Labor force shortage in Russian regions

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Introduction The labor market is a complex system of socio-economic and legal relations, rules. It aims to ensure the functioning of the reproduction process of the labor force, as well as the productive use of labor. A labor shortage occurs when the total number of new vacancies exceeds the number of skilled workers in the national economy for an extended period. Moreover, the systemic shortage of labor force spreads to a wide range of professions and groups of workers, although most often arises among mid-level specialists, engineers, and construction workers. On the one hand, this deficit demonstrates the development of the economy as the emergence of new jobs. On the other hand, the lack of qualified workers can be a consequence of demographic problems. Systemic labor shortage can also be observed in the historical context. For example, labor market transformation occurs after wars, epidemics, and technological innovations. National and global demographic changes can be considered a potential catalyst for long-term systemic imbalances in the labor market. Labor shortages at the national level have significant consequences. These include lower living standards, higher inflation driven by higher wages, a potential decline in international competitiveness, and even erosion of future domestic production capacity. Thus, we should analyze a labor shortage in terms of demographic loss and in considering different aspects of systemic shortages. Three main factors can be identified as the reasons for the persistent systemic shortages: demographic changes, changing labor force participation patterns, and the need to improve productivity. These factors are critical indicators to consider when determining the ultimate size and depth of systemic deficits. As labor shortages increase over time, companies naturally tend to try to recover lost productivity from vacancies. Companies are changing job structures during this process so that fewer highly qualified employees can do the required work. Systemic labor shortages are spreading across industries and groups of specialists with different dynamics and times. The industries that enter the process of recovering lost productivity provide an opportunity for those who enter later to learn which management programs have been most effective. Russian labor market Despite the continuing population decline in Russia, it is forecasted that the working-age population will increase in the coming years. According to the Ministry of Economic Development forecast, from 2021 to 2024, the growth will amount to 1 million people. At the same time, according to the low version of the Rosstat forecast, the growth for the same period will amount to 1.7 million people, and according to the high version - 2.6 million people.[21] This is mainly due to the pension reform, which raised the legal retirement age. In addition, according to the Higher School of Economics forecasts, demographic growth is expected in all federal subjects of Russia - the population aged 15-19 will grow from 6.6 million in 2016 to 8.9 million in 2030 (Dudyrev et al., 2017). An increase in the working-age population creates new challenges for the state. For example, there are high risks of increasing the unemployment rate, primarily among people of pre-retirement age and young people (Lokhtina, Metelitsa, 2019). In their study, Pukhova et al. conclude that the unemployment rate decreased in the 2000-2010s - below 5% (before the COVID-19 pandemic) is associated not with economic growth but with a decrease in the working-age population due to low fertility in the 90s, high mortality, and aging (2019). When analyzing the labor market, it is necessary to consider the demographic situation and forecasts of the country’s demographic development and qualitative reproduction of the labor force, namely, the existing trends in the training of specialists of different skill levels. The transition from a planned economy to a market economy and the reform of higher education in the 90s led to a desynchronization of the labor market and the market for educational services. Enrollees are often guided by socio-cultural stereotypes about certain professions rather than the situation in the labor market (Gnatyuk et al., 2018). About 60% of university graduates face employment issues and need to change their occupations (Sheregi, 2015). It is worth noting the beginning tendency of youth reorientation to secondary vocational education programs. For example, in Russia over the past ten years, the number of graduates of higher educational institutions has been gradually decreasing from 1.5 million people in 2010 up to 908 thousand people in 2019 in all federal districts, while the number of graduates of secondary vocational education institutions is increasing. Bashing et al. note that the peculiarity of the Russian labor market is the lack of correlation between the unemployment rate and the share of the need for workers to fill vacancies (2017), which also demonstrates the still existing imbalance in the demand and supply of labor for professional - qualification groups and types of economic activities (Krasinets, 2020). Moreover, the provision of professional retraining and the creation of new jobs does not correspond to the growing