‘The Traps in Our Way’: Experts Discuss Job Market and Human Capital in Russia
What fields employees can hope to get high salaries in? What is the return on higher education? How is life expectancy related to retirement age? These and some other issues were discussed by experts at the First Conference ‘Labour Market: Demographic Challenges and Human Capital’ organized by the HSE Human Capital Multidisciplinary Research Centre.
The First Conference ‘Labour Market: Demographic Challenges and Human Capital’, which was organized by the HSE Human Capital Multidisciplinary Research Centre, took place at HSE University on June 8th and 9th. The Centre was created as part of the National Project ‘Science’ and brings together researchers from HSE University, RANEPA, MGIMO, and the RAS Miklouho-Maclay Institute of Ethnology and Anthropology.
HSE Vice Rector Lilia Ovcharova, Director of the Institute for Social Policy, welcomed the participants to the Centre’s first conference and said that in today’s world, information flow, the academic agenda and academic perspectives should be promoted in a vivid and convincing way. Tatiana Maleeva, Director of RANEPA Institute of Social Analysis and Forecasting, emphasized the importance of academic discussions. ‘It makes sense to discuss the results of research before they are carved in stone’, she said.
Each speaker at the conference delivered a presentation and had an opponent. Vladimir Gimpelson, Director of the HSE Centre for Labour Market Studies, and Deputy Director of this Centre, Rostislav Kapeliushnikov, prepared a report ‘Shifts in job structure, where they lead and whether they lead anywhere’.
2000-2019 saw an overall decrease in low-productive manual labour and a growth of the service sector, which increased the number of jobs with routine cognitive tasks
According to the authors’ calculations, between 2000 and 2019, the number and share of employees in the fourth and fifth quintiles of highest earners, grew considerably (by about 5.5 and 6 million accordingly), while the share of employees in the lowest earning quintile decreased by 3 million. Meanwhile, the growth of the upper quintiles slowed down after the 2008 crisis, while the number of employees with medium incomes (third quintile) decreased.
The key beneficiary of the 2000s were employees under 30. In the following years, younger employees had far fewer benefits. ‘The window of opportunity shut down’, Vladimir Gimpelson explained. Generally, he believes, there has been little job polarization in Russia. The situation in specific fields has varied: for those employed in construction, finance and high-tech, the chances to get into upper income quintiles are much higher, while those employed in health care and education usually fall into the two lower ones.
The presentation by Sergey Kapelyuk and Elena Lishuk (Siberian University of Consumer Cooperation) was about requirements for employees, their skills and the payout. Sergey Kapelyuk said that the authors studied over 5.4 million vacancies published on job search services in April and December, 2019 and 2020. The study showed a decrease in requirements in terms of education and experience, accompanied by growing demand for social (communication, team work) and cognitive skills (ability to learn, to work with big volumes of information).
Aleksey Oshchepkov, Senior Research Fellow at the Centre for Labour Market Studies, spoke on ‘Return on higher education in Russian regions’. He studied the difference in salaries between employees with higher and secondary education in the country on average and in specific regions based on the Russian Longitudinal Monitoring Survey – HSE data.
The return on higher education remains high and fairly consistent. The size of the return positively correlates with per capita gross regional product and, accordingly, the local level of economic development
According to the author, in 2015, the return on higher education in Russia fluctuated significantly depending on the region. The average national level was 71.5%, with a maximum of 125% and a minimum of 38%. In Moscow, the level was 81%. With more complicated calculations that take into account the field of employment and form of company ownership, the average return was 80.5%, with a maximum of 127% and a minimum of 54%. In Moscow, an employee with a degree earned on average 81.5% more than one without this qualification.
The return on education is lower in central Russian regions and higher in Siberia and in the Far East, with the exception of Krasnoyarsk Krai and Tyumen Oblast. The indicator generally decreased on a national level from 2005-2015 and in 65 regions, while growing in 15 regions. Aleksey Oshchepkov believes that large differences in the return on higher education may have an impact on the decision of young people and their families to invest in education.
