Report - UNDP Russia

As a rule, these regions have above-averagelevels of youth unemployment.The situation in specific regionsdepends on the character of their labor marketand corporate policies of large corporations.Employment problems in oil & gas mining areasare the result of the Soviet strategy fordevelopment of northern territories. Manymigrants were urged to move permanently toareas with adverse climate and high cost ofliving. Development of social infrastructure andhousing for these migrants and their familiesrequired huge expenditures. Financing waspoor and social amenities in the northernterritories were scarce. The standard of livingthere is still lower than the national average.There was a partial exodus from northernterritories in the 1990s, but in regions with oil&gas extraction such remigration effects wererelatively small-scale and brief (limited to theearly 1990s) because high salaries persuadedpeople to stay.Oil companies optimized theiremployment structure in the early 2000s. Someauxiliary processes were outsourced and not allof them were able to survive on their own. Theeffect in Khanty-Mansi Autonomous Districtwas to postpone increase of employment ratesin the first years of economic growth (Figure2.5). Oil companies also started to make fulleruse of rotation schemes, bringing in employeesfrom other regions, primarily from regionswhere oil production was declining. In 2002rotation workers were 12% of all employees inKhanty-Mansi Autonomous District, but theirshare on the regional employment market washalved in subsequent years, as oil companieswere forced to take account of negative impactfor local inhabitants from increasedcompetition for jobs.In the Yamal-Nenets Autonomous DistrictGazprom made special efforts to maintainemployment despite high costs, and sharp risesin unemployment were avoided. But such apolicy only postponed resolution of the problemof inefficient and excessive employment, as hasbecome evident in the new economic crisis of2008–2009, which has been accompanied by adramatic decline in gas production.Unemployment in coal-mining regionspeaked in the 1990s, after which employmentrestructuring programs were implemented in thecoal industry, though with mixed success.Employment in coal-mining declined as a resultof economic difficulties and corporate policies.Russia’s biggest coal-mining regions are insouthern Siberia, which has a relativelytemperate climate and a number of large citieswhere former coal industry workers had a chanceof finding new work. Shrinkage of the coalindustry in the more northerly Komi Republicproduced greater tensions, despite large-scalemigration away from the Region.By the end of the period of economicgrowth labor market conditions in fuel & energyregions were relatively good and the level ofunemployment, as calculated in accordance withrecommendations of the International LaborOrganization, was close to the national average(Figure 2.5). Nevertheless, the employment levelin fuel & energy regions, especially those withsingle-industry economies, is largely dependenton international fuel prices and therefore lacksstability.Human development in fuel & energyregions is promoted by higher incomes. The ratioof average per capita personal incomes to thesubsistence level in the single-industry oil &gasproducing autonomous districts is 4.5-5 times.This level is only surpassed in Moscow, where itis 5.5 times. In other regions, which produce largequantities of fuel resources, the ratio is higherthan the national average (3.3) or is close to it.Relatively high salaries of those employed in thefuel & energy sectors (particularly oil & gasproduction) have impact on income levels of theentire regional population. In the 1990s and early2000s salaries in fuel & energy resourceproduction industries exceeded average regionalsalaries by three times. This gap had narrowedsomewhat by 2007 (to 2.5 times) due to wageincreases in the budget-financed sector.Strong differences in wages betweenindustries and high cost of living in most fuel &36 National Human Development Report in the Russian Federation 2009