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Introduction

The development of a country and its economic and social stability depends on many factors. Unemployment rate is one of the main characteristics that have impact on the economy of Russia and has both particular positive and negative effects on a country and it people. The increase of the unemployment rate leads to the reduction of the state budget and occurs to be one of the main macroeconomic issues that may have negative influence on the economic growth of Russia. The improvement in the labor market is a key factor for the development and enhancement of both economic and social indicators. Reducing unemployment, improving forecasting methods and combat negative impact, and also endeavor to the stabilization of the labor market are significant and highly effective ways to reduce the effects of the global economic crisis and the rise of reputation of the Russian Federation among other countries.

The primary goal of this project is to reveal the impact of unemployment, its nature, types, sizes, measurement methods and ways to reduce it in the Russian labor market, as well as analysis of the dynamics of the main macroeconomic indicators and identifying the relationship between them.

Object of the project is the Russian labour market, the subject is unemployment. The determination of unemployment in terms of the various economic schools, the understanding of types and forms of unemployment, acquaintance with the various indicators and methods for measuring the level of unemployment, to find effective decision of it, analysis of the dynamics of unemployment, to identify the main factors of unemployment in Russia and its socio - economic impacts, reviewing the main prospects of the Russian labour market are the main objectives to achieve the goal.

1. Unemployment in economic thought

1.1 The subject of unemployment, different approaches to determination of unemployment

Economists distinguish different theories and approaches to the determination of unemployment. So there is various definition of the unemployment. For example, - unemployment is defined as situation in which someone of working age is without work but is available for work at current wage rates. Also unemployment is a social-economic phenomenon in which the particular parts of the labor force (economically active population) is not engaged in the production of goods and services. In the Article 3 of the Federal Law of 1991 ”Employment in the Russian Federation” unemployed person is defined as "Employable citizens who do not have work and earnings, registered in employment agencies in order to find suitable work, which are trying to find a job and are ready to work”, then it also states that the unemployed can not be citizens under 16 years and old-age pensioners.

The issue of unemployment is considered by all economic schools. Classical or real-wage unemployment usually takes place when wages are higher than market-clearing level that leads to the reduction of job vacancies and firms are unwilling to employ people.

Figure 1. Classical unemployment

In economy labour is supplied by people and labour is demanded by firms. In the diagram above (see Fig.1), the supply curve shows the relationship between the quantity of labour supplied and the price of labour. The demand curve shows the relationship between the quantity of labour demanded and the price of labour. In equilibrium WR2, all the labourers in the economy are being employed. When real wages for workers in the economy are too high (at point WR1) it means firms are unwilling to employ all available labour. So the supply for labour outstrips the demand for it. As a result, there is a quantity of empoyee that won't be employed by firms.

In the Marxian theory unemployed person is regarded as internal phenomenon in capitalism, a phenomenon caused by the growth of the organic composition of capital and the displacement of the personal factor of production, which forms a reserve army of labor, or unemployment. It is in the very nature of the capitalist mode of production to overwork some workers while keeping the rest as a reserve army of unemployed paupers. Neoclassical explanation of unemployment comes from the relation between the cost of labor and the demand for labor. Wages reduction stimulates the demand for labor (DL = f (PL)) and then employment and wage growth increases the supply of labor (SL = f (PL)), but delays demand. Combining curves for supply and demand, the neoclassical model of the labor market shows that all peolple who want to work can find a job in the current equilibrium wage rate PL *. Thus, in the neoclassical model of the market economy can use the entire workforce, but only if the flexibility of wages and unemployment is voluntary.

Another unemployment is cyclical or Keynesian occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work. Demand for goods and services falls, less production is needed and consequently fewer workers are needed, wages are sticky and do not fall to meet the equilibrium level, and mass unemployment results. With cyclical employment, the number of unemployed workers is higher than the number of job vacancies, so that even if full employment takes place and all open jobs were filled, some workers would still be unemployed.

