The global financial crisis ended a long period of economic growth that improved Russian labour market outcomes and reduced poverty. Nevertheless, the Russian labour market remains segmented, earnings and income inequalities are large, enforcement of labour standards is unequal and collective bargaining is underdeveloped, as is social and labour policy support for the working-age population. How can policy be reformed towards socio-economic outcomes that are both more efficient and fair?
To improve the balance between labour market flexibility and the protection of workers, the Russian Federation needs to reinforce its labour market institutions. This can be done by strengthening labour law enforcement and the labour inspectorate, promoting workers representation and collective bargaining, enhancing the effectiveness of active labour market programmes and by removing the possibility to use civil contracts for employment purposes as these provide little or no employment protection.
Poverty and income inequalities are well above the OECD average. Family policy is focused on increasing birth-rates, but ineffective in reducing poverty as working adults and children make up the vast majority of the poor. In fact, social policy is focused on the elderly and disabled, and in recent years there have 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 on the long-term financial sustainability of the private pensions system. Rapid population ageing further contributes to the need to address the low standard pensionable ages at which pensions become payable in Russia and limit access to early pensions. The challenge for Russia will be to rebalance its social policy towards more effective support for the working age population and help parents to combine work and family life more effectively.
Figure 3.1. Russia has high poverty rates and a wide income distribution compared to most OECD countries
Note: Countries are ranked in increasing order of the Gini coefficient of income inequality. Data refer to the distribution of household disposable income in cash across people, with each person being attributed the income of the household where they live adjusted for household size.
Source: OECD 2008a, Growing Unequal? Income Distribution and Poverty in OECD Countries; OECD 2009a, OECD Reviews of Labour Market and Social Policies: Chile; OECD 2009b, OECD Reviews of Labour Market and Social Policies: Slovenia; OECD 2010a, OECD Reviews of Labour Market and Social Policies: Israel; OECD 2010b, OECD Reviews of Labour Market and Social Policies: Estonia; and data provided by Rosstat.
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