ECONOMY
5. LABOR MOBILITY
SOURCE. Jeni Klugman, John Micklewright and Gerry Redmond. Poverty in the Transition: Social Expenditures and the Working-Age Poor. Innocenti Working Paper No. 91. Florence: UNICEF Innocenti Research Center, March 2002, pp. 32-35.
Constraints on labor mobility are widely recognized as an impediment to the restructuring and further recovery of Russia's economy. However, it is essential to distinguish three types of labor mobility:
[1] Labor turnover in the sense of movement between jobs but without movement from one region to another or into new kinds of jobs. This type of "low quality" labor mobility or "labor churning" has in fact been high, with dissatisfied workers moving around in a search for better wages and conditions (usually in vain). Thus the turnover rate in Russia was 17 percent in 1998, as against 13-14 percent in Hungary and Poland.
[2] Inter-regional mobility without change in the type of work. The incentive for such mobility is quite strong, as the unemployment rate is much higher in some regions than others and median wages are over twice as high in Moscow and St. Petersburg than (say) in the North Caucasus and the Volga Basin. Inter-regional mobility has been considerable in the 1990s, much of it driven by collapse of the economy and social infrastructure in the Far North. But many economists consider that migration remains well below optimal. One big constraint is the (albeit uneven) survival of the Soviet system of residence permits (propiska) and the associated underdevelopment of the private housing market. And for many the sheer expense of moving is prohibitive.
[3] Even more crucial to restructuring of the economy is movement from one kind of job to another as old jobs are destroyed and new jobs created. Such reallocation of labor is much too low. In the period 1994-99, only 13 percent of new hires in large and medium-sized enterprises arose from job creation.
The authors argue that improved unemployment benefits could play a vital role in stimulating the needed types of labor mobility, though the impact would be greater during an economic upswing. They consider what kind of unemployment benefits scheme might be workable in Russia. They also stress the need for better public information about jobs available: currently most vacancies are filled through word-of-mouth and within family and other close social networks.
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