MOSCOW -- Many advanced economies are wondering how breakthroughs in technology could leave whole swaths of the population unemployed, but in Russia the government is pondering how to fill jobs with a dramatically shrinking work force.
Economy Minister Maksim Oreshkin this week called Russia's demographic situation "one of the most difficult in the world," saying that in the next five to six years "we are going to lose approximately 800,000 working-age people from the demographic structure every year."
Speaking at Sberbank's Corporate University on September 25, Oreshkin cast it as a knock-on effect of the 1990s, when birthrates plunged following the Soviet breakup that brought political freedom, but also economic hardship, rising crime, and a collapse of welfare.
"The lowest birthrate in the country was reached in 1999, and these people are now 18 years old; they are entering the work force. This generation is very small," Oreshkin said in comments reported by state news agency RIA Novosti. According to Oreshkin, the working-age population will contract by 4.8 million over the next six years.
Kremlin Narrative Undermined
The continued workforce decline in the country of just over 140 million would likely harm efforts to spur economic growth after a deep two-year recession, and also undermines the Kremlin narrative that Russia is beating a slow-burning demographic crisis that dates back to the Soviet Union, when its demography was deformed by tumultuous events, high mortality, and low-life expectancy.
"The challenge is, of course, serious, but the question is how to respond to this challenge," said Anatoly Vishnevsky, director of the Moscow-based Demography Institute at the Higher School of Economics. "In some form, it will probably require a greater flow of migrants to fill the deficit on the labor market. The second kind of answer is labor productivity, which is not very high with us."
President Vladimir Putin, who inherited a dire demographic situation when he came to power in 2000 has tried to nurture higher birthrates, raise low male life expectancy, and attract labor migrants. In a 2012 campaign article, Putin warned that if demographic trends continued, the population of the biggest country in the world could fall from 143 million to 107 million by 2050.
Newspapers like Nezavisimaya Gazeta have cast Oreshkin's declaration on the shrinking working-age population as another reason for the government to raise the retirement age -- a divisive policy that if passed would risk angering older, conservative voters who support the Kremlin. The newspaper noted how influential former Finance Minister Aleksei Kudrin -- an advocate of raising the retirement age -- predicted in April that the work force could plunge by 10 million over the next 15 years.
Dmitry Kulikov, an expert at the Analytical Credit Rating Agency, told the state news agency RIA Novosti that the fall in the work force combined with lower migration flows could shave 0.4 percent potential growth from Russia's economy every year.
Vishnevsky, however, doesn't believe raising the retirement age would alleviate the problem. "Old people in no circumstances can replace the young," he said. "They are not effective workers. They cannot master new technology. So if your entire work force gets older, it's not clear what the effect will be."
He also noted how a policy of attracting labor migrants from Central Asia or elsewhere might risk inflaming nationalist sentiment. "It's another matter that Russia is not very hospitable toward migrants," he said. "There is fairly strong anti-migrant sentiment, so it's difficult to say how the situation will develop."
More than 10 million labor migrants are estimated to work in Russia.