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Russia Has the Resources for a Budget Manoeuvre That Helps Education, Healthcare, and Social Welfare

Issues concerning changes pertinent to key social spheres were discussed during the ‘Human Capital and Social Policy’ plenary session of the XIX April International Academic Conference on Economic and Social Development.

HSE Director for Social Studies Lilia Ovcharova presented the paper ‘How to Boost Human Capital and Its Contribution Towards Economic and Social Development,’ which was prepared by experts from HSE based on joint papers with the Centre for Strategic Development. According to Ovcharova, the researchers focused on problems that have a ‘large potential for positive change,’ and all of the proposed solutions are supported by ‘adequate resources.’

The situation surrounding human capital in Russia is actually not as bad as it often seems. Russia is ranked 16th out of 130 on the human capital development index, which is compiled for the Davos Forum. Russia is also ranked fourth for formal level of education, but only 42nd for the ability to use the newest knowledge and competencies in the workplace.

At the same time, properly resolving existing issues could serve as a serious impulse for development. For example, average life expectancy has great potential for improvement. One of the main problems is a very high mortality rate for working-age men (things are worse only in war-torn countries). In addition, a lot can be done to fight poverty, particularly as concerns reducing the risk of poverty for children. Currently, one out of every five children in Russia grows up poor.

Lilia Ovcharova has identified three priority areas that require a fundamental change in policy. The first is immigration policy, which must become ‘friendly for qualified specialists and students studying in Russia.’ A change in employment policy is also necessary. Increasing the minimum wage to the level of the living wage is a departure from Russia’s traditional labour market model, where employment has been maintained thanks to a low salary. Finally, it is necessary to rethink housing policy, which has long emphasised the actual purchase of housing. It is, however, dangerous to expand mortgages further, as these mortgages may attract individuals objectively unable to repay them, which could lead to something similar to the crisis that occurred in the U.S. over 10 years ago. This is why it is necessary to develop non-mortgage components within the housing policy, e.g., social and rental housing.

Russian Presidential Advisor Alexandra Levitskaya noted that we must do away with the binary approach – is a person dead or alive – when assessing the demographic situation

Three additional priorities – education, healthcare, and social policy – require a budget manoeuvre. Experts suggest taking concrete steps in each of these areas. In education, it is necessary to finish building a system of continuing education, particularly early (with children) and later on (retraining seasoned workers). It is also necessary to develop a modern digital school and a way of furthering professional education (in particular, universities could become centres of innovation in their regions and in particular areas).

Measures to improve the healthcare system include creating a new model of district medical services, which would increase public access to such care; creating an effective drug supply system; and boosting efficiency in managing and financing medical care, for which an insurance model must finally be created.

To improve social welfare, it is necessary to focus on supporting poor families with children. In addition, the pension system must be changed, which includes raising the retirement age.

To accomplish all of this by 2024, additional spending is needed totalling 0.8% of GDP for education, 0.7% for healthcare, and 0.2% for social welfare.

According to Centre for Strategic Development Chairman Alexei Kudrin, the proposed budget manoeuvre is much more modest than the one that occurred de facto starting in 2010, when spending grew by 4.5% of GDP in two areas – military and social (above all pensions). Spending on education fell in relative terms during this period, while healthcare spending remained practically unchanged. The previous ‘defence-retirement’ manoeuvre took away 0.5% of GDP growth, while the proposed manoeuvre would contribute 0.5% growth over the course of three years and nearly 0.8% in the longer-term perspective. Alexei Kudrin is certain that Russia has the opportunity to carry out such a manoeuvre and that these expenditures are ‘feasible without raising taxes.’

Russian Presidential Advisor Alexandra Levitskaya noted that we must do away with the binary approach – is a person dead or alive – when assessing the demographic situation. It is important to assess the quality of life and quality of health. She noted that Russia has 12 million disabled individuals, and this number has not changed significantly. Childhood disability, however, has been growing over the last four years, and there are currently 651,000 disabled children in Russia, the majority of whom suffer from mental disabilities. ‘If we are saying that every individual is important to the country, then it is important to work with these children and their families as well,’ Levitskaya added. There is still not even a single intergovernmental policy for this, however. Each agency dealing with social welfare develops its own mechanisms without agreeing on them with one another and sometimes contradicting one another. As a result, the problem is not resolved and ineffective government spending rises.


See also:

Russia’s Middle Class: Who Are Its Members and How Do They Spend Their Money?

The HSE Centre for Studies of Income and Living Standards studied the dynamics of the middle class and its behaviour with regard to paid services. The study was based on data drawn from the HSE Russian Longitudinal Monitoring Survey (RLMS-HSE) for the years 2000 to 2017, and the results were presented at the 20th April International Academic Conference hosted by HSE.

Reproductive Evolution: How Birth Rates Are Changing in Post-Soviet Countries

Reproductive behavior is modernizing at different rates in post-Soviet countries. Things are changing faster in Russia, Armenia, Georgia and Ukraine, where, over the last fifteen years, the average maternity age has increased and the contribution of women in their thirties to their countries’ birthrates has grown. Meanwhile, old reproductive patterns persist in Azerbaijan, Kazakhstan and Kyrgyzstan, where firstborns are usually born to parents under 30, demographers Vladimir Kozlov and Konstantin Kazenin note in a paper delivered at HSE’s XX April International Academic Conference.

Live Long There and Prosper: How Internal Migration from Small Towns Works

More than half of school graduates in medium-sized Russian cities will change their place of residence either forever or at least for a long time. According a report on internal migration presented by HSE demographers at the XX April International Academic Conference, these people are lost to their cities.

What Drives Innovation in Russian Companies

As part of the Management session of the XX April International Conference, Carl F. Fey from Aalto University School of Business, Finland, presented his paper on Facilitating Innovation in Companies in Russia: The Role of Organizational Culture. In his talk, Professor Fey spoke about the results of three studies he has been conducting with his team.

‘In a Digital Environment, the Role of Human Teachers Only Becomes More Important’

How does digital technology affect the behavior and health of schoolchildren? What opportunities does it proved teachers and school administrators? These and other issues were discussed by participants in the plenary session ‘Children’s Wellbeing in the Digital Age’ at the XX April International Scientific Conference of HSE.

‘Statistics Should Be Available and Comprehensible to Everyone’

Implementing a digital analytical platform, opportunities for Big Data, and other prospects for the development of Russian statistics were discussed by participants at a plenary session of the XX April International Academic Conference.

Can Youth Bullying Ever Be Eradicated?

Dr. Dorothy Espelage (University of Florida) presented a comprehensive account of her research into youth bullying spanning more than two decades in an invited paper ‘Prevention & Intervention of Youth Bullying and other Forms of Youth Aggression: Research Informed Strategies’ at the XX April International Academic Conference.

‘To Achieve Our Goals, We Need to Involve a Wide Range of Universities in National Projects’

The role of regional and industrial institutions of higher education in achieving national development goals must increase, and leading universities will help them. This was the conclusion reached by participants of the plenary session on Russian higher education that took place as part of the XX April International Academic Conference.

How to Boost Russian Food Exports

The plenary session ‘Strategy of Russian Presence at Global Food Markets’ took place as part of HSE University’s XX April International Academic Conference, where participants discussed the prospects for Russian agricultural exports to Asia, as well as the use of nonconventional investment models, such as Islamic financial tools.

‘The President is Focused on Increasing the Birth Rate and Reducing Poverty by Half’

National objectives for social development, as well as existing risks and opportunities in implementing these objectives were discussed by participants of HSE International April Conference.