The global financial crisis interrupted a protracted period of strong economic growth in the Russian Federation. Despite a large decline in output, job losses and hikes in unemployment remained rather modest, and much of the labour market adjustment took place through reduced working hours and, in particular, real wages. Notwithstanding the recent recovery, the Russian labour market remains characterised by significant structural imbalances resulting in widespread segmentation and large earnings inequalities.
To improve the balance between labour market flexibility and the protection of workers, the Russian Federation needs to reinforce its labour market institutions. Poverty and income inequalities remain well above the OECD average. Family policy is focused on increasing birth rates, but is ineffective in reducing poverty as working adults and children make up 60% of the poor. Instead, social policy is focused on the elderly and disabled, and in recent years there has been significant increases in transfer payments to pensioners.
Recent reform is likely to “eradicate” poverty among pensioners, as measured by official benchmarks, but raises questions about the long-term financial sustainability of the private pensions system. Rapid population ageing further contributes to the need to raise the low standard pensionable ages in Russia and limit access to early pensions. The challenge for Russia will be to rebalance its social policy towards more effective support for parents to combine work and family life.
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Assessment and recommendations Chapter 1. A dynamic but segmented labour market -1. The global crisis ended a decade of strong growth, but recovery is underway -2. Real wages remain the main adjustment variable in the labour market -3. The labour market is highly dynamic by strongly segmented -4. Regional disparities are large but declining -5. Educational attainment of the workforce is high, but average quality is rather low Chapter 2. Reinforcing labour market institutions -1. Introduction -2. Employment protection is not a strong constraint on employers -3. Enforcement of labour regulation is weak -4. Collective bargaining has a limited impact on wages and working conditions -5. Expenditure on labour market policy is very low -6. A policy for professional training is lacking -7. Conclusions Chapter 3. Supporting the working-age population more effectively and more fairly -1. Introduction -2. Income disparities and poverty -3. Social policy in the Russian Federation -4. Family policy -5. Conclusions Chapter 4. Ensuring adequate and financially sustainable pensions in the Russian Federation -1. Introduction -2. Poverty among pensioners -3. Demographic change will have a profound effect on Russian society -4. Pension policy developments over the past 20 years -5. The 2010 pension system: Reform to strengthen adequacy of pension payments -6. Financial sustainability -7. Conclusions