pace of digitalization in various sectors of the Russian economy. According to Zemtsov et al. (2019), it is due to many factors: “low population density, uneven distribution of economic activities, low incomes, insufficient technological equipment, weak territorial connectivity, etc.” (p. 86). At the same time, the federal subjects of Russia are highly differentiated by the level of socio-economic development, demographic, economic, social, geographic, climatic, and other characteristics, which directly affects the formation of demand for labor in the regional labor market (Koksharova et al., 2019). In this regard, there is an issue of redistributing labor resources between Russian regions that are salient in conditions of low internal mobility. Labor force shortage Examining the shortage of labor resources in the Russian Federation, it should be indicated that due to the onset of the demographic crisis, a decrease in the working population can be observed, directly affecting the shortage of personnel. At any positive level of economic development, the market needs growth in the form of an increase in the labor force. Thus, regardless of the level of unemployment in a country or region, the market needs a new labor force. This study aims to explore the current stage of development of the labor market in Russian regions and analyze the level and reasons for the shortage of labor resources. To determine the level of labor shortage, we have compiled Table, which shows the dynamics of changes in the level of the unemployed and the need for labor. As we can see from the data, the number of registered unemployed has decreased both in the whole country and separately in all federal districts. The share of unemployed in the country decreased by more than 25%, from 894.6 thousand in 2016 to 691.4 thousand in 2019. Moreover, the decreasing trend occurred in all federal districts, with the most significant dynamics in the Siberian Federal District and the Central Federal District. A minor decrease - about 15% - is observed in the Northwestern Federal District. The leaders in the rate of unemployment reduction were the Ivanovo and Pskov regions (-42 and -40% respectively). Only in St. Petersburg, an increase of 2% in the number of unemployed was recorded. Dynamics of changes in the level of the unemployed and the need for labor Regions Number of registered unemployed Need of organizations for personnel to fill vacancies The difference between 2016 and 2018, % Russian Federation -23 13 Central Federal District -27 24 Belgorod region 0 28 Bryansk region -36 53 Vladimir region -26 -21 Voronezh region -14 26 Ivanovo region -42 74 Kaluga region -38 20 Kostroma region -17 56 Kursk region -27 74 Lipetsk region -24 130 Moscow region -31 -2 Oryol region -27 14 Ryazan region -15 -26 Smolensk region -21 46 Tambov region -24 63 Tver region -36 21 Tula region -37 22 Yaroslavl region -31 17 Moscow city -24 35 Northwestern Federal District -17 -5 Republic of Karelia -17 -1 Komi Republic -17 -19 Arkhangelsk region -14 -11 Nenets Autonomous District -17 -69 Arkhangelsk region (excluding Nenets Autonomous District) -13 -4 Vologda region -27 6 Kaliningrad region -30 7 Leningrad region -24 20 Murmansk region -8 -52 Novgorod region -26 3 Pskov region -40 144 Saint Petersburg city 2 -11 Southern Federal District -18 6 Republic of Adygea -33 36 Republic of Kalmykia -7 -30 Republic of Crimea -18 -8 Krasnodar region -15 15 Astrakhan region -29 21 Volgograd region -28 2 Rostov region -8 11 Sevastopol city 0 -35 North Caucasian Federal District -16 45 Republic of Dagestan -13 50 Republic of Ingushetia -11 -22 Kabardino-Balkarian Republic -15 113 Karachay-Cherkess Republic -26 10 Republic of North Ossetia - Alania -20 250 Chechen Republic -13 92 Stavropol region -35 21 Volga Federal District -22 8 Republic of Bashkortostan -17 -4 Mari El Republic -30 -42 Republic of Mordovia 0 86 Table, ending Regions Number of registered unemployed Need of organizations for personnel to fill vacancies The difference between 2016 and 2018, % Republic of Tatarstan -30 4 Udmurt Republic -31 56 Chuvash Republic -20 8 Perm region -15 -13 Kirov region -17 8 Nizhny Novgorod Region -33 9 Orenburg region -9 10 Penza region -12 73 Samara region -35 -3 Saratov region -28 25 Ulyanovsk region -23 32 Ural Federal District -31 6 Kurgan region -26 7 Sverdlovsk region -31 16 Tyumen region -22 -14 Khanty-Mansi Autonomous District -23 -4 Yamato-Nenets Autonomous District -38 -35 Tyumen region without autonomous districts -11 -6 Chelyabinsk region -35 36 Siberian Federal District -24 17 Altai Republic -19 56 Tyva Republic -6 39 Republic of Khakassia -23 41 Altai region -13 50 Krasnoyarsk region -31 14 Irkutsk region -18 21 Kemerovo region -38 66 Novosibirsk region -24 26 Omsk region -7 17 Tomsk region -26 7 Far Eastern Federal District -26 24 Republic of Buryatia 0 47 Republic of Sakha (Yakutia) -29 46 Transbaikal region -30 26 Kamchatka region -16 -4 Primorsky region -39 2 Khabarovsk region -27 -11 Amur region -18 78 Magadan region -29 -26 Sakhalin region -35 -21 Jewish Autonomous Region -20 54 Chukotka Autonomous District 0 -13 Source: compiled by the authors based on Rosstat data.