Improving the Organizational and Financial Models of Employment Assistance in Russia

The article discusses the basics of employment policy in Russia: the organizational model in terms of delineation of responsibilities between stakeholders, and the financial model in terms of the two basic directions of employment policy — passive, in the form of cash benefits to the unemployed, and active, in the form of programs of employment assistance. The authors show that the Russian model of unemployment benefits has lost its original intent: the benefits have become an analogue of social support, since they are virtually unrelated to previous earnings. The unemployment benefit is, in fact, counter-productive, since it contributes to the growth of registered unemployment (including the so-called “professional unemployment”, when the unemployed are not motivated to find a job). As a result, the resources of the Employment Service are wasted and the prospects of its modernization are put at risk. Regarding active employment programs, the authors highlight the following problem: while the implementation of active labor market programs is the responsibility of subnational governments, the mandatory list of such programs is set by the federal government, which constitutes an unfunded mandate imposed upon subnational government by the federal government. In fact, the measures needed to support employment may vary significantly from territory to territory, and the focus of most existing programs is to support the registered unemployed, while motivated job seekers could use job search support before registering. The authors recommend to reform the organizational and financial models of employment services in Russia, first of all by allowing the regions to design their own employment support policies that take into account the specifics of the local labor market. They also recommend to abolish the current noncontributory unemployment benefit in Russia and to replace it with a means-tested income support benefit for the poor.