By Polina Khimshiashvili and Maxim Tovkailo
30,000 people have lost their jobs since the beginning of the year
At a meeting with Prime Minister Vladimir Putin, Deputy Prime Minister Alexander Zhukov said that between December 31 and January 13, the number of people officially registered as unemployed has increased by 30,000.
Considering that the employment services were closed during the first ten days of the year, in reality the number of unemployed increased by 30,000 in the first three working days of the year. The figures presented by Mr Zhukov are worrisome, despite his statements that the unemployment growth dynamics "was about the same as during the last several weeks of the previous year."
Mr Zhukov's figures only reflect the official unemployment rate, registered by the Federal Labour and Employment Agency (Rostrud), which is only half of the unofficial unemployment rate.
According to Rostrud, 1.5 million people were in search of employment at the end of 2008. In addition, 200,000 people were either on involuntary leave or had to work part-time, and, as such, could also be considered as looking for jobs. Hence, Mr Zhukov's figure of 30,000 newly unemployed should be added to those 1.7 million. Then, we get a figure of 1.73 million unemployed in Russia, or 2.2% of the economically active population.
The real level of unemployment is much higher. While Rostrud considers unemployed only those registered with municipal employments services, according to Rosstat (Federal Statistics Agency), only half of all the unemployed ever register with employment services.
According to Rosstat, unemployment in Russia started to increase in July 2008. While the number of unemployed was 4.4 million in the middle of the summer, by the end of October that figure already stood at 4.6 million. In November 2008, the unemployment rate increased by 17.8% compared with the same period of 2007, totalling 5 million people.
The Ministry of Economic Development is predicting that the number of unemployed will increase to 5.5 million people in 2009. This forecast can still be considered optimistic, taking into account that the Ministry is also predicting a negative economic growth in 2009.
HOW AND WHERE UNEMPLOYMENT IS GROWING
Rostrud Head Yury Gertsy told Echo Moskvy radio last Saturday that according to the latest data not yet released, the number of unemployed had already reached 6 million in December 2008 (essentially he admitted that Rosstat's method of measuring unemployment was more accurate than that of Rostrud). It appears then, that the number of layoffs increased by 20% within a period of one month, and the unemployment rate increased from 6.6% in November to 7.9 % in December. As a result of this rapid growth, the unemployment rate in Russia has exceeded the world average rate.
The unemployment rate has increased the most in the Far East, in the Krasnoyarsk Region, as well as in the Vologda, Nizhny Novgorod, and Tver regions. According to statistics, the number of unemployed in Moscow and St Petersburg is relatively low. In the southern regions, where unemployment is traditionally high, the layoff rate has not increased. "There are simply no jobs to terminate," the Labour Agency's head.
HOW TO FIGHT UNEMPLOYMENT
The Government believes that fighting unemployment is mainly the responsibility of the regional authorities. The federal Government will, in turn, provide financial support.
At the end of 2008, Prime Minister Putin approved the allocation of 43.7 billion roubles to support employment in the regions. The funds will be provided to the regions, which have developed and agreed with the Government programmes to fight unemployment. By January 15, regional Governors were supposed to have the programmes agreed with the Ministry of Healthcare and Social Development, and to submit them for consideration by the inter-departmental commission for labour market monitoring, headed by Mr Zhukov. However, not all of the regions were able to meet the deadline. Some decided not to develop the programmes at all and, hence, refused the federal subsidies.
Such profligacy, especially in the current circumstances, surprised President Medvedev. At a meeting last Wednesday, he tasked the President's envoys to the regions to discuss the matter with the Governors who failed to submit the unemployment programmes. "The state of the labour market, the creation of new jobs, and the assistance to our citizens - these are the priority issues. If some people (i.e. the Governors - Gazeta) do not have the time for or do not want to (develop employment promotion programmes - Gazeta) and have other priorities, let them openly say so to the people," Mr Medvedev said. As of last Friday, only 58 regions had programmes developed to fight unemployment.
Even though the deadline to submit the programmes to the Ministry of Healthcare and Social Development had expired, regions received an extension. "I believe that within one or two days all the regions will submit their programmes," Mr Zhukov said during a meeting with Prime Minister Putin.
