Unemployment benefits in St Petersburg: The poverty link?

Abstract

THE STATED AIM OF THE RUSSIAN SYSTEM of unemployment benefits is to provide state support for the income of registered unemployed persons during a period of active job search. While the structure of unemployment benefits appears generous on paper, the real value of benefits has sharply deteriorated since their implementation. The erosion of benefits is only partially attributable to inflation. In locking unemployment benefits to the legal minimum wage, and in failing to index this minimum wage in accordance with the rising cost of living, the Russian government has had a hand in the impoverishment of a large proportion of benefit claimants. While the deterioration of unemployment benefits has been going on since 1993-despite the introduction in that year of a mechanism for benefits indexation to guard against the effects of inflationary conditions-the scale of deterioration has been such that by 1995, the level of benefits received by most claimants has been relegated to little more than a token social payment. The situation in St Petersburg has followed this national trend. This article offers a brief overview of the State Employment Service in Russia and the system of unemployment benefits administered under its auspices. Economic and employment conditions in St Petersburg in the transition are then briefly assessed to provide a context for the examination of the impact of unemployment benefits on the household incomes of a sample of officially registered unemployed persons in St Petersburg. The research forming the foundation of this article is based primarily on extracts from a June 1995 survey of the registered unemployed in St Petersburg, as well as official statistical information from the St Petersburg Committee for the Employment of the Population, the Federal Employment Service and Goskomstat. It also draws on existing research in the field, information obtained in interviews with officials and administrators of the Federal Employment Service, the St Petersburg Committee for the Employment of the Population and the Employment Service Scotland, other documentary materials such as policy documents, employment and unemployment