The influence of

foreign labour migration

on the russian labour market

Svetlana Sigova, Doctor of Economics, Chief Researcher Natalia Parikova, Master in Economics, Junior Researcher

Petrozavodsk State University

23 October 2012

Institute of Migration, Turku

Agenda

Short revue of migration flows in Russia Regions “attractiveness” for foreign labour

migrants A quantitative assessment of foreign labour

migration on the Russian's economy The fundamental logic scheme of foreign labour

migrants calculation in terms of economic development of all regions

Conclusion

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I. Introduction

The crucial

issue for Russia

Provision of competent employees

Ageing population

Foreign labour migration (FLM)

Positive impact Negative impact

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Goals

Quantitative assessment FLM

impact on the regional economy

and labour market;

Foreign migrants forecast for the

Russian economy.

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Definition

Foreign labour migration

Employees moving to find

work

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Bridging the gap between the D and S on the labour market

Dynamics of the foreign migrants number in

Russia and Russian workers going abroad,

2000-2010

arrived

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left

Dynamics of foreign labor migration in the

context of 7 federal districts, 2007-2010 гг.

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0

200

400

600

800

1000

1200th

ou

san

d p

eo

ple

2007

2008

2009

2010

5 Russian regions with the highest number

of foreign migrant workers, 2010

№ Region of the Russian

Federation

Number of foreign workers,

people

The share of foreign workers in the total number of foreign workers Russia

Russian Federation 1 640 801 100 % including: 1 Moscow 345 142 21,0 % 2 Moscow region 134 855 8,2 % 3 St. Petersburg 120 875 7,4 % 4 Sverdlovsk region 82 969 5,1 % 5 Irkutsk region 62 853 3,8 %

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Map of Russian regions, in terms of the intensity of

the foreign labour migration flows, 2010

5% or more

less than 1%

The share of foreign workers in the average number of workers in the region

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Possible socio-economic implications of FLM for

Russian regions

Positive impacts

Negative impacts

1. The growth of the labor force in the economy, output, total income and aggregate demand;

1. Deteriorating situation in the labor market, increased competition for jobs, decreased wages of local workers, the marginalization of the less skilled workers;

2. Elimination of structural imbalances in the labor market due to filling of vacancies, which local population avoids, meeting the needs of the market in the labor force necessary qualifications

2. Blocking the introduction of labor-saving technologies in the use of cheaper labor;

3. Production costs reduction associated with the lower price of labor;

3. Dependence on foreign labor for certain types of work;

4. Mitigation of an ageing population problem; 4. Growth of social tension, ethnic conflicts; 5. Savings on the cost of education and training (in the case of attracting skilled workers);

5. Illegal immigration and the associated impacts;

6. Savings in pensions and other social benefits (in the case of temporary migration);

6. The additional conditions for the development of the "shadow economy" and corruption;

7. Stimulation of vertical mobility of local workers; 7. Budget spending on the social, linguistic, educational adaptation programs for migrants;

8. Creating conditions for attracting foreign investment and new technologies.

8. The outflow of funds received by migrants in the form of income.

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The current situation is characterized by:

Which regions are attractive for FLM? Which regions are migrants going to? PetrSU

FLM flows increase Positive and negative impact on the socio-economic life

Regions receive migrants, so there is a

need for them Deferent intensity of FLM in regions

President: FLM is an additional source for labour

market FLM forecast

II. Pull-factors system of Russian regions

12

Migration attractiveness of Russian regions

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1) Set of 39 relative ratios was

considered

2) 20 indicators with the most statistically

significance

Methods: multicollinearity

analysis, a matrix of pair correlation

coefficients, coefficients of determination derived from

multiple regression

The system of pull-factors of regions of

The Russian Federation

13 PetrSU

1

Demographic

development

indicators

Х1 The urban population in the total population (%) Х2 The ratio of men and women (1,000 men have women)

Х3 The share of working age population in the total population (%)

Х7 The population density (people per 1 km2) 2 Economic

development

indicators

Х9 The gross regional product per capita (rub.) Х10 Depreciation of fixed assets (%) Х12 Investments in fixed capital per capita (rub.) Х14 The employment rate (%)

3 Social strain

indicators Х17 The unemployment rate (%)

Х20 The share of employment in the informal sector in total employment (%)

4 Standard of

living

indicators

Х26 The ratio of living cost to the average income per capita (%)

Х27 The ratio of living cost to the average monthly salary (%)

Х28 Average prices in the primary market (RUB per 1 m2 of the total area) Х30 The cost of a fixed basket of goods and services (rub.)

