Unemployment begins to bite in Russia

August 14, 1991

By Irina Glushchenko

MOSCOW — A new law on employment came into force on July 1 in the Russian Federation. For the first time since the late 1920s, the terms "unemployment", "unemployment benefits" and "labour exchange" are part of the official language of the Russian state administration. The new law follows all-Union legislation "On the Employment of the Population", adopted in January.

In introducing these laws, the authorities have tacitly admitted that privatisation and the "shift to market mechanisms" have ended the near-full employment that Soviet workers have largely taken for granted for more than 60 years.

Already by May, the total of officially registered jobless stood at 4.14 million, or 2.5% of the economically active population.

By Western standards, this level is not high. But unemployment in the USSR is set to grow rapidly. Enterprises that in the past have enjoyed state subsidies are being forced to become self-supporting or to shut down; either way, the results are sure to include a flood of workers onto the labour market. Shortages of materials and components are forcing shutdowns and lay-offs even in relatively efficient industries.

According to projections published in the paper Economics and Life, by the end of 1991 no fewer than 13 million people in the USSR, almost 8% of the workforce, will be "unemployed citizens".

Job placement services in the USSR are very weakly developed. In 1990, despite many hundreds of thousands of job vacancies, these services were able to place only 65% of the people who turned to them for help.

Another source of difficulties is the acute housing shortage and the resulting policy of restricting the right to shift residence from one city to another. People cannot settle in a particular town unless they obtain a residence permit from the local authorities. But to obtain this permit, they must first have work. Consequently, moving about the country in search of work becomes difficult or impossible.

The main centres of unemployment in coming years will be Central Asia, Azerbaijan and the North Caucasus. Joblessness in these regions is already high, though in the past the problem was largely disguised in the form of rural semi-employment.

More developed areas will also be hit. Predictions for later this

year are that Leningrad will have 250,000 jobless, Odessa 110,000 and the Republic of Tatarstan, with its large vehicle complexes, 130,000.

Those who will find themselves out of work will not, for the most part, be unskilled or semi-skilled workers. An article in the June 15 issue of Izvestia observes that those who will suffer most from the job cuts will be qualified technicians and other specialists. In the coming months, hundreds of thousands of tertiary students will finish their courses and come onto the labour market; it is clear that few of them will find jobs.

In the autumn, the numbers of jobless will swell as army conscripts are demobilised.

Evidence now emerging shows that the money available to fund the social welfare provisions of the Russian employment law will be nowhere near sufficient.

The implications of all this are ominous for the liberal politicians who now control the governments of most of the Soviet republics. The people hardest hit by unemployment will be precisely those layers — well trained, self-confident, articulate and often young — whose illusions in Western-style capitalism have been strongest, and who have provided the liberals with their political base.

The disillusionment of the new jobless will be swift, and they will not take their marginalisation lying down.

Issue