Kudrin: Russia at level of G7 countries of 80s

Kudrin: Russia at level of G7 countries of 80s

Russia's labor productivity lags 40 years behind those of developed economies. This level is close to Brazil's level and three times below the level of the U.S., head of the Russian Accounts Chamber Alexei Kudrin said at the plenary session of the St. Petersburg International Labor Forum.

"The output per worker amounts to about $23 per hour. Even in Turkey, and about three times more in the U.S. We are still at the level of the G7 countries of the 80s," the minister said.

According to him, it is necessary to increase labor productivity by systemic measures.

In addition, the share of Russia's participation in global research is only 3%, while the shares of the United States, France and China are 50%, 22% and 30%, respectively.

“We are catching up in some areas, but the most important thing that we need is to be involved in the international process of forming new management models," Kudrin added.

The professor of the Department of Labor and Social Policy at the Institute of Public Administration and Management of RANEPA, Doctor of Economics Alexander Shcherbakov, speaking with Vestnik Kavkaza, noted that low labor productivity in Russia has two reasons. "The first reason is that not human resource management skills lag behind the required criteria. The level of our personnel management is low, including the production management. The second reason is that the investment process is not satisfactory enough. Often our investments are too small and ineffective," he said.

There is a whole range of measures to help increase labor productivity. "We have already taken some steps in this area, we have created special institutional structures in order to increase the literacy of managerial personnel, especially entrepreneurs, to increase the efficiency of investments. Certain steps must be taken to change the tax system so that it stimulates efficiency growth production and encourages the development of production. The current actions are not enough, we need more decisive, more focused steps," Alexander Scherbakov stressed.

The vice-rector of the Academy of Labor and Social Relations Alexander Safonov, in turn, noted that labor productivity improvement programs meet with the same obstacles from the Soviet times. "Labor productivity will not grow unless wages grow. It is the high cost of labor that makes business owners to improve production, reduce unit labor costs, introduce modern methods and mechanisms. Most importantly, with rising labor costs, it’s profitable to produce only products with a high added value. Therefore, all those measures aimed at solving these problems will help to reduce the gaps in labor productivity between Russia and the United States," he said.

At the same time, the expert noted that statistics does not consider the entire Russian economy. "We have a very large shadow sector. In addition, we have a very long transition to the international accounting system, so far a number of services are not included in the statistics. And it is even more significant that the frequency of tax reporting is noticeably lower than in the US.," Alexander Safonov pointed out.

"We need to develop the economy as a whole, change sectoral guidelines, increase wages. The fact is that an important element of labor productivity is the ability to meet growing consumer demand, and if it doesn't grow, then there will always be low productivity," the vice-rector of the Academy of Labour and Social Relations concluded.