5 Regional

infrastructure

development

indicators

Х32 The number of hospital beds per 10 000 population (units) Х33 Number of doctors per 10 000 population (persons)

Х34 Number of nurses per 10 000 population (persons)

Х36 Putting into operation housing (units per 1,000 people of population) Х37 Border region (1 or 0)

Х39 The density of public roads with hard surface (km of road per 1,000 km2)

Regions “attractiveness” typology based on

pull-factors system

Cluster "Attractive“ (13)

Moscow, the Republic of Komi, Nenets Autonomous District, Murmansk, St. Petersburg, Tyumen Region, Khanty-Mansi Autonomous Area - Yugra and Yamal-Nenets Autonomous District, the Republic of Sakha (Yakutia), Kamchatka, Magadan, Sakhalin region, Chukotka

Cluster "Medium" (61)

Belgorod, Bryansk, Vladimir region, Voronezh region, Ivanovo Oblast, Kaluga, Kostroma, Kursk, Lipetsk region, Moscow, Orel, Ryazan region, Smolensk region, Tambov Region, Tver, Tula Region, Yaroslavl region , Republic of Karelia, Arkhangelsk, Vologda, Kaliningrad, Leningrad, Novgorod Oblast, Pskov Oblast, the Republic of Adygea, Republic of North Ossetia - Alania, Krasnodar, Stavropol, Astrakhan, Volgograd and Rostov Regions, the Republic of Bashkortostan, Mari El, Mordovia, Tatarstan, Udmurtia, Chuvashia, Perm, Kirov region Nizhny Novgorod region, Orenburg, Penza Region, Samara, Saratov Region, Ulyanovsk Region, Sverdlovsk Region, Chelyabinsk Region, Republic of Buryatia, Khakassia Republic , Altai Territory, Trans-Baikal Territory, Krasnoyarsk Territory, Irkutsk, Kemerovo, Novosibirsk Region, Omsk, Tomsk Oblast, Primorsky Krai, Khabarovsk Krai, Amur Oblast, Jewish Autonomous Region

Cluster "Unattractive" (9)

Republic of Dagestan, Ingushetia, Kabardino-Balkaria, Kalmykia, Karachay-Cherkessia, Chechnya, Kurgan region, Altai Republic, the Republic of Tyva

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Application of regions “attractiveness”

typology based on pull-factors system

…in

acc

orda

nce

with

regi

onal

feat

ures

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The factors affecting the direction and intensity of FLM

Evaluation of the potential migration

attractiveness

Explication of the migration process

migration forecasting

decisions making

recommendations for FLM regulation

III. A quantitative assessment of the FLM impact

on the region's economy and its labor force

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A system of assessment indicators

indicators of needs satisfaction in FLM /

level of education

a labor market tension, taking into account

FLM

Structure indicators of FLM / economic activity and the

level of professional education.

New

indicator

Indicators of needs satisfaction

in the foreign labor force

1. The full satisfaction of demand for labor in regions by graduates

Meeting needs by graduates - 27 regions out of 83 (33%) Surplus of russian employees

Migrants surplus Less than 30% 30 - 60% More than

60%

Sa

tisf

act

ion

of

dem

an

d f

or

lab

or

in

reg

ion

s b

y g

rad

uate

s

till

130%

6 regions Republic of North Ossetia-Alania Republic of Chuvashia, Udmurtia, Ulyanovsk region, Ivanovo region, Omsk region

7 regions Rostov Region, Republic of Mordovia, Voronezh Region, Tambov region, Tomsk region, Tatarstan, Kostroma

2 regions St. Petersburg, Irkutsk Region

Mo

re t

ha

n

13

0%

5 regions Republic of Dagestan, Ingushetia, Karachay-Cherkessia, Kabardino-Balkaria, Republic of Khakassia

5 regions Tyva, Oryol Region, Saratov Region, the Republic of Kalmykia, Republic of Adygea

2 regions Republic of Buryatia, the Altai Republic

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2. Regions with a deficit of Russian workers and graduates

Meeting needs by migrants- 50 regions out of 83 (60 %) Surplus of migrants

Partial satisfaction of

demand for labour in regions

by migrants

Full satisfaction of demand for labour in regions by migrants

till 130% More than 130%

till

70%

4 regions Tyumen Oblast, Arkhangelsk Oblast, Murmansk Oblast, Komi Republic

2 regions Novgorod region, the Leningrad Region

7 regions Magadan Region, Moscow Region, Chukotka, Kaluga region, Khanty-Mansiysk, Yamal-Nenets Autonomous District, Sakhalin Region

70 -

100%

1 regions Kirov region

14 regions Mari El Republic, Kurgan Region, Altai Krai, Nizhni Novgorod Region, Kursk region, Stavropol region, Bryansk region, Orenburg region, Kemerovo Oblast, Republic of Karelia, Vologda, Yaroslavl, Penza, Samara Region

26 regions Belgorod, Lipetsk region, the Republic of Bashkortostan, Perm, Pskov Region, Chelyabinsk Region, Volgograd Region, Smolensk region, Vladimir Region, Krasnoyarsk, Krasnodar, Tver region, Novosibirsk Region, Kaliningrad Region, the Republic of Sakha (Yakutia), Khabarovsk Krai , Sverdlovsk region, Astrakhan Oblast, Tula Oblast, Kamchatka, Transbaikalia territory, the Amur region, Moscow, Primorsky region, Ryazan Oblast, Jewish Autonomous

