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Earnings differences in Russia by region, industry, occupation and other


Contents

Introduction
Earnings differences by region
Earnings differences by industry
Earnings differences by occupation
Earnings differences by firm size
Earnings differences by gender

Conclusion
Bibliography

Introduction
Wages are a non-prescriptive attribute of any labour market. Usually economists tend to consider only the average rate of earnings while estimating the economic performance of a given country. Being given only the average wage rate and without profound consideration of the inner processes of the economy and peculiarities of earnings allocation, it would be difficult for us to explain, why, for example, a middle-level manager of some huge company earns 35,000 rubles per month, while a manager at a tiny firm at the gateway – 45,000 rubles for the same period (not vice versa!). Why a doctor working in a private hospital earns 15-20 times as much as a rescuer, who frequently risks with his own life, while both of them save lives? Why a woman with work experience will be paid 18,000 rubles, while a man without any attainments will earn 25,000?
Whatever economic issue connected with Russia we try to consider, we are always to be particularly attentive while making judgements. We can hardly find any other state that would have tried to reckon itself among “almost developed” countries with stable labour markets, when we face so huge earnings differences that in reality are not decreasing alongside the economic development, but, vice versa, are gathering pace.
Earnings differences by region
The growth of employees’ wages, financed by the state budget, has helped our government to curtail the regional earnings differences. However, the multiple disparity observed in the earnings sphere across Russian regions, still persists and is even gathering pace. At the same time economically active population is moving to metropolises, adding an extreme outflow of labour resources to the current problems of the lagging regions.000000000 0000000However the Ministry of finance policies of budgetary equalization does not leave without a trace. In accordance with the investigation, conducted by IA “Integrum” research agency, the earnings differences across regions has decreased from 13 to 15 times on average.1000000000000000000000000000000000000 0000000From the geographical aspect the highest salaries – more than 75 thousand roubles – are earned in Yamalo-Nenetskiy (5.1% of employees) and Khanty-Mansiyskiy autonomous regions, in Sakhalin oblast (2.6%) and Chukotskiy autonomous region (2.5%). The greatest share of employees, earning up to 1100 rubles live in Ust’-Ordynskiy Buryatskiy autonomous region (6.7%), Dagestan (6.6%), Kalmykiya (4.2%) and Aginskiy Buryatskiy autonomous region (3.5%). In Khanty-Mansiyskiy, Koriakskiy autonomous regions, in Kamchatka, Magadanskaya, Sakhalinskaya oblast’s and in Evreyskaya autonomous region there are no such employees at all. In Moscow and Saint-Petersburg the lowest limits are pushed to approximately 13 and 9 thousand rubles respectively .00000000000000000000000000000000000000000000000000000 0000000In the year 2000 the average official earnings differences between the richest and the poorest regions of the country amounted to 13.5 times, while in 2005 and 2006 it decreased to 10.6 and 10.2 times respectively. By the end of the year 2007 the differences between official earnings had fallen to 5-6 times. Thus, for example, in April, 2008 the average wages in Dagestan was only 6.7 times less than those in the richest region – Yamalo-Nenetskiy autonomous region. In accordance with “Rosstat” data, in February, 2008 the average accumulated wages, registered in Dagestan and Adygeya, were 8,485 and 9,502 rubles respectively. While the highest officially charged salaries across the country were registered in the following regions: Nenetskiy AR – 54,203 rubles, Chukotka – 52,049 rubles, Yamalo-Nenetskiy AR – 49,283 rubles and T’umenskaya oblast – 39,646 rubles. Moscow appeared only on the 7th position in this rating – a Muscovite earned on average in February 2008 32,031 rubles. Thus, nowadays we can observe a decrease of the regional average earnings differences down to 6.4 times – almost twice as less as in the year 2000. However, as some experts suppose, it is too early now to celebrate a victory .00000000000000000000000000000000000000000000 000000“By directive measures authorities managed to decrease the regional earnings differences, but the real income disequilibrium among regions is still growing”, - claimed the regional program director of the Independent institute of the social politics Natalya Zurabkevich. She states, that the major instruments of “earnings equality” was the earnings growth in budgetary sphere and agriculture, and also compulsion employers to declare a part of their employees’ wages. However, the official statistics fails to consider the real incomes of the population taking into account all forms of earnings. She also states, that the best confirmation to the mentioned above statistical malfunctioning is the blatant disequilibrium between the official earnings and average income per capita, that are registered through current expenses. Thus, for example, in December, 2007 an average Muscovite earned approximately 32 thousand rubles, while an average income per capita (including the aged and new-born) amounted to 52 thousand rubles during the same period in Moscow. Even the data of “Rosstat” confirms that regional income differences significantly exceed earnings differences. And while our government managed to gripe the official earnings disequilibrium down to 6-7 times, the income differences still amount to 10 times (for example, between Ust’-Ordynskiy Buriatskiy and Yamalo-Nenetskiy regions) .

Graph: “Sandwich index” – the Russian analogue of the “Big Mac index” shows the purchasing power of the Russian regions .
Earnings differences by industry
The differences in earnings by industry, as % to the average earnings (11,488 rubles) in Russia, are as follows .

