08.05.09

The registered number of unemployed persons (2.28 million as of April 22) has already exceeded what was predicted in the 2009 budget for anti-crisis measures (2.2 million). The Ministry of Pubic Health (MinZdrav) and the Ministry of Economic Affairs are now predicting that this number will rise to 2.6 million and 2.8 million respectively – 27 percent higher than the original prediction. These estimations are based on the confidence that the anti-crisis measures would start in May, which will cost 43.7 billion rubles. However, these measures are based on an official unemployment count of 2.2 million, which was the official number of unemployed only at the end of 2008.

According to Ministry of Health and Social Development, the situation is further complicated by the fact that the statistic is threateningly underreported -  more than 1.3 million people are working only part time, and 738,000 employees have been warned of layoffs.

Before the crisis in 2008, the practice of warning employees of possible layoffs ahead of time was common in Russia, even before the decision to reduce staff was actually made. An overwhelming majority of those who received the notification re-entered the labor market within 3 months. Recent statistics from Rosstat show that 36.4 percent of those laid off find work within 2 -3 months, while 41.4 percent (according to the methodology of the International Labor Organization) search for work for more than 6 months. Even if the number of officially registered unemployed persons does not rise significantly, by the summer of 2009 it will reach at least 2.4-2.5 million.

One new idea to buffer the rising unemployment rate is to offer a relocation allowance to internal migrants in the Russian Federation who are forced to move to a different region in order to find work. However, this idea has not been approved and Ministry of Health and Social Development, which could not say how much such a program would cost. All of the ministry's remaining initiatives are held within the restraints of the new budget. Therefore, the ministry has suggested increasing subsidies for unemployed persons to open their own business up to 60 thousand rubles (a little more than the base level of unemployment benefits if received for one year). They earlier proposed to tie the amount of this subsidy to the size of the unemployment benefits. A ministry representative said, "We have run into a problem: when a person has the minimum aid, 850 rubles without regional coefficients, then the size of his subsidy should consist of about 10,000 rubles." These subsidies can cover up to 52,000 people and may created 150,000 new jobs.

However, as of now, the ministry is offering only to carry out the initial anti-crisis plan, which includes the organization of community service and a program of moving unemployed persons to different regions. Relocation allowances are not being offered but the price of travel documents and housing in the new location based on 550 rubles/night for 3 months will be reimbersed. The ministry also plans to carry out a program of professional career training and internships, anticipating the number of college graduates who will not be able to find work in 2009.

The government will likely have to revisit the labor issue next fall. However, while lowering the rate of registered unemployment from 10 percent a week in January and February to 1.1 percent in April, the government considers this not only a natural dampening of the "first wave" of layoffs, but a general victory against all plans to reduce personnel.

Translated by Alinga Consulting Group.

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Source: "Kommersant"