From Inclusion to Exclusion: Barriers to the 'Formal' Post-Soviet Russian Labour Market

Abstract Since the collapse of the Soviet Union everyday life for many Russian middle-aged men has become extremely uncertain. This article explores the difficulties such men face in St. Petersburg in their attempts to negotiate the new economies that have sprung up since the dismantling of the command economy system. The research is based on qualitative research conducted in 2003 amongst middle-aged men operating within the city's informal economies. The article demonstrates that such men are often forced to operate in informal economies, which provide for a very low standard of living, due to the barriers they face when trying to enter the 'formal' economy. The paper then goes on to examine how the government conceptualizes such actions and, in turn, how it denies many of this group access to welfare benefits. To conclude the article analyses the social outcomes of this marginalization and argues that there is little prospect of everyday life significantly improving for this sector of society in the foreseeable future. Introduction: The paradox of low employment in post-Soviet Russia With continuing high levels of economic growth, stable inflation rates and growing inward investment, a consensus is forming amongst economists that Russia's 'transition' to the market economy is proving successful (see, for example, Aslund, 2004, or World Bank, 2004). The presidency of Vladimir Putin has brought stability across national and international stages, after the volatility of the Yeltsin era, improving Russia's prestige both at home and abroad. Furthermore, countless press stories detailing the growth, and spending power, of Russia's 'emerging' middle class further fuel the image of increasing prosperity. Many economists positively highlight that while the initial reform process was chaotic, unemployment levels have, however, remained fairly constant since the collapse of the Soviet Union. The expected mass redundancies not materializing despite the transformations that state controlled enterprises have undergone. For many, this low unemployment is seen as a sign of economic development, and labor market flexibility, as workers exercise their choice to move from one job to another. However, despite the lack of visible unemployment, economic marginalization has become deeply entrenched within post-Soviet Russian society. According to government figures approximately thirty million people, equaling twenty percent of the population, can be considered, as they receive incomes below the state set subsistence minimum, to be 'in poverty'. There are numerous reasons why the apparent paradox between low unemployment and high levels of poverty exists. Firstly, many workers, especially in the state sector, receive wages below the subsistence minimum. This is also true for senior citizens, with the average pension well below the figure needed for an adequate standard of living. The second reason is the social restratification, triggered by the collapse of the Soviet Union, which Russia is undergoing. Increasing social uncertainty has seen death, alcohol abuse, drug usage and divorce rates soar, leading to an increasing atomization of Russian society. Rising numbers of one-parent families, social orphans and the decreasing health of the population embeds the increasing marginalization. The third reason, upon which this paper concentrates, is the 'hidden' unemployed. The majority of this group is denied access not only to the formal economy but also to the state structures, which, in a market economy, the marginalized normally turn to, for assistance. The discussion is based on repeat, qualitative, interviews with forty middle-aged men (between 40-60 years old), undertaken between June and September 2003, who operate in St. Petersburg's informal economies. The analysis is also informed by approximately forty-five interviews with government officials, at both federal and regional levels, academics and NGO workers. …