OREANDA-NEWS.  February 13, 2012.  Russia is a social welfare state. We have a much higher level of social guarantees than countries with a comparable level of labour productivity and per capita incomes. In the past few years, spending on the social sphere has accounted for over 50% of overall budgetary spending. In the past four years alone, it has gone up by 50% in absolute terms. Its percentage share of GDP has increased from 21% to 27%. The 2008-2009 downturn failed to undermine any of these social guarantees. Moreover, during this period the wages of public sector employees actually went up, as did pensions and other social payments. But Russian citizens are by no means satisfied with the current situation, and their dissatisfaction is perfectly justified.

Social policy has many objectives and many dimensions. It entails providing support for the poor and those who are unable to earn a living for valid reasons. It means implementing social mobility and providing a level playing field for every person on the basis of his or her capabilities and talents. The effectiveness of social policy is measured by whether popular opinion believes the society we live in is a just one or not.

I will not discuss the obvious successes. We have made great strides in improving the situation in the demographic sphere, in pensions and in reducing poverty. We have achieved tangible results in the fields of education, healthcare and culture.

But today we have to discuss the as yet unresolved issues, as well as the objectives which must form the agenda for the next stage of Russia’s development.

Firstly. Many people are unable to make use of their professional knowledge, to find a job that offers them a decent salary and enables them to develop and build a career. Our system of social mobility functions badly and inconsistently, starting from the education system. This problem has worsened considerably in the past few years, at a time when most young specialists have been graduating from universities and entering the labour market.

Secondly. The glaring income disparity is unacceptably high. Every eighth Russian citizen still lives below the official poverty line.

Thirdly. The perception of the ordinary needs and opportunities of the average Russian household has changed dramatically in the first decade of the 21st century. Only 10-12 years ago, people's main goal was simply to stay above the official poverty line. At that time, entire social groups, pensioners mostly, were forced to exist below that line. Today, the bulk of the population is making entirely different demands, something to which the social sphere has so far failed to adapt. People, primarily the “middle class,” well-educated and well-paid individuals, are dissatisfied with the level of social services on the whole. The quality of education and healthcare is still quite low, despite higher budgetary allocations. Services that you have to pay for in these areas are still rife. The goal of creating a comfortable living environment is still a long way off.

Fourthly. The decline in the national workforce and an increasingly ageing population means the efficiency of social spending has to be increased. We simply have no choice, if we want to preserve and improve the situation.

The social dimension of the economy

People of different vocations, including businesspeople, workers, specialists and state employees, must be given the opportunities to realise their potential, as well as opportunities for professional and social growth.

Firstly. Every specialist, every engineer, agronomist, economist and designer, must be give the chance not only to work in their chosen field but to build a professional career. This means that they must be constantly working to improve their qualifications and skills and studying new applied technologies and production processes. At the same time, the qualifications and aptitudes of each specialist must be clearly visible to employees.

As far back as 2006 we agreed with business associations that they will undertake to create a system of professional qualifications. Unfortunately, this has produced very modest results. Only 69 standards have been approved in five years. This is a drop in the ocean, to put it mildly. It appears that we overestimated the interest of major corporations in the national system of qualifications open to small and medium businesses. This means we have to tackle this issue on a national level and involve all the resources of the state.

I suggest that the government teams up with business and professional associations and the country’s leading universities and adopts a national plan for the development of professional standards and the creation of an open database of members of professional associations before the year is out.

Secondly. Every country looks upon its teachers, doctors, scientists and cultural workers as the backbone of the “creative class”, as the people who contribute to the sustained development of society and serve as the pillar of public morality.

We will without fail improve the efficiency of our education and healthcare systems. We will put a stop to the situation where we finance blatantly poorly performing agencies through sheer inertia. But this work has been going on since the 1990s. Organisational and economic reforms have been implemented, managerial systems changed, and external assessment mechanisms introduced. This has so far failed to lead to any noticeable changes in the quality of education or healthcare. It appears that we have overlooked the most important factor -- the motivation of the specialists working in these sectors.

I believe that healthcare and education reforms are only possible when they guarantee decent pay for public sector professionals. A doctor, teacher or professor should be able to earn enough on their basic jobs not to have to seek outside earnings. If we fail to fulfill this condition our efforts to change the organisation of the economic mechanisms and renew the material base of these sectors will come to nothing.

The quality of medical care, educational programmes and scientific research can be efficiently controlled only by relying on the authority of the professional community. Society has the right to expect the restoration of professional morality, self-management and self-purification of professional collectives as it reviews its relations with the medical, teaching and scientific communities.

Public sector pay should be linked to the specific conditions of regional jobs markets. After all, people don't compare their salaries with abstract figures in a statistical handbook, but with what their neighbours and acquaintances earn and what they themselves could earn by moving from the public to the private sector.

A mechanical rise in pay for one and all does not work. It is necessary to take more account of the qualifications and professional ratings of employees for their salaries. This means that basic pay should be combined with a more rapid increase in incentive bonuses and supplemental payments.