The topic of education efficiency was continued by Vice Rector Sergey Roshchin, Head of the Laboratory for Labour Market Studies, together with researchers from this laboratory, Ksenia Rozhkova and Pavel Travkin, who talked about ‘Return on a master’s degree on the Russian job market’.
The study compared salaries of employees with a bachelor’s and a master’s degree and demonstrated that a master’s degree brings noticeable benefits. Specifically, a master’s degree increases the chance of employment by 3-8% for males and by 10-16% for females as compared to a bachelor’s degree. It also brings a salary bonus of 5-21% for females and 2-11% for males.
The highest return on a master’s degree is received by graduates of research universities and universities in the Project 5-100. The return on other master’s programmes is lower.
The return on a master’s degree varies considerably depending on profession and employment experience while studying. In particular, graduates in management and technology fields get a good addition to their income thanks to a master’s degree, while students of humanities don’t receive any dividend and may even lose out because of additional years of study.
In addition, bachelor’s students who combine work and studies get generally more than master’s graduates without work experience. At the same time, the salary of a master’s graduate without experience is 4.6% higher than that of a bachelor’s graduate without experience.
Elena Varshavskaya (HSE Graduate School of Business) and Viktor Lyashok (RANEPA) made a presentation on ‘Regional differentiation of retirement age in Russia’. Viktor Lyashok said that the level of participation of older people in the workforce in Russia in 2010-2018 was lower than the average across OECD countries.
The real average age of leaving the job market in Russia, calculated by OECD methods, is 63. It is considerably lower than in the U.S. and Korea, but comparable to the countries of Southern and Eastern Europe
The authors calculated the presence of three-year age groups among men and women on the labour market. In most regions, the average age of retirement is between 61 and 64, which is also lower than the OECD average. The age of leaving one’s job is higher in central Russia and lower in Siberia and in the Far East. But the indicators are also strongly dependent on the fact whether the region is on the list of Far Northern territories, where early retirement is paid. The exceptions among Northern regions are Chukotka Okrug and Komi Republic. The authors believe this is because most people who reach retirement age prefer to move to other regions with a milder climate.
Many factors impact retirement age, such as an increase in the legal retirement age, health condition, level of previous labour and other incomes, and level of education. Employment in positions that required a degree often means higher intellectual capabilities, a readiness for continuous education, and preservation of skills that allows employees stay in the job market for longer. High salaries may stimulate both continuing work as well as retirement.
The authors came to a paradoxical conclusion: longer life expectancy in senior ages reduces, rather than increases, the age of retirement. They are going to continue their study by looking at the impact of chronic and other diseases, the quality of health care in the region, and the popularity of practices in helping raise grandchildren on the age of retirement.
The conference also included papers by Anna Lukyanova, Senior Research Fellow at the HSE Centre for Labour Market Studies, on ‘Contribution of various sources in labour income inequality in Russia’, by Irina Denisova (NES, RANEPA and MSU Faculty of Economics), Olga Chudinovskikh and Valeria Oksinenko (both from MSU Faculty of Economics) on ‘The impact of the joint Eurasian Economic Union labour market on the wealth of migrants from Armenia’. The paper by Marina Kartseva (RANEPA) was dedicated to the spread of ‘sandwich syndrome’ in Russia and its impact on the life of people who experience it.
In his conclusion, Vladimir Gimpelson thanked all the authors and opponents for their in-depth preparation of papers and reviews. ‘All comments have been useful and insightful. Clearly, the opponents have taken their job seriously and contributed to it no less than the authors’, he said.
Tatiana Maleva expressed her satisfaction with the high quality of the papers. ‘It was thrilling and useful: we have learned about the traps in our way, which will make us think and look deeper into the tools and empirical bases we use. Now, to elaborating our papers’, she concluded.