For example, in a recession aggregate demand (AD) will fall leаding to a decline in output and negаtive еconomiс growth. With a fаll in output firms will employ fewer wоrkers beсause they are producing fewer goods. Also some firms will go out of business leading to large scale redundancies.

In recessions, unemployment tends to risе rapidly as firms lay off workers.

1.2 Types and forms of unemployment

Nowadays unemployment is considered by economists as a natural phenomenon in the modern society. There are three types of unemployment: frictional, structural and cyclical which are distinguish by the causes and duration.

Frictional unemployment is the time period between jobs when a worker is searching for, or transitioning from one job to another. The Russian Constitution states that “... Everyone has the freedom to control their abilities to work and to choose activities and profession,” Thus, a person has the right to voluntarily change jobs because of various reasons, such as, for example relocation of a person or an employer offers higher wages and etc. This explains the constant presence of frictional unemployment - temporary unemployment due to voluntary transfer of workers from one job to another. According to American economists McConnell and Brue, this unemployment is not only inevitable, but even necessary. They explained it as most workers have been able to be in period of “changing jobs", change from low-wages jobs to higher wages jobs. Consequently, the income of these workers increase, and workforce begins to distribute rationally. This leads to growth of real national product.

Structural unemployment - is a form of unemployment where, at a given wage, the quantity of labor supplied exceeds the quantity of labor demanded, because there is a fundamental mismatch between the number of people who want to work and the number of jobs that are available. The unemployed workers may lack the skills needed for the jobs, or they may not live in the part of the country or world where the jobs are available. Also it can be caused by major structural changes in the economy, when the company gets rid of old enterprises sectors, sometimes even entire industries, which implies the disappearance of a large number of jobs for those who worked there before. So these are types of structural unemployment:

· Occupational immobilities. This refers to the difficulties in learning new skills applicable to a new industry, and technological change.

· Geographical immobilities. This refers to the difficulty in moving regions to get a job, for example there may be jobs in London, but it could be difficult to find suitable accommodation or schooling for their children.

· Technological change. If there is the development of labour saving technology in some industries, then there will be a fall in demand for labour.

· Structural change in the economy. The decline of the coal mines due to a lack of competitiveness meant that many coal miners were unemployed people, however they found it difficult to get jobs in new industries such as computers.

The difference between the structural and frictional unemployment is very uncertain. The essential difference is that the "frictional" unemployed people have so-called abilities that they can sell, and structural unemployed can not immediately get a job without training. The combination of these types of unemployment forms a natural rate of unemployment corresponding to the potential GDP. Also, some economists distinguish types of unemployment as seasonal (due to seasonal fluctuations in the volume of production in certain industries), institutional (occurs when the organization itself is not effective labor market) and others.

There are the following forms of unemployment: Registered unemployment which reflects the number of unemployed job seekers who are ready to get the work and are taken on record in official unemployment statistics. Hidden unemployment is the unemployment of potential workers that is not reflected in official unemployment statistics. Unemployed people are people who work but in fact are "superfluous." They tend to be either working part-time or weekly, or are on vacation.

Duration of unemployment is the value which characterizes the average job search duration (in months) of people who have the status of unemployed, as well as those unemployed who have been employed in this period. Due to the duration unemployment is divided into four types:

* tempopary - up to 4 months

* continuosly - 4 to 8 months,

* chronical - from 8 to 18 months,

* stagnant - more than 18 months.

1.3 The ways of reducing the unemployment

All methods and ways, by which the state can affect on levels of employment and unemployment, can be divided into demand-side and supply-side or active and passive. Supply-side measures are aimed to create more job vacancies. These are organizational, legal and financial measures of the state which includes:

• The organization of education and training staff on the basis of employment services and agencies;

• Regulation of sectoral and regional mobility training;

• Increasing the production of goods and services due to the growth of government subsidies;

• Implementation of public work programs in utilities, constructing, and repair works;

• The creation of jobs for young people;

• Subsidies for the employment of people who needs social protection;

• Investing in the most prospective and potentional, untapped industries and markets;

• Encouraging self- employment;