Indicators of needs satisfaction in the foreign labor force

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Indicators of needs satisfaction in the foreign labor

force according to level of education, 2015

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133,0

77,763,7

0

20

40

60

80

100

120

140

0

100

200

300

400

500

600

700

800

900

1 000

HVE SVE EVE

%

thou

sand

peo

ple

.

additional demandgraduates of vocational educationmigrantsfilling gap by graduates

Structure indicators of foreign labor migrants according to level of professional education

Distribution of Russian regions according to migrants share with basic vocational education in the total number of foreign workers

10 regions 38 regions

12 regions

23 regions

less than 30% more 70%

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Structure indicators of the of foreign labor migrants according to economic activities

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2,0 3,11,4 1,0

1,5

33,5

1,8

0510152025303540

0,0

100,0

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500,0

600,0

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Prov

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oth

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ervi

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times

thou

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2006 2010 growth rate

- the number of foreign migrants

*Stk

Where:

- Modified coefficient of a labor market tension with FLM

U - The number of the unemployed

J

Lm

- vacancies (demand for labour force)

Indicators of a labor market tension, taking into account the foreign labor migration

(a new indicator)

St U Lmk

J

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The regions of Russia, where coefficient of a labor market

tension with FLM changes in comparison the traditional tension coefficient is more than 20%, 2010

Indicators of a labour market tension, taking into account the foreign labour

migration (a new indicator)

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%

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Application of assessment indicators system

It allows to define…

Possibility of qualitative and quantitative assessment of arriving foreign migrants

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areas of RF affected by migrants’pressure

qualitative characteristics of arriving migrants / real needs

of the Russian economy

social tension increase caused by migration

III. Forecasting migration flows

in Russian economy

Crucial forecasting principles Migration forecast is defined by: - labour shortages on Russian market, - the presence of internal sources to cover the deficit - pace of economic diversification, new technologies

introduction - documents of strategic development in Russia and

its regions

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Forecasting migration flows

in Russian economy

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1 stage Total demand of the russian economy for skilled workers

2 stage The calculation of how much

demand can be met by domestic sources

3 stage If there is a deficit of Russian

employees, determine the need for migrants

Forecasting migration flows

in Russian economy

tLm

- Russian employees

- GDP

-model productivity function.

- foreign migrants

tX

tL - the required number of employees

tF

t t tX F L

t t tL Lr Lm

tLr

I. Basis - a multiplicative production function

II. Forecasting of Modified coefficient of a labor market tension based on Beveridge curve (the share of vacancies to the unemployment rate)

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Forecasting migration flows

in Russian economy

Required number of foreign workers according to productivity dynamics

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

тыс.

чел

.

оптимистический сценарий средний сценарий пессимистический сценарий

угрожающий сценарий фактические данные (1998-2010 гг.)

ItLm

IItLm

IIItLm

IVtLm

0,0643 (0,587 0,030 ln )397,659

II tt t tt

XLm N

e

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The fundamental logic scheme of foreign labor migrants

calculation in terms of economic development all regions

1. Total demand of the regional economy for skilled workers

2. The additional demand of the regional economy for skilled workers per year

7.1. 1) Measures to reduce foreign labor

migrants. 2) social policy measures to reduce the workforce in the region

3. Internal and external sources to meet the labour market needs in terms of regional economy

3.1. Internal and external sources (graduates of vocational education, the unemployed and etc.)

Surplus 4. Deficit / surplus of domestic sources on the regional labor

market

3.2. External sources (foreign migrants)

5. Demand of the regional economy for foreign migrants

6. Regions “attractiveness” for foreign migrants

7.2. Measures intended to toughen foreign migrants selection according to

vocational qualification structure

7.3. Measures to increase the "attractiveness" of the region for the internal and external labour migrants

(grants, subsidies, preferences)

"Unattractive" "Attractive“ "Medium"

Deficit

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Conclusion

1. Foreign labour migration is a complicated socio-economic phenomenon, which has a dual effect on the labor market in Russia:

- filling the gap in the labor force caused by the demographic crisis in 54 regions Russia;

- increase in tension on the labour market because of migrants (in 28 regions, more than 30%).

2. Regions vary in scale and intensity of foreign labor migration due to socio-economic parameters differences.

3. Foreign labor migrants can be seen as an effective tool for regulating the labour market.

The proposed fundamental logic scheme of foreign labor migrants calculation will enable both economic development and reduction of the negative effects of foreign labor migration.

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Applying migration forecast methodology

The state contracts for the Department of labour and employment in Moscow. 1. Forecast of labour market demand for

personnel with vocational education (2011) 2. Methodology development and forecast

of workforce balance in Moscow (2012)

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Looking forward to cooperating!

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Contacts

Petrozavodsk State University Budget monitoring center Phone: (8142), 71-32-29; 78-33-02 Email: sigova@onego.ru ptasha@psu.karelia.ru Address: Petrozavodsk, Lenin str. 31 Website: http://openbudgetrf.ru

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