Russia predicted an increase in the number of unemployed

Over the past year, the unemployment rate has fluctuated at its lowest levels on record, from 3.6% to 2.9%. The entire past year was the “year of the applicant,” that is, employers competed with each other for the best personnel, including by increasing wages and luring employees away. According to a number of analysts, in the future, unemployment in Russia will begin to rise slowly as foreign investment in the real sector of the economy decreases and domestic and external demand for goods and services decreases. Digitalization and automation of production will have an impact on the labor market, which will reduce the need of enterprises for low-skilled labor.

The opinion remains popular that the benchmark for understanding the “natural” or “unnatural” level of unemployment is this indicator in the most developed G7 countries on the planet: there it does not exceed an average of 4%. But even this indicator is not critical. Problems for the state, theoretically, can only begin if this indicator increases by more than 1.5 times. “An increase in the unemployment rate above 7% can lead to a worsening of the economic situation, since it is associated with a decrease in consumer demand, a decrease in household incomes and a deterioration in social stability: in general, this is a negative moment for the economy,” recalls the founder of HR-Tech company Happy Inc. Alexey Klochko. — Unemployment itself is not so bad. A moderate unemployment rate – about 7% – is even useful, as it contributes to the formation of healthy competition in the labor market and improves the quality of the labor force.”

Growth within the normal range of natural unemployment is a normal phenomenon if it is associated with the restructuring of the economy, its digitalization, and the introduction of new technologies and industries. According to the associate professor of the basic department of the Chamber of Commerce and Industry of the Russian Federation “Human Resource Management” of the Russian Economic University. Plekhanov Farida Mirzabalayeva, a decline in unemployment is natural for Russia due to the above reasons – the transformation of the economy. The freed-up workforce needs to be retrained for in-demand jobs. Record-low unemployment rates are affecting employers: companies are struggling to find suitable workers, pressure on wages is growing, and job seekers may be making higher demands. At such moments, the state may soften the conditions to attract labor migrants to the Russian market, the expert warned.

However, the most rigorous analysis of the unemployment situation was carried out by Alexander Safonov, a professor at the Financial University under the Government of the Russian Federation.

— Do you agree with the conclusions of economists surveyed by the Bank of Russia?

— The assertion that we will see an increase in unemployment in the future does not have sufficiently serious economic justification.

– Why?

—Firstly, the Ministry of Economic Development predicts that this year the GDP level will reach about 2%, that is, there will be economic growth. Secondly, we are at the stage of complete exhaustion of the results of the pension reform. In 2025, after the transition period, men will retire at 65 years old, and women at 60 years old. That is, in 2025 there will no longer be an effect of labor force growth due to older people. And this will worsen the problem of staffing in the economy. At the same time, in Russia until 2026 there will be no mass entry into the labor market of the larger younger generation, which appeared, accordingly, in the early 2000s after the launch of the maternity capital program. And even after they enter the labor market, it will not be such a massive influx of young people that it could somehow change the picture.

In addition, we must also pay attention to the fact that our flow of migrants is decreasing. Naturally, migrants from Africa and Latin America may replace workers from Central Asia, but this will be a completely different situation. The fact is that migrants from Central Asian countries who have been working in our market for a long period have already adapted to the requirements of the law and have the necessary professional qualifications, which cannot be said about guest workers from more remote regions of the planet. Therefore, there are simply no significant reasons for changing the trend in the labor market.

– What will happen then?

— We can say that Russia will “freeze” for some time at one figure—2.9% or 3% unemployment—but no more. And then, you need to understand that such a level of unemployment means that we are talking about so-called structural unemployment, that is, a situation where there are jobs in the economy, but they do not match in terms of the qualifications of applicants and their place of residence.

– And what will the picture look like in the end?

— Accordingly, 2024 will be similar to 2023 in key labor market parameters. The shortage of workers this year will be felt most by agriculture, the housing and communal services sector and industrial enterprises, because the number of older specialists will continue to decline for natural reasons, unless, of course, there is a recession or crisis in the economy. Do not forget also that there is a physical decline in population in Russia. Experts who talk about rising unemployment do not take into account the possibility of a flow of workers between industries.

– What does he look like?

— Where is reduction possible in 2024? For example, in housing construction, due to the actions of regulators to reduce the availability of preferential mortgages, due to the high cost per square meter, etc. However, migrants who are currently employed in construction will simply move on to work in courier services and logistics, but they will not create unemployment for Russian citizens.

In addition, the real state of the labor market in Russia is like a layer cake. The formal unemployment rate is 2.9%, but every month 1 million of our total employed people are on administrative leave, and no one counts them as unemployed.

– What does it look like?

— In our country, in principle, it is a common practice, almost since the 90s: when an enterprise faces problems, it negotiates with employees so that they go on vacation without pay, that is, in fact, they are listed as employed, but de facto they are unemployed.

We have informal employment, it is sometimes also called “gray”, when people who are not registered in any way actually work, and various government departments, including Rosstat, simply do not know how to isolate them from the general mass. Against this background, statements that the trend in the labor market should reverse do not look very correct. For us now it is a different story that is problematic.

– Which?

— Due to the large extent of the country, the overall picture of unemployment is good, but this is the average temperature in the hospital. And from the point of view of individual sectors, regions or single-industry towns, it requires additional measures. Just as there was a problem of youth unemployment in the Trans-Baikal Territory, Yakutia, Tuva, and the North Caucasus, so it remains. Therefore, in some places there is a shortage of personnel, and in others there is an excess of it. Moreover, it is quite difficult to change this situation, because people from regions with an underdeveloped economy or single-industry towns are not going to go anywhere or change anything, or acquire additional specialties.

— Do you agree with statements that an unemployment rate of 4% is normal?

— No, such conclusions also raise questions. In Japan, for example, unemployment has been at 2% for many years in a row, and this country today ranks fourth in the world in terms of GDP, overtaking Russia, which is among the five most rapidly developing countries. The question is not the percentage of unemployment: there is no economic evidence of what level of unemployment is “natural” for a particular state. Every situation has its own specifics: somewhere 2% will be good, somewhere 3%, somewhere even more, because a lot depends on the abundance of labor and a whole bunch of other factors, so general approaches here will be incorrect.