• Reduction of the actual labor supply by reducing the retirement age , the same effect can cause the development of services retraining and qualification;

• Providing jobs not-for- profit which are directed to the public interest and society, such as work in environmental protection, etc.;

• Promoting the development of small and medium businesses

Demand-side measures include unemployment insurance, unemployment compensation, welfare and subsidies to aid in retraining:

• Providing legal protection of employees;

• Develop a system of unemployment insurance:

• Use insurance principles, when along with the employer employee also participates in the formation of the fund;

• State funding for special programs for specific social groups in the labor market - were laid off soldiers, refugees, youth, etc;

• Adaption to the changing requirements of the unemployed people through vocational training system at present level of basic qualifications;

• Simplifying the registration of the unemployed people with the employment services;

• Development the particular guarantees in the field of paying wages;

• Creation of an effective system of protection of employees through the mechanism of social partnership.

The state has several kinds of policies for unemployment: social, macroeconomic and in the sphere of unemployment. Function of social policy is to assist the unemployed people in order to support their standards of life. Macroeconomic policy involves the use of monetary and fiscal - tax measures to reduce unemployment. Employment policies aimed at creating new jobs, retraining system, developing of employment centers, etc. So to know more about the unemployment in Russia therefore to reduce its rate it is necessary to analyse all current statistics of unemployment and to reveal unemployment causes and costs in the country.

2. Unemployment in Russia

2.1 Causes of unemployment in Russia

There are a lot of causes of unemployment, for example economic reccessions, economic inflation, changing technology, dissatisfaction of jobs and its conditions. So to learn the causes of unemployment in Russia it is mandatory to review all the factors and events that have influenced the economic situation which in turn affected the labour market. The occurance of unemployment in Russia is connected with development of market economy in Russia, foremost with the labour market. Nowadays one of preconditions of unemployment is the decline in production and structural changes in the economy as a result of the crisis in 2008 in Russia.

The calculating of unemployment rate in Russia is made by the following organizations:

• Federal State Statistics Service (Rosstat);

• Federal Service of Labour and Employment;

• Ministry of Health and Social Development.

Unfortunately, the rate is usually calculated without considering the hidden unemployment (those unemployed that are not in registered in the job centers). That is why official unemployment rate is lower than the one that is made with the help of sоcial surveys, public and business surveys.

Over the last decade the highest rate of unemployment was in 2009, which was significantly affеctеd by the crisis of 2008. Consequences of that situаtion were the reductions of staff costs in 62% of surveyed organizations. (The poll was made by research company HeadHunter, which 222 Russian companies participated). One of the most common wasy of reducing costs was staff reduction. Third of companies (33%) had fired part of employees. Then goes the way of reduction of the wages and salaries (22%), reduction of working hours (14%), compelled vacation (16%) and there was also the reduction of benefits package. The crisis not only resulted in the mass dismissal and unemployment in Russia, but also increased demand on professions and jobs that had been unpopular such as specialist in staff reduction, crisis manager, a specialist in financial monitoring and credit risks, and others. As the result the unemployment rate reached its maximum in 2009 after crisis situations in 2000s. According to the Federal State Statistics Service the number of people who was searching works has raised to 6,4 million people, which is 8,4% of active population. In 2009 among the unemployed people that has been fired because of staff reductions (structural unemployment) was 16,2 %, and the number of people who has voluntary left their jobs is 19,8% (frictional unemployment). The number of villagers is higher than the number of urban resident's among unemployed people in 2009. It is explained by that for villager is easier to change their works in production of goods and services in household conditions. Average age of the unemployed people in September 2009 was 34.8 years for unemployed men, 34.3 years for unemployed women. According to the datas of 2009, this highest rate of unemployed people are people of 20-24 years, because of the uncertainity and difficulties that people that age faced (high level of frictional unemployment). The lowest level of unemployment was among people of 55-59 years because people of that age are not tend to change their jobs. A distinctive feature of unemployment is its hidden character. The largest scale of hidden unemployment was in the North-East and Far East of Russia. People in these regions tend to look for a job themselves, not going through the employment services. Also, a lot of people were employed in the criminal sphere.