Industry 1997 2002 2007
Agriculture, hunting and forestry 55 44 43
Mining and extraction 235 267 231
including:
Extraction of fuel and energy resources 260 314 274
Manufacturing activities 97 106 98
among them::
Production of foodstuffs (including beverages) and tobacco 106 98 85
Textile and clothing manufacture 59 55 47
Woodworking and wood-ware production 85 78 69
Chemical industry 114 124 116
Metallurgy and finished metal articles production 142 173 120

Machinery and equipment production 80 89 98
Electric production and distribution 175 142 124
Construction 124 119 106

Transport and communication 152 145 133
Financial sphere 149 235 263
Public administration, military protection, compulsory social security 113 122 128
Education 65 56 63
Public health and social services rendering 74 60 69
A new requirement of the tax regulation of our country was imposed recently: the level of earnings should be not only above the minimum wage level, but it should also correspond to the average level of wage in industry.000000000 0000000Thus, in accordance with this new rule, the Federal Taxation Administration of Russia has sent out in Moscow and Moscow region notifications to local tax inspection departments with specifications of the average level of wages in various industries. There was stated that the highest average salaries are to be paid in the coke and oil-related industry – 67,000 roubles; in financial intermediation – 52,995 roubles; the average wages in insurance industry amount to 37,000 roubles in Moscow, in subsidiary financial services – 40,235, in secondary raw materials processing – 36,786 roubles, wholesale trade – 20,000 roubles, retailing – 15,000. The lowest wages are paid in the security sphere – 9,000 roubles, in agriculture and hunting – 7,486 roubles, in leather clothes and shoes production – 6,703, in textile production – 6,043, in personal service rendering – 5,556, in fishery and pisciculture – 4,871 roubles. Analogous wage requirements have been elaborated for all regions of our country. In Orenburg oblast the average salary rate in the coke and oil-related industry is 33,000 (against 67,000 in Moscow), in financial intermediation – 24,000 roubles (against 52,995), in trade–10,000, in agriculture–4,000. On the whole, most people with the minimum wages of 1100 roubles per month are employed in the agriculture (6.4%). In fishery, pisciculture and in, however strange it may sound, communication, the share of such employees is 1.5%. In the sphere of mining and extraction there are no such workers at all. 1.4% of people employed in the educational sphere still earn 1100 rubles per month. According to statistics, no one employed in agriculture earns more than 75 thousand rubles per month. Wages of such size earn not more than 0.1% of people employed in public health protection, education and textile protection. In financial activities there are 4.8% of employees who manage to earn such a salary, a little fewer of them – 4.6% - there are in fishery and pisciculture, and 2.2% - in the sphere of mining and extraction, while their salaries turned out to be not excessively high on average – the major part of employees earn from 25 to 35 thousand rubles monthly . Thus, an industrial disequilibrium has formed and settled in the Russian economy, whose basis is in non-optimal allocation of the labour force among industries due to salary unattractiveness. From the point of view of wages confrontation, we can distinguish 3 groups of industries – “rich” – oil and gas extraction, power industry; “middle” – machinery construction, chemical and food industries, construction, ferrous and non-ferrous metallurgy; and “paupers” – light and timber industries and agriculture.
Earnings differences by occupation
It is quiet logical, that top-management employees and lower-level workers should be paid differently within a firm: not only the scope of responsibility plays here a significant role, but also education and many other factors. In Sweden the earnings differences between the highest- and lowest-paid workers does not usually exceed 3-4 times, in the USA – 5-6 times. Russian rates of earnings disparity by occupation are significantly higher and are on average within the limits of 10-15 times. However, for example, in Chelyabinskaya oblast’ the range of earnings differences at enterprises can amount to 20-25 times . But taking into consideration the informal part of wages and also social benefits and premiums provided by successful companies to their employees, these earnings differences can turn out to be significantly greater. Differences of such kind provide evidence to the actual absence of any social partnership process (interaction between employers and employees within the framework of contract relations), that is in its own turn an extremely important mechanism of settling socially justified and economically well-taken correlation of wages at an enterprise. One should say, that this is connected with the weakness and compromise-orientedness of the largest trade union of our country – Federation of independent trade unions of Russia, that has limited its efforts in this sphere concerning requirements to increase the minimum wage rate up to the living wage level and to increase the wages of employees working in the public sphere, whose wages are financed by the state budget (employed in education, public health, culture, etc.). The greatest gap in earnings of high- and lower-paid employees who take different positions within a company (26 times) can be observed in the financial sphere and in organizations, employed in rendering public utilities, social and personal services. In trade, communications and real estate spheres this gap is a little less – 24 times. In hospitality business and education the difference in earnings of the most high- and lower-paid employees is the same as in the oil industry – by 15 times. The least earnings differences (by 11-12 times) can be observed in the transport sphere, in manufacturing and gas and electric power production .0 0000000The average earnings differences by 22 times is a terrible correlation. We can conclude that either qualification or labour input is definitely under-valued in Russia. Fortunately, current Rosstat’s data testify to the slow but continuous increase in wages of employees who take lower positions. This increase takes place just because there is no way to retreat: if there is no increase in wages for employees of lower-ranked occupations, one can expect a social “explosion”.
