Peculiarities of Labor Market Regulation In Russia

Abstract :

Timothy Besley and Robin Burgess (2004), based on the study of labor market in the Indian states, expressed an assumption that legislative regulation of labor market has a negative impact on economic development. The economic situation in Russia is a good confirmation of this assumption. Labor legislation of the Russian Federation imposes significant restrictions on the employer regarding the reduction of workers at enterprises and institutions. This allows to keep the unemployment rate in the country at a low level. However, this leads to significant negative consequences. Companies are cutting salaries, attracting hired professionals and moving salaries to the shadow sector of economy. This paper considers peculiarities of modern labor market in Russia in relation to the labor market, considered by Timothy Besley and Robin Burgess and in relation to the labor market in Western Europe. They showed that there is at least one significant difference - in Russian economy 45% of enterprises are enterprises with state participation. In addition, in Russia a significant part of population is employed in public sector. Thus, the state is able to limit the reduction of workers in a number of industries in order to maintain a low level of official unemployment. In particular, this confirms the “political” hypothesis on the issue of motives for regulating labor market. In Russia as in Western Europe there is an unfavorable demographic situation associated with an aging population. As in Europe, although to a lesser extent, there is a problem of labor migration. However, these factors manifest themselves to a lesser extent in Russia which does not allow to use them as arguments for or against the assumption. ?under discussion.