well as in many in-
dustrial societies, the majority of unemployed workers is formed by
low-educated men who used to perform low prestige jobs in manufacturing in-
dustries or construction. There are effective mechanisms in this country for fi-
nancial support of the unemployed, for retraining them, for encouraging and
helping them set up small businesses. And this is the forth principal point of
Thus, Russia is still very different from the Third World economies at least
with respect to unemployment risks. However, one cannot be absolutely sure
that the answer to the above set question will be negative in the future, if the
present line of developments continues. The way of ruling and restructuring, to-
gether with the lack of hard-currency resources to overcome the crisis, are cru-
cial points that make the answer uncertain.
Russia's economy is in a very difficult situation. The memory of the crash of
the national financial system in August 1998 when many foreign investors lost
huge amounts of money is fresh enough to prevent most Western bankers from
new adventures in Russia. The burden of state foreign debts is extremely heavy
too. In 1999 Russia has to start paying for the earlier postponed debts of the
former USSR, and for this reason the economic situation in the country may be-
come worse than expected.
Oversimplifications should be avoided when speaking about the relations
among unemployment, labour market and the restructuring of economy in
post-communist Russia. It appears reasonable to assume that if the government
takes action to stimulate economy, business will boom and more jobs will open
up. However, the real relations between the governmental intentions and their
direct and indirect efforts are more complex and far from this simple scheme.
The best way to deal with unemployment is to re-organise the economic sys-
tem in Russia so that it operates more efficiently. In the recent years the gov-
ernmental policy of economic restructuring had harmful effects on the living
standard of the nation and created the rise of unemployment, although most
former state property was privatised.
Today Russia looks more like a market-type economy, than a state-run one.
Governmental intervention into economy is lim-ited. Any attempt to provide
jobs for millions of unemployed people would require great investments in the
economy. The right and left politicians are now united around the point that
more money must be invested in the so-called 'real economy', i.e. in industry and
agriculture, to reach an increase in productivity and competitiveness of Russian
products on the world markets, and eventually to reduce unemployment. They
have different opinions on where and how to get money and how to use them.
The principal point to be emphasised here is that any economic recovery
strategy needs a political will on behalf of the government and a strong support
of both the parliament and the nation to be implemented in practice in a full
scale. Most Russians are concerned about revitalising the national economy.
Most Russians, like the overwhelming majority of the interviewed in Tver, do
not believe in the capability of the federal government to reduce the scale of
unemployment because of the chronically poor Russia's budget, and due to po-
On the other side, capitalism in this country is often called "bandit or robber
capitalism". The state of democracy is poor. It takes the country back to the
eternal problematic of democracy and capitalist economic development. Alt-
hough many people think about inflation, unemployment, and huge state debts
as the most important economic problems of the present-day Russia, they are
actually symptoms more than causes of economic problems.
Resuming, we want to argue again that unemployment in Russia cannot be
understood or dealt with solely in economic terms. Political and cultural dimen-
sions of Russia's policy of transformation are equally important as the economic
one. If examined in this context, the current labour-related troubles in Russia are
not just short-term economic problems of non-paid in time wages and rising
unemployment. They are mainly political issues, because they are related to the
future goals, to the strategy of reforms, and to popular support for the power.
Thus, the principal point of the struggle against unemployment is: should the
government guarantee jobs for those who want to work, should the state give
jobs to those who are unable to find them in the private sector, or not. For the
newly emerged Russian oligarchy any attempt for greater intervention of the
federal government in the economy would be unacceptable.
At the threshold of the new millennium Russia is probably coming to the next
turning point in its history, but we do not share the view that the present line of
development can be altered virtually overnight. The fundamental question is
whether Russia will be a Third World country in the 21-century, or it will restore
its former position as an advanced nation and will be able to maintain itself as a
powerful player on the international scene. In our view, despite today's huge de-
cline in GDP per capita, the ranking of Russia on the list of nations will improve
in the next century, because of its giant intellectual, natural and technological
Thus, we may conclude that the struggle against unemployment in Russia will
be endless like in the Western world. Genuine state wisdom and governmental
skill need to shield the unemployed from undue distress while reorienting the
economy to reintegrate them. As far as the future development is concerned, the
formula "put men before money" may be the only way for the Russian elite to
answer the revolutionary challenge of the 21st century.
The question formulated as "Which of the problems existing in today 's Russian
society makes you most anxious ?" Response 3 - "Rising unemployment".
Source: Ekonomicheskie I sozialnie peremeni. Monitoring obschestvennogo mneniya.