Those regions that have already submitted their programmes have done "a good job." "For each municipality and for each enterprise they have determined how many new jobs will need to be created and how many employees will be retrained and where," Mr Zhukov told the Prime Minister. As a result of these programmes, 114,000 people will be able to acquire new professions.
"About 700,000 temporary jobs will be created, and 10,000 graduates of educational institutions will be provided with practical training opportunities," Mr Zhukov said. In addition, 40,000 new jobs will be created by small businesses which will receive government contracts. Those citizens who will need to relocate in search of employment will face the most difficulties. Mr Zhukov did not specify their exact number, but said that the Government would provide financial assistance to 27,000 people who will have to relocate.
Still, the 43.7 billion roubles to be allocated by the Government may prove to be insufficient. Mr Gertsy said late last week that the Government would most likely need to allocate additional 30 billion roubles. The funds will be spent on regional employment programmes as well as on unemployment benefits. Beginning in January, the maximum benefit has been increased to 4,900 roubles.
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HOW THE NUMBER OF THE UNEMPLOYED IS COUNTED
Rosstat is using the International Labour Organisation's (ILO) method, according to which the unemployed include all those citizens of employment age (16 years and over) who in the reporting period did not have jobs (income), were searching for employment (seeking assistance from state or commercial employment services, or company management; were using personal connections; and placing newspaper ads, etc.) or were attempting to open their own business and were ready to start working immediately.
Rostrud is using a different methodology, according to which the unemployed include only those citizens who have registered with the state employment services at their place of residence with the aim of finding a job; those who are searching for employment, and are ready to start working.
Only those registered as unemployed can claim unemployment benefits.
There are other methodologies as well. In the United States, for example, the unemployment rate is determined based on the number of unemployment benefits applications, filed for the first time.
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UNEMPLOYMENT - A SERIOUS CONCERN FOR MANY
Unemployment has become one of the most serious issues for Russian citizens. In January, 61% of the respondents polled by the All-Russian Public Opinion Research Centre (VTsIOM), were concerned about it. Last March, only one third of all respondents were concerned about unemployment. Forty two percent of respondents considered unemployment as a personal issue (28% last March).
This year, the economic crisis and salary arrears were mentioned among the country's key issues for the first time: 23% and 20% of respondents, respectively, are concerned about these issues. The economic crisis is considered as a personal issue by 27% of respondents, and salary arrears by 24%. For 61% of respondents, inflation remains the most important issue facing the country (67% last year). Inflation is also the most important personal issue for 66% of those polled (68% last year).
People are less concerned about alcohol and drug abuse issues (53% vs. 63% in March 2008), as well as about housing and public utilities (24% vs. 44% in the last year's poll).
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UNEMPLOYMENT IN THE US TO IMPROVE ENVIRONMENT
In the United States, 2.6 million people lost their jobs in 2008. The unemployment rate last year stood at 7.2%, the highest in 16 years. Economists in President Obama's Administration predict that in the coming years the unemployment rate will reach 10%. The industrial output has fallen to the lowest level in the last 28 years.
On Saturday, President Obama briefly explained to the Americans how he was going to realise his economic recovery plan worth $850 billion.
Mr Obama said that the plan would help save and create from 3 to 4 million new jobs over the next few years. He added that millions of Americans were looking for jobs, and there was a great deal of work to be done throughout the country.
The main points of President Obama's economic plan were formulated during his election campaign and elaborated after he was elected President. The plan provides for tax credit for new jobs creation: in 2009 and 2010 companies can receive a tax credit of $3,000 for every newly hired full time US citizen.
For example, if a firm with 10 employees on staff hires 10 more people, it will receive a tax credit worth $30,000, which will cover the expenditures for the newly hired employees tax contributions.
According to the plan, 1 million jobs will be saved through infrastructure modernisation projects. A special $25 billion fund will be established for this purpose, which will finance projects currently under way. President Obama believes that government investments in infrastructure projects are essential to overcoming the recession. According to the plan, such investments create new jobs, increase the US economy's competitiveness, and are environmentally friendly as the new facilities are built of modern materials.