Labor Market in Russia: Foreign Workers as a Solution for Labor-Based Stagnation

Zhengizkhan Zhanaltay

Abstract


An estimate of labor force growth is an important information for economic growth forecasts for any country. Declining working-age population could create serious challenges to Russia’s economic policies in near future. Currently, Russian labor market has two significant problem depopulation and aging of the workforce. The demographic situation in Russia has been deteriorating for over two decades between 1992-2012 years number of the population has decreased by 5.2 million people and according to forecasts in the next 35 year it will reduce 17 million. Moreover, during the 2011-2015 period, the number of total working-age population is decreased 3.6 million. During this period, Russia’s natural growth of the population was one of the lowest in the world. Starting from 2006 demographic concerns started to attract the attention of Russia’s policymakers and in 2007 comprehensive family support package has been introduced. Policies have managed to improve the demographic situation in Russia to a certain extent; however, reduction in working-age population continues to decrease dramatically. Considering the fact that average age of the working-age population is 40.6 years and share of workers under 30 is only 22% if the current situation is not changed in the positive direction a great trouble awaits Russian labor market in near future. Among the solutions to these concerns, there is basically two options; the first option is to try solving the problems through natural ways which require long-term planning and long-time to show its effects. The second solution is to attract more migrants in accordance with the needs of the labor market. In short period of time, the migration-based option seems more realistic and feasible than the natural way. This research aims to represent the current situation of the Russian labor market in the context of demographic concerns and analyze the potential of labor migrants as a part of the solution.


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