Raising the retirement age added 1.7 million people to the Russian labor market

As follows from RANEPA calculations, thanks to the increase in the retirement age in the Russian Federation, the number of pensioners and the dependency ratio have decreased to the levels of almost ten years ago. This decision also had a positive impact on the labor market – between 2018 and 2022 it gained an additional 1.7 million people. At the same time, most of them managed to find a job – the unemployment rate among older Russians in 2022 was lower than in 2018.

Without raising the retirement age, which the White House initiated in 2018, the Russian labor market could face an even more noticeable labor shortage. This conclusion can be drawn from the report, which during the Fifth Russian Economic Congress (REC-2023) was presented by Viktor Lyashok, an expert from the Institute of Social Analysis and Forecasting of the Russian Presidential Academy of National Economy and Public Administration. The work is based on the results of a labor force sample survey conducted by Rosstat and the results of a color analysis. Let us recall that in 2018 the government announced a gradual increase in the retirement age by five years – to 65 years for men and to 60 years for women. At the same time, those who were supposed to reach retirement age under the old rules in 2019 and 2020 were given the opportunity to retire six months earlier than under the new ones.

As follows from the report, in 2018–2023 the number of old-age pensioners decreased by 2.4 million people, including due to an increase in the retirement age, and by the beginning of 2023 reached 34.2 million people. This is the minimum figure since 2014; the maximum number for this period was recorded in 2019 (36.7 million people). Similarly, after 2020, the dependency ratio, the ratio of the non-working age population to the working age population, decreased to the level of 2014 (47.9%). Since the beginning of the pension reform, the average actual age of exit from the labor market has increased by 1.1 years for men and 2.1 years for women – to 64 years and 62.7 years, respectively.

Raising the retirement age has also contributed to an increase in the labor force participation rate of older Russians. For women 55–59 years old, this figure increased by 12.8 percentage points, for 60–64 year old men – by 10.6 percentage points. Economic activity of 60–61 year old men over the past four years increased by 17– 19 p.p., 55-56-year-old women – by 17-18 p.p.

In addition to the age cohorts directly affected by the reform, labor force participation rates also increased in other age groups. As a result, the total labor force increased by 1.7 million people, or 2.3%, between 2018 and 2022. At the same time, the unemployment rate among the older population decreased at almost any age in the range from 50 to 65 years – in 2022 it amounted to 1.9–3% instead of 3–5% in 2018. For women, however, the effect was more complex – if in general for Russian women aged 50–65 years the unemployment rate decreased, then for certain ages in 2022 it was higher than in 2018 (for example, for 55 years old – 3% instead of 2 .3%, for 58 years old – 3% instead of 2.5%).

“The personnel shortage that is currently emerging in the Russian labor market is gradually forcing employers to abandon discrimination in hiring. Now Russians who belong to the group of pre-retirees, if their health allows them, can relatively easily find a job. Moreover, they show great interest in retraining and are the second category in terms of level of involvement in educational activities of the national project “Demography,” says Dmitry Cherneiko, head of the Committee on Labor and Employment of St. Petersburg. As the author of the work, Viktor Lyashok, notes, without raising the retirement age, “the personnel crisis that we can observe in the labor market would now be even more acute.” “This decision will continue to support the size of the workforce in the future – over the next five years it will grow by about 2 million more people,” he estimates.

We note, however, that, according to calculations by the Center for Labor Research of the Higher School of Economics, the impact of raising the retirement age on the labor market was somewhat weaker, due to the fact that the majority of older people continued to work after retirement even before the reform. As a result, while labor force participation rates for women aged 55–56 and men aged 60–61 rose by 10–15 percentage points (pp), labor force growth in 2020–21 amounted to only 700 thousand people (see “Kommersant” on May 18).

Anastasia Manuilova