In 2010 in Russia, despite the overcoming of the crisis, the unemployment rate remains high - 7.5%. Compared with the previous year -it has declined by 0.9%.Such dynamics has continued on the labour market in 2011, that year the unemployment rate was equal 6.6%, it means it has additionally declined by 0,9% in comparison with 2010 year. Therefore the rate of reduction of unemployment rate is the same. In 2012 it declines to 5.46% and it was the same rate the country had in 2013 year. In both years the economically active population size was about 75, 6 million people, it was 56% of all population.

Using sample surveys on employment of Rosstat about division of unemployed people by age group and level of education in 2013 the following tables compiled (see Table 1 and 2). From these data conclusions can be made which reflect the problems of the employable population in the labor market in Russia in 2013.

Table 1. Distribution of unemployed people by age and sex in 2013

Table 2. Distribution of unemployed people by age and level of education in 2013

In 2013 year most of the people who faced the unemployment problems are the people of the age 20-24 and 25-29. The reasoning for such phenomenon can be the lack of demand in some industries for young people who recently graduated. We can see that 17, 4% women in the age of 20-14 were unemployed in 2013, and 20, 8% men were unemployed. Thequnatity of men are higher then women. The cause for such data may be that women of such ages usually marry or have small children so they are not trying to get a job. Also women of 45-49 years and 50-54, which are people before and after retirement age, have problems of unemployment. Men also have such phenomenon. The reasons for unemployment in such ages can be the unwillingness of employers to hire people of retirement age, because they concerns about the health of potential employees that can be poor or that the knowledge and ability the people of these ages may not meet the requirements, therefore the employee will not be able to fulfill their duties. The average age of unemplyed women in 2013 is a little bit higher than men - 36, 9 and 35, 9.The average age of which people in general are unemployed is 36, 4 year. However, as mentioned above most of people of 15-19 and 20-24 years have the unemployment problem -880 thousand people or 21, 3% of all people. It was more difficult to find job in 2013 for people with general secondary education. First of all, it is connected with that fact that people with such education are limited in choosing proffesions, because the majority of industries require highly skilled labor. Also it can be possible that job vacancies that are suitable for such level of education do not satisfy the needs of this group of people. In this case the unemployement will be frictional, which is voluntary.

Unemployment as a phenomenon has both social and economic consequences. Finding its causes and its solutions can reduce the number of unemployed people, bringing the prosperity and economic growth to the country.

2.2 Consequences of unemployment in Russia

Unemployment as an economic phenomenon is сlosely related to various elements of the market. One of the interrelations that have great importance in the economics is: unemployment-inflation. The growing rate of the inflation leads to increasing rate of the unemploymen and visa verse. The attempts to solve the unemployment through inflation may only bring short-term positive effect, but afterwards may lead to the increase of the inflation and unemployment in desctructive scale for the society.

“Unemployment dynamics is interrelated with factor prices of labor and capital. The level of unemployment of the employable population is directly related to the dynamics of total factor productivity, with an elasticity of substitution of labor by capital. If the ratio of factor prices is in favor of the price of labor, it leads to the choice of technologies wich do not need human labor, reducing the profitability of production and reduction of employment.” One of the main economic consequences of the unemployment is unreleased production. In the case if economy can not create enough workplaces for all people, who want and who is able to work, the potentional production of goods and services is lost irrevocably. It means that a lot of products and services can not be made because of unemployment. The higher unemployment rate the more lag in the production output. So unemployment leads to the decline of the production.

Arthur Ouken formulated a rule known as Okun's Law which is empirically observed relationship relating unemployment to losses in a country's production. The "gap version" states that for every 1% increase in the unemployment rate, a country's GDP will be roughly an additional % lower than its potential GDP.

