An expanded version of these comments was published in Vedomosti on November 19, 2008
 
Of the 55 points of the Cabinet’s plan to fight the windmills of the global financial crisis, only four concern the situation on Russia’s labor market.
 
It is suggested that, first of all, weekly monitoring should be carried out on “layoffs resulting from the bankruptcy of organizations or personnel cuts, as well as part-time work arrangements”. The second suggestion is to organize consultation centers, hotlines and layoff-related counseling for workers, and to publish informational booklets and brochures. The third suggestion is to increase active programs for supporting the unemployed. And the fourth – to increase unemployment benefits.
 
All of the planned measures of the Cabinet are, of course, correct. But they are of a passive, wait-and-see character. As if the Russian labor market is seeing nothing more than temporary “difficulties”.
 
In reality, the current financial and economic crisis in our country seriously, if not radically, changes many things on the labor market.
 
The first issue. We already see a laying off of, it appears, several hundred thousand assistants (office personnel), and some of those working for the state. Furthermore, a similar number of people holding significant positions will also be laid off. And this whole mass of unemployed will swamp the state employment centers, which are prepared to offer little more than second-class vacancies. But in many areas even such vacancies are already filled. This means that a substantial proportion of these people, even those with college degrees, will during the crisis be forced to agree upon practically any job, including the likely accompanying pay cut.
 
The second issue. Many of these people are not prepared to accept just any job, but they are willing to learn a new profession. But the capacities of employment centers are quite inadequate, and when their oversight was transferred to the regions these capacities in many instances were degraded.
 
The third issue. A significant portion of our workforce is already prepared for a more mobile lifestyle and is ready to move to wherever work is being offered and with more or less acceptable pay. However, the issue of living quarters continues to frighten this group. It is clear that international exchanges are very difficult and costly. Furthermore, for a family man, such issues as children’s education, recreational activities, training opportunities, etc., are all very important.
 
These three issues indicate that the Russian labor market may final begin to normalize:
 
The number of vacancies will come to represent more closely the number of qualified candidates for such positions;
The widespread trend of workers dictating pay conditions will disappear;
Workers will become more mobile geographically and between sectors.
 
However, in order to achieve a new, more effective labor market, it is necessary to work with institutions and influence the manner in which they function. So what would such efforts entail?
 
An nationwide database needs to be created with information on vacancies, including information available to private recruiting agencies. In order to achieve this the government must provide recruiting agencies with tax incentives that are directly linked with the number of individuals these organizations are able to place.
 
Companies must be convinced to provide information regarding vacancies for the general employment database, either through state centers or through private recruiting agencies.
 
State employment centers must not only increase expenditures on existing programs supporting the unemployed but also provide employment guarantees for graduates of training programs. Participants of such programs must also commit to working in their new places of employment for no less than one year.
 
Federal legislation should be drafted with regard to voluntary unemployment insurance, which would allow workers to to set aside such funds without paying taxes on them, while employers would be able to also allocate a portion of payroll taxes to this unemployment insurance.
 
A clear system needs to be established regarding how an employer can receive tax breaks for providing employment to the unemployed.
 
Mechanisms need to be created to facilitate the mobility of the workforce. In addition to the abovementioned database, it will be necessary to provide relocation support and attract realtors’ services to address housing issues.
 
Special attention needs to be paid to the unemployed who following retraining could be qualified for service in state positions (for example, as teachers).
 
Special efforts should be made to attract the unemployed to such sectors as agriculture and small business. This is particularly important for small and mid-sized cities where the failure of dominate enterprises could seriously lead to mass unemployment.
 
Employment centers must be prepared to expand their social work programs.
 
The regional budgets for 2009-2010 should include expanded support for targeted programs supporting the underprivileged. Such efforts can be supported by special allocations from the federal budget.
 
The author is a member of the Management Board of the Institute of Contemporary Development