[22] The need for organizations for labor resources has increased in Russia as a whole and in all federal districts, except for the Northwestern Federal District (-5%). The most significant growth of 250% is observed in the Republic of North Ossetia - Alania and the Pskov region (144%). Comparing the data of the sample survey of Rosstat for 2014 and 2020, there is a visible increase in the need for employees by 209 thousand people. At the same time, the increase in the need for workers occurred in all federal districts; only a few regions showed a positive trend of reducing the need for workers. However, from 2014 to 2016, there was also a reduction in demand in all federal districts, which may be due to the unstable economic situation in Russia in 2014-2015. Since 2016, the demand began to grow and amounted to +392 thousand by 2020. In the context of professional groups, there is a noticeable increase in the need for specialists of the highest level of qualification by 33% since 2014; qualified workers of industrial enterprises, construction, transport, communications, geology, and subsurface exploration - 20%; operators, apparatchiks, machinists of installations and machines - by 16%; employees engaged in the preparation of information, documentation, accounting, and maintenance - by 14%; and employees in the service sector, housing and communal services, trade, and related activities - by 14%. Based on the data obtained, we can mention a severe shortage of labor resources in those regions where the need for personnel is increasingly dynamic. At the same time, the unemployment rate remains stable or has an increasing dynamic. Among all the regions, there are only those where there is a stable dynamics of unemployment at 0% and an increase in the need for personnel (the Belgorod Region, the Republic of Mordovia, and the Republic of Buryatia). Thus, these regions experience a shortage of labor resources more than others. From these three regions, the Belgorod Region has more positive indicators of socio-economic development than Mordovia and Buryatia. In the Belgorod Region, the shortage of workers happens due to economic growth - creating new jobs (Pankratova, Gerasimova, 2017). To compare, the Belgorod Region ranks 18th according to the socio-economic situation in the regions of Russia at the end of 2019, while Mordovia and Buryatia have only 59th and 71st places, respectively. However, unlike Buryatia, Mordovia is actively developing innovative projects due to its low natural resource potential. It is in ninth place in innovative development, with a value above the national average (Lipatova, Gradusova, 2019). Nevertheless, the existing shortage of labor resources in Mordovia can be explained by the uneven distribution of the population and vacant jobs in the municipalities of the Republic (Moiseeva, 2020) and not by active economic development. In Buryatia, the shortage of personnel happens due to weak economic development - the region cannot create a sufficient number of new jobs. As a result, the population is forced to go to the shadow economy sectors or leave the Republic to work in other regions of Russia or abroad (Osodoeva, Gorshkova, 2019). Conclusion In conclusion, it should be noted that the shortage of labor resources is a severe problem to the socio-economic development of both a region and an entire country. In this paper, it is determined that the region's socio-economic situation, the successful implementation of innovative and investment projects, and the demographic situation affect the level and cause of the shortage of labor resources in the regional labor market. Thus, we can identify some indicators of the modern labor market in Russia. Moreover, it is impossible to predict which of the indicators will have the most significant impact since everything directly depends on the characteristics of a particular region. During the Analysis of the current state of the labor market in the Russian Federation, we highlighted the dynamics of changes in the percentage ratio in the number of registered unemployed and the need of organizations for workers to fill vacant positions in the period from 2016 to 2018. The data obtained indicate that the number of registered unemployed in the Russian Federation has a decreasing dynamics, which, in turn, has a favorable effect on the labor market. Speaking about the need of organizations for employees, this indicator, on the contrary, increases, which shows a stable economic development. Thus, there is a shortage of labor resources in only three regions (the Belgorod Region, the Republic of Mordovia and the Republic of Buryatia).

About the authors

Sergey V. Ryazantsev

Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences

Author for correspondence.
Email: riazan@mail.ru
ORCID iD: 0000-0001-5306-8875

Doctor of Economic Sciences, Professor, corresponding member of RAS, Director of the Institute for Demographic Research

6 Fotievoi St, bldg 1, Moscow, 119333, Russian Federation

Alexey D. Bragin

Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences

Email: braginalex2@gmail.com
ORCID iD: 0000-0002-4065-3546

junior researcher, Institute for Demographic Research

6 Fotievoi St, bldg 1, Moscow, 119333, Russian Federation

Galina N. Ochirova

Federal Center of Theoretical and Applied Sociology of the Russian Academy of Sciences

Email: galinaochirova93@gmail.com
ORCID iD: 0000-0002-2154-9604

junior researcher, Institute for Demographic Research

6 Fotievoi St, bldg 1, Moscow, 119333, Russian Federation

References