Informazionnyi bulleten.( Interzentr). Rossiiskii zentr izucheniya obschestvennogo mneniya
(VZIOM)(Economic and Social Change. The Monitoring of Public Opinion. Bulletin of In-
formation. (InterCentre). The Russian Centre for Public Opinion Research (VCIOM) (Bi-
Monthly, in Russian), 1993, #4, p. 60-61; 1994, #5, p. 58; 1995, #4, p.57; 1996, #4, p.58-59;
1997, #5, p. 47-48; 1998, #5, p.57.
The city of Tver is located to the north-west of Russia's capital on the banks of
the Volga river, 167 kilometres from Moscow and 485 kilometres from St. Pe-
tersburg. The total population of Tver is over 460,000 people, including
187,000 economically active persons. 63% of the labour force are working in
material production sectors, the rest - in other sectors of economy. One-third of
the working population is employed in industry. The non-state sector of the city
economy, emerged as a result of privatisation, gives jobs to about 90 percent of
those working in the sphere of production of material goods. 92 large and me-
dium-size industrial enterprises with different forms of ownership compose the
core of the economy of the city. Together they produce about one-quarter of the
total industrial production of the region. Main branches of industry are machine
building (36% of the total volume of production), food industry (21%), electric
energy industry (15%), light (12%) and chemical (7%) industry. Currently 18
percent of the economically active population are working in the informal sec-
tor, which is expanding. About two thousand small private enterprises are reg-
istered by the city authorities. According to the official statistics, the share of
the small private firms in the total volume of industrial production of the city is
nearly 10 %, in construction works - 23%, and 69% - in retail trade. The num-
ber of commercial banks operating in the city is close to 20. There are 5 higher
education institutions, including university, several colleges and vocational
schools, and over 50 scientific research institutions and design and planning
organisations, which are also giving jobs to citizens. Since the very beginning
of the 1990s, the entire city economy is in deep crisis. However, the official
rate of unemployment is relatively low - 1.4% of the economically active pop-
The UNESCO- MOST sponsored this survey as a part of the international pro-
ject headed by Professor Nikolai Genov from the Institute of Sociology of the
Bulgarian Academy of Sciences. Prof. Genov supplied the questionnaire used
in the Tver survey to the Russian team. Mr. Yuri Veremeenko supervised the
fieldwork, organised with the kind assistance of the leadership of the Tver City
Department of the FSES. The Tver university students served as interviewers.
Mrs. Tatiana Rukavishnikova administrated the computer works. The author
greatly acknowledges all persons engaged in this study.
The duration of individual unemployment depends on plenty of subjective and
objective reasons. By the end of 1994, more than half of the unemployed had
had this status for more than 4 months, each sixth or seventh of them had had
no job for more than a year (Socialno-economicheskoe polozhenie Rossii,
1995: 142). In 1994 the average time spent in search of a new job was about 7
months, in 1995 it was nearly 8 months (Socialno-economicheskoe polozhenie
Rossii, 1995: 248). The overall figures also vary from region to region and
from month to month due to the stand of economy.
By keeping students off the labour market until they are young adults, the edu-
cational system, i.e. universities, colleges and schools, absorbs many of those
who are actually not needed in the economy and reduces unemployment.
According to data from a special survey carried out by the Russian Centre for
Public Opinion Research (VCIOM) in June 1993, about one-fifth of the regis-
tered unemployed have not had a job previously. Two-fifths were dismissed on
grounds of redundancy or liquidation of their enterprise. And another two-fifths
left voluntarily, mainly because of low earnings and hard working conditions.
Public opinion reflects contradictory combinations of attitudes and beliefs
spread among the population. The transition involves changes of the val-
ue-attitudinal system of the nation, which we did not discuss in this paper.
Basic pillars of the mind of "homo sovieticus" are eroded but the entire value
system is not totally destroyed. An ideological split of society is not a simple
expression of a 'generation gap'. It is the result of a conflict of different sets of
orientations and world-views.
In 1995, according to World Bank data, Russia was 56th in the list of 150 na-
tions ranked by gross national product (GNP) per capita measured in US dol-
lars (Russia's GNP per capita was $2,240). Russia's GNP per capita adjusted
for purchasing power parity (PPP) was $4,480, and according to this measure
Russia ranked 52nd. Russia stood behind all welfare Western-European nations
as well as USA, Japan, 'young Asian tigers', Canada, Australia, United Arab
Emirates, Kuwait, Israel, New Zealand, Republic of Korea, Argentina, Uru-
guay, Brazil, Mexico, etc. Central European ex-socialist states are positioned
higher than Russia.
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