The is the Okun's coefficient. Statistics shows that in different countries and periods of time it flactuate between 2 and 3. Its value depends on the labor factor in the production. So the pоtential size of GDP and its loss with the presence of the cyclical unemployment based on Rosstat data of the unemployment rate and the amount of real GDP in 2008 can be seen in the table 3. The natural rate of unemployment is 6%, the Okun's coefficient в is 2, 5.

Table 3. Loss of Russian GDP due to the presence of cyclical unemployment from 2000 to 2011

It can be concluded that cyclical unemployment leads to the lag of the actual GDP from the potеntional GDP. The largest lag we can see in 2000 year and in crisis years in 2009 and 2010 year. The crisis had a big impact on the country economy. Between 2010 and 2011 we can see the tendency of reducing the lag between actual and potentional GDP. In 2007 the actual unemployment is nearly equal to natural unemployment. In this period we can see the minimal lag between actual and potentional GDP - 98, 2924 billion rubles. In 2011 the loss of GDP was 630, 777 billion rubles at actual unemployment - 6, 6%. It means that Government had held an effective policy against unemployment.

To negative economic consequences of unemployment we can include state budget expenditures on unemployment benefits and reduce of tax revenues due to the reduction of the taxable portion of the population. Thus, an increase in the unemployment rate may reduce the profitable side of the budget of the Russian Federation and the increase of costs which can result in a budget deficit. However it may also have positive consequence, for example, it can increase competition between workers, which motivate to the development of abilities to work, increase its intensity and productivity.

Force unemployment leads the majority of people to appearance of depressions, loss of qualification and practical skills; rise of crime, lost of self-esteem, family breaks up, etc. In the end it decreases “physical health” of society.

Due to the unemployment many families have been below the poverty line. The number of the poor people varies with the change of economy in the country. In Russia in 2013, according to Rosstat, the number of people with incomes below the poverty libe is 11.1% of the total population, which is 15, 9 million people. In comparison with 2012 it has increase by 300 thousand people. Another negative impact of unemployment is the increase of families with drinking or drug addiction which leads to the homelessness of children. So it subcequently increase the number of suicides, and young families are afraid or do not have the opportunity to have a lot of children. Therefore, Russia is traced another negative situation - more deaths than births (natality), so there is a negative natural population growth. For example, in 2010 it had -1.7% rate, in other words 13 born people is counted for 15 dead people. Many families in poverty, due to job loss, were forced to earn money in shadow business such as the spread of drugs, as well as their propagation among young people that have negative mental and physical impact on children. These effects have impact on people of all ages. So the priority of the government policy is the policy against drug addiction, homelessness, alcoholism. Social and psychological effects of unemployment may also vary depending on the regional characteristics of the labor market.

However any difficult situation can be handled, so the current situation and perpectives of labor market in Russia are analyzed in the next chapter.

3. Current situation of unemployment in Russia

3.1 Unemployment in Russia nowadays and it perspectives

Rosstat has summed up sample survey on employment by the third week of January 2014. The number of economically active employable population of the age 15-72 (employed+unemployed) by January 2014 is 74, 6 million people or 52% of all the population. Among them 70,4 million people are employed people and 4,2 million people are unemployed.

The table 4 of the economic activity of the population was made based on the Rosstat data. In this table we can see the unemployment rate and empoyment rate of January 2013 and 2014.

Table 4. The economic activity of the population

The rate of unemployment in 2014 is 5, 6 % (with seasonal factor) and so the rate of employed people is 64, 3 %. Compared with December 2013 the number of people employed in January 2014 has decreased by 461 thousand people or 0,7%, the number of unemployed is less than in 2013 by 10 thousand people, or 0,2 %. In comparison with January 2013 the number of employed people has decreased by 283 thousand people, or 0,4 %, the number of unemployed has decreased by 297 thousand people, or 6,6 %. The total number of unemployed people, classified according to the criteria of the International Labour Organization, is 4.5 times higher than the number of unemployed people registered in state employment services. In January 2014 there were 931 thousand people registered in public employment services as unemployed, which is 1, 5% more than in December 2013 and is less by 13.2 % compared with January 2013. The survey showed us that more than 74 % of the unemployed people were looking for work their selves, without any help of employment services. Also men are less likely to use employment agents than women. In the figure 5 the most preferred way to find job and to apply for job is by asking friends and relatives - in January 2014 61.9 % of unemployed people did in such way. Searching jobs through media and Internet is the second most popular way to find work, which third of the unemployed people has used.

