Wednesday, August 22, 2007

Window on Eurasia: Low Pensions, Fewer Younger Russians Keep Retirees on the Job

Paul Goble

Vienna, August 22 – Russian retirees increasingly are returning to work, a reflection of both the small size and relative decline of their pensions and the interests of employers who cannot find enough younger Russian workers to replace them, according to “Vostochno-Sibirskaya pravda.”
In its August 18th issue, the paper reported that the percentage of pensioners returning to work has been growing in Irkutsk oblast by seven to eight percent a year and that “practically every third pensioner – more than 190,000 – now is toiling in the workplace” (
Officials at the local pension fund told the Irkutsk daily that as of July 1st, 195,251 of the 694,525 pensions are regularly employed, a figure up from 160,655 in 2004 and a trend that shows no signs of easing off anytime soon. But they indicated that for Irkutsk at least, this might be in part a statistical fluke.
On the one hand, the number of pensioners there relative to the number of younger workers is increasing dramatically. And on the other, pensioners compared to younger groups prefer to work on the books rather than in the “shadow” economy that employs many younger people.
But local academic specialists pointed to two underlying causes that they suggest are not only found across much of the Russian Federation but also are responsible for this trend: “low pensions and the absence of a replacement generation of qualified workers.”
Viktor Samarukha, the vice rector of the Baikal State University of Economics and Law, argued that the relative decline in the size of pensions explained why older people were going back to work: “The real pension of Irkutsk workers rose 17.5 percent in 2005 but only 2.6 percent in 2006,” he said.
As a result, the relative position of pensioners compared to workers has declined over the last two years. Two years ago, Samarukha indicated, 25 percent of Irkutsk retirees had incomes below the poverty line; now 30.3 percent do, and today, their average pensions barely exceed that minimum, while salaries exceed it by 3.5 times.
These figures, Nikolai Vorob’yev, who works at the Institute of Geography of the Siberian Division of the Russian Academy of Sciences, told the Irkutsk paper that pensioners there have no choice but to keep working or return to work if they had retired earlier.
But broader demographic realities may be even more significant as an explanation for this trend. There are fewer younger workers than there were only a few years ago because the number entering the workforce is smaller and the number leaving Siberia and the Far East has increased.
In Irkutsk oblast alone, those combined developments have meant that over the last five years, the number of people in the traditional working age cohorts has declined by 9,000. And not surprisingly, many employers are doing what they can to retain the workers they have even if they are of pension age.
This problem is not spread equally across the economy. Older workers form far larger percentages of those employed in fields like medicine and education than they do in other branches. Samarukha said that the share of pensioners in medicine is now 39 percent, and the overwhelming majority of teachers are those at or above retirement age.
Unless Moscow’s current pro-natalist policy works more quickly than anyone expects, all this means that further cuts in government support for medicine and education will not only hit pensioners harder than anyone else but in at least some cases put in question the continued supply of these vital services to the Russian population.

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