Page 36 - RUSRptSept18

the labour pool and go some way to counteracting the shortage of workers, but the process of adjustment will be painful and slow, say economists.
Over the second week in August, the number of unemployed Russians fell in 60 regions and increased in only 23 regions, Vedomosti reported. The biggest declines were recorded in the Nenets and Chukotka autonomous districts, Mari El, Karelia and Tuva, Pskov, Magadan and Voronezh regions, the Trans-Baikal and Kamchatka regions. Employment growth was observed in Ingushetia, Crimea, Kabardino-Balkaria, Kalmykia, Tatarstan, Tyumen, Kostroma, Kaliningrad, Lipetsk regions, and also in Sevastopol.
Informal employment decreases. New Rosstat data show that last year employment in the informal sector of the economy fell by more than 1mn people, down to 14.2mn or 19.8% of all working individuals. This drop is notable considering that, since 2011, the informal sector has grown by 300,000-400,000 workers per year.
The new stats are good news for the economy at large, as growth in informal employment typically indicates economic recession and a worsening business climate. That recruitment agencies recorded a 15% increase in demand for their services last year demonstrates workers’ ever-growing confidence in the economy since the tumult of 2014. But recent policy announcements raising taxes and tightening tax oversight could drive many back into the informal sector, especially if small businesses are inordinately burdened by newer policies designed to protect state firms under sanctions.
Rosstat’s statistics show an economy-wide decline in informal employment that cannot be attributed to any particular group of workers. There are several explanations for this drop. First, the state has placed increasing pressure on the shadow economy since 2015. Second, the spread of electronic services has enabled some illegal workers, such as taxi drivers, to move into the official sector with new technologies like ride-sharing apps. Lastly, the stabilization of wage dynamics in 2017 has allowed individuals to abandon the informal work that was previously necessary to bolster their incomes.
As the Russian economy recovers, high demand for workers has led legal businesses to offer increasingly favourable conditions and thereby reduce the attractiveness of informal employment. Yet upcoming legislative changes and other factors, such as the popularity of flexible forms of employment and recovering business revenues make it hard to predict the dynamic going into next year.
A study showed the low personal investment in human capital in Russia.
Despite Russia’s decent position in global human capital rankings, a new study from the Higher School of Economics shows that only 6% of the Russian population actively invests in developing their human capital.
Russia has been fairly resilient to brain drain despite the emigration of skilled professionals, but these figures are a serious concern for the country's modernization agenda. People need to believe that learning skills actually brings benefits to help drive innovation and make industries more competitive. Each additional year of education leads to a 3.9% increase in employee income, all the more pressing when most have seen their real incomes fall.
The most significant component of human capital in Russia is secondary specialized education, which 44% of the population has completed. This number, however, fluctuates across the country, at 46% in Moscow and St. Petersburg, but only 34% in centres of constituent entities. Higher education is the second largest human capital component, covering 30% of the total population. If taking into account those with incomplete higher education or those with doctoral degrees, 43% of Moscow/St. Petersburg residents and 52% of those that live in regional centres have education above the secondary
36 RUSSIA Country Report September 2018 www.intellinews.com