According to Rosstat data among the unemployed people the number of women in January 2014 is 44, 4%, while the number of urban residents - 68,8%. The number of unemployed rural residents is higher compared with the number of unemployed urban residents. In January 2014 the excess level was 2,0 times. Also unemployed people of 15-24 age is 14, 2 % in January 2014 which is higher by 3, 1 times than the rate of 30-49 years old unemployed people. 33,6% people usually search for work less than 3 month, and 28, 7 % is searching for work more than a year.

In January 2014 18, 2 % people were fired, and 25, 6% people has resigned , in 2013 it was 18,6 %. This more people have resigned on their on will. The lowest rate of unemployment was in Central Federal District, the highest - in the North Caucasian Federal District. According to all these data we can conclude that the difference between this year and the previous one is not very high, but there is the tendency of the increasing of the unemployment rate.

Also it is necessary to highlight the professions rate, which takes into account the 20 most popular search queries for employees based on the number of relevant jobs posted in the database Superjob.ru recruitment portal in March 2014 (see the Table 5). Leading position in the number of requests of employers in March 2014 belongs to the skilled workers. Jobs vacancies for turners, fitters, millers, welders and other representatives of working specialties is 11.4 % of the all vacancies. Also there is a little bit lower percentage of queries for sales managers - 11.2%. So we can say that there is still a demand in trade and business spheres. The professions like engineers, computer programmers and other professions related to technique are also popular. And also there is a demand for doctor and medical staff. At the end of ratings of the top 20 most popular occupations were supervisors, economists, marketing managers, the demand for which is 0.4%.

Table 5. Rating of occupations on Superjob.ru

However nowadays one of the important factor in the labor parket is the government policy. A lot of politics and economists assert that the regulation of the unemployment will solely depend on the authorities. Statistics of our country of unemployment comparing with other countries in previous years is rather low but dynamics in Russia shows that it is likely to rise and this tendency may continue due to the current political situation in the country. Previous years the government has already held some policies against unemployment, but it has only helped us to cope with the consequences of crisis. Anyway experts predict that there won't be any “blast wave” of unemployment in the near future. The government has claimed that they are going to provide financial support to business sphere and large corporations promised to held effective personnel policy.

Conclusion

unemployment economic worker

Unemployment is a macroeconomic issue that directly affects both the individual and the whole country. It is an important part of the modern labor market of any country. It is clear that in terms of productive work with a high level of employment of the economically active population the unlimited demand for goods and services will be created, there will be economic growth, the budget deficit will be eliminated, while inflation will be reduced, real wages and real incomes will be increased its life.

Also statistical data in this work has clearly showed the impact of unemployment on country's economy. Analysis of the dynamics of the unemployed people and the size of the GDP showed that 2009 was rather difficult time for the Russian labor market and the economy as a whole. Based on the statistical researches it can be concluded that the situation in the labor market has a significant impact on the economic situation in Russia as a whole. That's why the most important aspect of labor market regulation in Russia is to ensure maximum employment, creation of favorable conditions of work, as well as improving methods for recording and registrating unemployment. Also it must be noted that the main means of reducing unemployment today is the development of the state employment policy along with the general improvement of the economic situation in the country. New active labor market policies must be comprehensive in several areas and focus on the long term period of time. The current unemployment rate has showed that it is not so high comparing to previous years but it means that it will extend and may easily increase due to instability of the economics and politics in Russia. Government and employment agencies have still not succeeded in changing the whole situation, but experiences shows that it is quite possible. While assesing the activities of the state to reduce unemployment, it should be noted that its actions is practically aimed at decreasing the unemployment rate and all of them always require large expenditures and works in Russia.

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