Academic journal article Social Security Bulletin

Unemployment in Russia

Academic journal article Social Security Bulletin

Unemployment in Russia

Article excerpt

Given the probability of increased unemployment that could occur as a result of economic reforms and privatization of State enterprises, Russia introduced an unemployment insurance program in 1991. The program provides for training and job placement services in addition to the payment of unemployment benefits. At present, the Federal Employment Service (FES) has over 5,000 employees in more than 2,000 employment centers nationwide to meet the needs of the unemployed. The FES is funded by employer contributions to the Employment Fund at 2 percent of payroll, and subsidies from central and local governments to cover any deficits. Employees do not contribute.

According to the Employment Law, the unemployed can claim benefits for 12 calendar months on a declining scale: at 75 percent of the worker's average wage (during the last 2 months preceding unemployment) for the first 3 months; at 60 percent for the next 3 months; and at 45 percent for the remaining months. Benefit payment can be extended an additional month for every year worked over 20 years for women and 25 years for men, not to exceed 24 months in total. To those unemployed due to a reduction in force, the employer pays 100 percent of the average wage for the first 3 months. The minimum monthly unemployment benefit is equivalent to the minimum wage (14,620 rubles or US$13.62 as of January 1, 1994--equal to about one-third of the per capita monthly minimum subsistence level).

The number of officially registered unemployed rose from 62,000 in January 1992 to about 700,000 by November 1993. Officials at the FES reported that, from January to September 1993, the Service placed over 500,000 applicants in jobs, trained 30,000 in new skills, and paid out 18.1 billion rubles in training allowances and unemployment benefits. Approximately two-thirds of the registered unemployed were eligible for unemployment benefits. Surveys indicate that 575 percent of the registered unemployed are women, who are among the first to be dismissed and who also have the most difficulty in finding another job. …

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