Support of the Small and Mid-Sized Business will Contribute to Creation of Jobs in the Services Sector

According to Alexei Ulyukaev, Minister of Economic Development growth in the rate of unemployment to 6% poses no threat to the Russian economy in a situation of reduction of enterprises’ costs.

The problem of the manufacturing sector consists in excessive employment and low labor efficiency. In addition to the above, the Russian industry is still unprepared to invest in its own production due to low demand. Intentions to scale down investments prevail over plans to increase them.

So, a few large Russian companies have already declared about reduction of their personnel.  A drop in sales made AvtoVAZ reduce its personnel by 11% in 2014. Due to a drop in global prices on aluminum, Rusal declared about its plans to reduce the output and personnel.  Last year, RZhD transferred 27% of its employees to a half-time week; in future the company intends to continue optimizing its personnel.

The Government gave to understand that it did not intend to preserve jobs artificially in companies with state participation. Last year, Premier Dmitry Medvedev declared about the need to give up the policy of preservation of jobs at any cost. In future, a trend of optimizing of inefficient jobs and supporting of high-skilled employees will be encouraged. So, one should not expect the level of unemployment to be below the “safe lim it” A. Ulyukaev referred to.  

It is to be noted that it is a global trend that with introduction of high technologies in industry and growth in labor efficiency the number of the employed in the industrial sector is rapidly decreasing, while that in the services sector it is growing.  So, late in the 20th century less than one in six workers engaged in the economy was employed in the US industry, while over 70% of workers, in the services sector. In the EU countries, every fifth worker engaged in the economy is employed in industry.

In Russia, that trend can be seen, but the share of the employed in the services sector is much lower than that in Western countries. So, in 2012 the share of the employed in the industrial sector amounted to 35%, while in the services sector, to 65%.

Taking into account the fact that the share of the employed in the industrial sector will decrease, the government’s mid-term objective should consist in creation of conditions for employment growth in the services sector. It is to be noted that support of the small and mid-sized business and improvement of the business climate in the country can contribute to that. It is necessary to increase the share of the small and mid-sized business in the country’s GDP. If at present that index in Russia amounts to the mere 25%, in the EU states it is equal to 50–75%.

Е.А. Pospelova, PhD, Senior Researcher of the Economic Development Department