The article was published in Rossiyskaya Gazeta on November 17, 2008.

It looks like the major layoffs at companies will start at the beginning of next year. People have already begun to receive notifications about staff reductions or the liquidation of operations. This concerns not only banks and insurance and investment companies but also the real sector of the economy.

There are 1.2 million officially registered unemployed people in the country. I don’t exclude the possibility that this “family” will grow to 2.5-3 million members. And this does not include those who look for work on their own. Are our employment services prepared for such a rush? They not only have to pay out increased unemployment benefits to all those who need them, but they must also redirect this stream of people to where our economy can make the best use of them. This is a difficult task. And with every day it becomes more and more apparent that the labor market policies need to change. This is, by the way, a long overdue change, the necessity of which the financial crisis has harshly reminded us.

Who will face the most difficulties now? Those people who work at the only large business in a given city. The inhabitants of Baikalsk, where the pulp and paper plant suspended operations, have already come up against this problem. They must be supported, by all means. How? There aren’t that many possibilities for a quick solution. But the problems at the plant didn’t appear yesterday. And still the local authorities were not prepared for them, just like they aren’t prepared in the dozens of other small cities that are supported by a single large company or factory. Small businesses continue to remain the destiny of the employers themselves if they are to survive. And this is the solution to the issue of self-employment. At the federal level, they didn’t think about the reassignment of the labor force around the country in the event of the situation’s deterioration. Why not, for example, give employers benefits: if they take a person from the labor registry office, they receive a tax break. We can charge employment centers with concluding agreements with realtors, which could look for housing for “working migrants” at the expense of the state. Another option would be to give a person a certificate for a specific sum so that he, adding to it his own money, could buy an apartment in a city in which he can find work.

The state should have a set of standard measures in order to mitigate the situation in the event of its escalation; it must also anticipate the needs of the economy in the long term. And now is just the time to prepare a new conception of the state policy in the labor market. We so far have only heard the first alarm signal from the labor market. There will be at least three more.There are sectors in which there exists “surplus staff.” This is primarily true for the so-called support staff, people who sit in offices and state administration. The president exposed this sector to very harsh criticism in his state-of-the-nation address, which is completely reasonable. There is finally an understanding that the state should be compact but effective. And, incidentally, the reduction of the state apparatus has already begun in the regions.

If we take a look at our public sector, then we see that above every school, clinic, hospital is an entire superstructure consisting of all kinds of regulatory bodies. These large institutions employ a whole crowd of people, who in essence are just intermediaries between the budget and the actual institutions that serve people. And the quality of the services offered to people accommodates hardly anyone. Do we really need this administrative superstructure? The answer is obvious. Our state-financed institutions probably need self-determination (for example, they should become autonomous institutions); control over them should be given to society, to councils that will monitor them. And these changes are inevitable, if we really want education and healthcare reform to succeed. This means that we also need to be ready for layoffs in this sector.

Let’s get to the real economy. Under minimal competition, and for greater effect, companies could fully allow themselves to maintain a large office staff, people who handled three pieces of paper a day and received $1,500-2000 a month. But real competition can only be won with an effective staff that receives a fair salary. And this kind of competition certainly will begin! Russia has been pulled deeper and deeper into the world economy, and there the conditions are harsh. There the weak are beaten up. There’s the third “focal point of layoffs.” At the same time, there are sectors that have a deficit of qualified personnel; for example, the agriculture, mechanical engineering and service sectors.

We have to understand the size of the problem that stands before the Russian labor market. And to develop a program to redistribute human resources throughout the economy, throughout the regions. Of course, this is a long process, but it’s already time to begin to lay its economic, educational and moral foundations. And I didn’t name the last requirements just to be witty.

As I have already said, today there is an oversupply of white-collar workers (office staff, all kinds of managers) in our country. This “profession” is considered to be prestigious. Lathe operator, locksmith, milkmaid, cobbler, bus driver, street sweeper – these jobs are, in my view, placed undeservingly low in the hierarchy of values. It is this attitude in particular that dictates the government’s immigration policy. A quota of 4 million migrant workers has already been approved for 2009. And yet businesses are cutting their staff. Do we really need that many migrants? Alas, we do. Because our people don’t want to accept jobs that are not considered prestigious or lucrative.

Remember that there was a popular catchphrase during Soviet times: if you are a poor student, you will end up at vocational school. In essence, nothing has changed. The majority of parents dream about seeing their children in an office, in a white shirt and tie. This is the source of pursuit of higher education at any cost, for any price, even just for a “wallpaper degree.” In the end, we have actually cheapened university diplomas, which do not guarantee high-quality specialists. Then those with higher educations would be the winners in big, competitive struggles, and not because they made some less than honest deals. And all the more so because it must not be set against the vocational education that prepares the regular labor force.

Professionals are needed everywhere; this includes locksmiths as well as top managers. It is this quality – professionalism – that will determine the social status of every worker. And we must help society change its priorities so that it believes that all work is useful, valuable, and respectable, as long as it is done by a professional in the field. Preparing these professionals and guaranteeing them employment should take priority, because the country cannot continue its long-term development without this.

If we don’t have qualified workers, skilled managers, a modern education system and, finally, an effective, competent state apparatus, then all of our ambitious plans to become one of the five world leaders by 2020 are doomed to fail. Success is achieved by those countries that can reform, especially when it comes to issues in the labor market, faster than all of the others. And we have every opportunity to do this.

By Evgeny Gontmakher, Board Member, Institute of Contemporary Development