Earnings differences by firm size
Most employees, while searching for a job, prefer to work in a huge well-known company, being sure that they will paid greater wages there. However, they are mistaken. And the investigation, conducted by “Anchor” company testifies to this point: in smaller companies earnings are higher.00000000000000 0000000During this survey 100 companies operating in Moscow were subdivided into smaller ones (up to 100 employees) and large ones. Then similar positions were chosen within these companies and corresponding salaries were compared. Even recruiters were surprised at the results of this survey – it turned out, that smaller companies are far more “generous” than larger ones. Researchers chose 10 middle-level positions. And the highest gap in earnings was observed for such occupations as a programmer ($1560 – in a smaller company, $950 – in a larger one) and a specialist of network maintenance ($1765/$1105). Thus, the difference amounts to 64% and 60% respectively. Further goes the private assistant of a director ($1125/$895) and HR-manager ($890/$710).
The “Anchor” consultants point to three reasons for such a phenomenon. First, in smaller firms due to the scarcity of resources middle-level managers have a broader sphere of responsibilities. Secondly, they just do not have such a motivating instrument as a company brand-name. Smaller companies are simply forced to pay more to employees as they do not have a high-flown brand-name at their disposal. And finally, a large company is still a more reliable and stable employer and provides more opportunities for building up a career. This is what smaller companies cannot do. Thus, they are to pay higher wages for lower stability and vague career perspectives . The same situation exists in the West – employees of smaller companies earn more. People, working in companies with a turnover of $1 to $4 million earn 12% more than those who are employed by firms with a $100 million turnover. pppppppppppppppppppooooooooo 0000000If any person is asked the following question: “Where would you like to work – in “Gazprom” or in “Kalininskiye tapochki”?”, he will definitely reply: “In Gazprom”. But the higher the supply is, the lower the price is – everyone knows this rule. If so many people desire to work in Gazprom (just for example), then this huge company is not only able to offer lower wages, but to select the best out of a greater pool of candidates. So, the opinion that people earn more in large-size companies turned out to be just a prejudice.
Earnings differences by gender
Wages of women in Russia are significantly lower than those of men. In accordance with various estimations, they amount to only 60-70% of men’s wages. The reasons for such a payment inequality are quite well-known: they lie in the horizontal (among industries) and vertical (e.g. status-based) segregation. In other words, women tend to be employed in industries with lower wages and obtain promotion slowly. At a regional level, there are other impediments for women to earn as much as men, such as employment structure by industry, economic development and level of income, level of education and age structure.0 0000000The total impact of these factors is the following: in the regions with mostly “exhausted” economy and with a decreased rate of employment in the industrial sphere and in poorly-developed and agrarian regions with lower education level of the population the differences in earnings of men and women are smoother; at the same time, in regions with highly-developed mining and extraction sites, with a younger age structure, with a higher level of income, the gender disproportions tend to increase.00000000000000000000000000000000 0 0 Thus, the greatest earnings inequalities between men and women can be observed in Nenetskiy, Yamalo-Nenetskiy, Khanty-Mansiyskiy autonomous regions, in Komi and Khakasiya republics, in Kemerovskaya, Murmanskaya, Tomskaya oblast’s and Krasnoyarskiy krai (56-63% on average). The lowest gender differences can be found in Altay and Tuva republics, Komi-Permyatskiy, Aginskiy Buryatskiy, Ust’-Ordynskiy Buriatskiy autonomous regions (82-113%). Talking about Moscow, one should say, that thanks to the advance modernization of the tender roles, the high level of education acts as a factor of decreasing the gap in earnings between men and women, and earnings disproportions amount to 71%. The example of Moscow, where more than 42% of employees have a higher education, shows the effectiveness of education as a mechanism of balancing statuses. Unfortunately, this mechanism is not widely spread across our country . In depressive agrarian and poorly-developed regions earnings of women are very close to those of men. But this is just equality in poverty.
Conclusion
Russia is not homogeneous in all respects – this axiom we learnt long ago, whatever aspect of economy we referred to. Labour market and labour relations are not an exception to this rule. Salary and wages, one of the most unstable, varying and debatable issue, determine, nevertheless, the living standard of any society, and, thus, represent a particular concern not only for those who rule sway the destinies, but also for any literate person.
Bibliography
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2. Буланов В.С. Рынок труда. Учебник для вузов, изд-во «Экзамен XXI», 2008, сс. 234-235
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4. http://www.nns.ru/ArticlesByCategoryPage.aspx?cid=13 – an official site of the IA “Integrum” research agency
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12. http://www.ancor.ru/labour_market/article/articleid/71/ - official site of the “Anchor” Recruitment agency, - “Who pays more?” by Anatoliy Chernov
13. Stephanie Lluis, “The Structure of Wages by Firm Size: A Comparison of Europe and the United States”, University of Waterlooy publishing house, September, 2008
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