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OECD Reviews of Labour Market and Social Policies: Russian Federation 2011

image of OECD Reviews of Labour Market and Social Policies: Russian Federation 2011

The global financial crisis interrupted a protracted period of strong economic growth in the Russian Federation. Despite a large decline in output, job losses and hikes in unemployment remained rather modest, and much of the labour market adjustment took place through reduced working hours and, in particular, real wages. Notwithstanding the recent recovery, the Russian labour market remains characterised by significant structural imbalances resulting in widespread segmentation and large earnings inequalities.

To improve the balance between labour market flexibility and the protection of workers, the Russian Federation needs to reinforce its labour market institutions.

Poverty and income inequalities remain well above the OECD average. Family policy is focused on increasing birth rates, but is ineffective in reducing poverty as working adults and children make up 60% of the poor. Instead, social policy is focused on the elderly and disabled, and in recent years there has been significant increases in transfer payments to pensioners.

Recent reform is likely to “eradicate” poverty among pensioners, as measured by official benchmarks, but raises questions about the long-term financial sustainability of the private pensions system. Rapid population ageing further contributes to the need to raise the low standard pensionable ages in Russia and limit access to early pensions. The challenge for Russia will be to rebalance its social policy towards more effective support for parents to combine work and family life. 

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Ensuring adequate and financially sustainable pensions in the Russian Federation

The Russian pension system has undergone various reforms over the past decade. Since 2002, the general public pension system comprises a basic benefit, an earnings-related scheme based on notional accounts and a funded component. In 2008, the government started to financially promote voluntary pension saving by matching individual contributions up to a maximum, and it sharply increased the basic public pension in 2009-10 to fight old-age poverty.

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