We have made the first step towards concluding an efficient contract with teachers – this is a million people. Beginning this year, the legal entities of the Federation must, with federal budget support, ensure that the average salary of a teacher is no lower than the average in the region’s economy.

Starting on September 1, we will raise the pay of lecturers in state educational establishments – up to the average salary for the region. In the course of 2013-2018, the average salary of professors and lecturers will be gradually increased twofold to double the average in the economy. Increased pay must be provided immediately for those with a research background and who enjoy the respect of students and graduates. Each year the proportion of such top professionals will grow. By singling out the best and most deserving lecturers, we can guarantee the continuous renewal of higher school personnel.

Resources for the implementation of this objective will be provided by the state – through regular increases in the normative funding for higher education programmes. College and university rectors will be made individually responsible for its implementation – we will insert appropriate provisions into their contracts.

In the same way, the pay of faculty members will be gradually increased over the course of several years – lecturers in colleges and professional lyceums, production training instructors, other teachers, doctors, paramedical personnel, research workers in the Russian Academy of Sciences and state scientific centres, and staff of cultural institutions. In the case of doctors and researchers, the target for 2018 is the same as for higher school lecturers – 200% of the average pay across the region.

The implementation of this objective will require considerable resources – up to 1.5% of GDP a year. Making use of the significant internal reserves of industries is important here – in particular, restructuring ineffective organisations and programmes. Such restructuring could provide as much as one third of the required funds.

In the final analysis, salaries should be paid not for belonging to a certain institution, but for making a real contribution to science, education, healthcare or culture, and for providing specific services to society. The heads of colleges, universities, medical and research establishments should be obliged to report their incomes on the same lines as those introduced earlier for state corporations.

Thirdly. A no less significant problem is the professional qualifications and social feelings of workers – those people who make up the backbone of any economy.

Long gone are the days when workers had low standards of living and levels of education. Today’s worker is a responsible person executing complicated and ever changing technical requirements.  At a time when competitive businesses are regularly updating their technologies and low-quality goods are quickly forced out of the market – workers’ qualifications, outlook, professional pride and ability to constantly learn things have become the decisive factor in staying competitive.

Meanwhile some business owners and managers continue to behave as though they were living at the turn of the last century. As if one can establish oneself in the market by skimping on one's employees. Between 2004 and 2010, the economy saw a sizeable (17%) increase in the percentage of workers employed in conditions that did not meet the required standards of hygiene. The proportion of these types of jobs rose from 21% to 29%.

Together with the trade unions we have to consider legislation to broaden the participation of workers in the management of enterprises. This kind of participation is practiced, for example, in Germany in the form of what are known as works councils. In Russia, such councils could be responsible for organising daily staff routines – from drawing up work schedules to making plans for social safety nets in the event of the closure of a particular plant, or providing staff training.

The skilled jobs market is in need of serious change. We have to provide social mobility within workers' professions. Russia needs to reestablish its labour aristocracy. By 2020, this aristocracy should make up at least one third of skilled workers – about ten million people (25 million including their families).

Skilled workers must be included in the national system of professional qualifications. Assessment of their professional competencies and obtaining new qualifications should not be restricted to isolated enterprises, as is the case now. This will improve workers’ chances on the job market, increase their mobility and, ultimately, raise their pay.

Fourthly. We make little if any provision on the jobs market to help those people who have the same talents and same desire to work and earn money, but who find it difficult to fit into standard employment conditions. These are above all people with disabilities (wheelchair users, the visually impaired, those with impaired hearing, and members of certain other health groups).

In recent years, we have adopted a series of decisions on tax incentives for employers hiring people with disabilities. The government, together with the public bodies concerned, should assess the efficacy of these measures by the end of the year – and, if necessary, take further steps in this area.

In the next few years, we must create a system to help every disabled person who is able and willing to learn and work find their educational and professional niche in life: from specialised educational programmes to jobs adapted to an individual's specific requirements.

Fifthly. Businessmen still lack confidence in our society. This is largely a legacy of the 1990s, when business as a career, on the one hand, often involved risking one's life because of the criminal gangs who operated with impunity, and, on the other hand, frequently came down to nothing more than dividing up state property. This led to mistrust of businessmen from many people, while businessmen felt mistrust of society and the state.

Many of our citizens still have a tendency to regard any substantial property as ill-gotten gains and see big businessmen as high society personages rather than as creative drivers of the country’s development (admittedly some businessmen do give grounds for these suspicions).

Theirs must be a story not just of success, but of justified success from the perspective of others, a hard-won success, coupled with an ability to take risks and assume responsibility for others.

There is already a massive section of people in Russian business who are set for change and want to live the new way. These are small and medium-sized businessmen, and second or third tier managers. These people are well aware of the inefficiency of the current business model.

The young business elite stands a good chance in the next decade – to manage a new type of private corporations, which will accumulate the money of tens and hundreds of thousands of people like them on the Russian stock market. These are public corporations, they have no individual owner and are therefore resistant to corruption and vested bureaucratic interests.