Unemployment in Russia is close to the 1998 all-time high

According to the Russian Statistics Service, at the end of April 2009 the number of unemployed was 7.7 million people, or 10.2 per cent of the country's workforce, up 200,000 from March. (Numbers are calculated on the basis of the International Labour Organisation [ILO] methodology.) The Russian Statistics Service registered a 71.1 per cent (3.2 million people) growth in unemployment, compared with April 2008.

Experts assume that the unemployment level will hit 12 per cent by the end of 2009, the worst numbers since the aftermath of the 1998 crisis, when in the first quarter of 1999 the unemployment rate soared to 13.9 per cent.
These statistics differ from the official unemployment figures reported by the Ministry for Health Care and Social Development. At the end of April, the public employment service registered 2.3 million unemployed, of which only 1.9 million were on the dole. Moreover, the Ministry experts maintain that since 23 April 2009 the number of those officially out of work has been on decline. By 13 May it was down to 2.257 million people, a 0.3 per cent decrease over a week.

The release of the Ministry's optimistic report came ahead of the gloomy data by the Statistic Service raising hopes for a speedy labour market recovery among government members. In his address to the Russian government, Vladimir Putin said that the labour market trends were quite positive showing a reduction in the number of the officially unemployed. Vice-President Alexander Zhukov explained this trend with the start of seasonal agriculture work and the success of the regional unemployment programmes currently being implemented in 70 entities in Russia.

The ILO explains the above discrepancies as differences in accounting procedures. The Ministry for Health Care and Social Development counts only those who made it through the registration ordeal at the public employment centre. The Statistic Service, on the other hand, uses the ILO methods, basing numbers on surveys conducted quarterly among people between 15 and 72, who at the time of the survey are unemployed, in search of a job and available for new work within one week. Therefore, even though such active job seekers as students, retirees and disabled people, never show up in the Ministry's unemployment statistics, they are taken into account by the Statistic Service.

Unlike the 1998 downturn, the global demand for Russia's exports has decreased dramatically. This time around Russian industries cannot rely on boosting the ailing economy by offering cheaper domestic goods instead of expensive imports: domestic demand is falling and Russia's technologies are increasingly obsolete. This is why the current crisis might outdo the 1998 economic turmoil in terms of unemployment. Yet some experts disagree with these assumptions.

"I do not think that the unemployment rate will hit 13-14 per cent, like in 1998," says Evgueny Gontmakher, head of the Centre for Social Policy at the Russian Academy of Sciences. "Most likely, many Russians will engage in odd-jobs doing minor repaires or selling produce from their private land plots. This will help to keep the unemployment rate at no more than 12 per cent." He adds that such a result will downgrade the Russian economy still further, since firewood-splitting or subsistence farming are hardly consistent with the Russia's ambitious plans for innovative development.

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