«It's better not to compare us with Japan»
Having updated the historical minimum for unemployment in June, Russia reached the lowest rate among the world's largest economies. However, this can hardly be considered a reason for pride, some kind of unconditional benefit. In the current reality, the figure of 2.4% in annual terms, recorded by Rosstat, is an indicator of serious structural imbalances — both in the domestic labor market and in the economy as a whole.
In Japan, unemployment was 2.5% in June (2.6% in May), in Mexico – 2.8% (2.6%), in South Korea the 2.8% rate has been maintained for the fourth month in a row. In other G20 countries it exceeds 3%, and, for example, in South Africa it has not fallen below 30% for four years. In the United States, unemployment was 4.1%, in Germany – 6%, in Italy – 7%, in Australia – 4.1%, in Canada – 6.4%, in India – 9.2% (7% in May), in Brazil – 6.9%.
The absolute majority of experts consider 5-6% to be the normal unemployment rate (the ratio of the employed population to the total number of working-age people). When the figure exceeds 10-12%, the economy usually goes into crisis. For example, during the Great Depression in the United States (1929-1938), unemployment peaked at 23.6%, which ultimately caused a 31% drop in GDP. When the 13% mark was exceeded in Russia in 1999, real GDP fell by 27.8% compared to 1998 (from $271 billion to $195.9 billion), and more than twice compared to 1997. But what does the ultra-low unemployment rate of 2.4% mean for Russia today? Is it a success, an achievement, or, on the contrary, a global risk?
“Low unemployment is an absolute problem for both Russian business and the state. When people are hired just to fill a vacancy, this entails a decrease in the level of qualifications, productivity and motivation. An employee thinks approximately in the following paradigm: “Why try if I won’t be fired anyway?” The situation is aggravated by the legacy of the “demographic hole” of the 90s: there is simply no one to work, and the shortage of personnel is especially acute in the regions. At the same time, legislation regarding migrants is being tightened in Russia, and news is emerging about attracting remote resources from African countries. According to demographers, this could last at least until 2030. The shortage of workers also means a reduction in tax deductions and insurance contributions to the country's budget.»
«On the one hand, the 2.4% figure helps reduce social tension and increase consumer activity. At the same time, it is increasingly difficult for companies to find qualified workers, which leads to a slowdown in production, a decrease in competitiveness and an increase in prices. As for the indicators of Japan, South Korea and Mexico, comparison with them may be incorrect without taking into account the specifics of their labor market. Japan is a country with a very high level of automation and robotization of production, which reduces the need for labor. In South Korea, there is a high concentration of high-tech industries that require the appropriate specialists. And in Mexico, there is a lot of unskilled labor plus a high level of informal employment. So low unemployment in Russia is more of a two-sided coin: along with relative economic stability, it creates a serious challenge for business — a shortage of personnel.»
“I am not very happy with the decline in unemployment to a historical low of 2.4%. This means that the economy is in a state of overheating, the main sign of which is high inflation. Our economic growth is becoming increasingly uneven, and its heterogeneity across sectors. One of the reasons — the labor shortage — is associated with both disgusting demographics and a sharp change in the structure of the labor market, or more precisely, with the flow of personnel to the military-industrial complex. The unbridled wage race is driving up consumer prices and undermining labor productivity. As for unemployment rates in countries such as Japan and South Korea, they largely stem from the socio-cultural characteristics of these societies, with their high proportion of elderly and old population. People there strive to work as long as possible in order, on the one hand, to feel healthy, maintain activity and cognitive abilities, and on the other, to receive serious material support.”
“Everyone understands that the labor shortage in Russia creates negative effects: first of all, the wage race, labor costs, inflation. The normal unemployment rate in the world is considered to be 5-6%. Anything lower is caused by structural imbalances in the labor market. It’s better not to compare us with Japan: there is a long-term program in place to create additional jobs. The economy of this country has been characterized by overemployment for quite a long time. In Tokyo, you can see about six people on duty at subway stations.”