In actual fact, if we break down the figures for work productivity amongst Russians by industry, then the situation looks even less impressive. For example, comparing its workers in the steel industry, the US operates 4 times more efficiently, in construction it is 5 times, and in agriculture 6.3 times. And work productivity in the US electrical energy sector is 6.7 times higher than in Russia. Similar results emerge when comparing work-place efficiency in Russia with EU countries: in ship-building Russia is 3 times behind Europe, in aircraft construction 6 times, and in transport engineering 8 times…
Meanwhile, the level of Russian work productivity exceeds that of Mexico, and is virtually the same as that of Chile. But, as I am sure you will agree, such a comparison is hardly worthy of the status of a global power and is unlikely to suit foreign investors intending to start a business here or localize their production within the Russian Federation.
So, can it be the case that Russians are such poor workers? This seems unlikely… How is it then, that the country experienced those well-documented periods of massive economic growth, associated with the industrialization of the last century, with its exploration of space? And how has it maintained its position as leader in a whole host of economic sectors? One doesn’t need to look too far for examples: there is not only space, but also a range of extractive industries, knowledge-intensive industries, not to mention defence. And, in recent years, there has been noticeable growth in that very same agricultural sector. No doubt many have heard about the bumper grain harvest in Russia this year?
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The answer is simple: in reality Russians are not such poor workers. However…
According to data from the Development Centre at the HSE, Russians work 76 more 8-hour shifts a year than Germans do. But their work productivity is still 1.7 times lower.
So, what are the reasons for such low work efficiency in Russia? And should these figures be cause for concern amongst foreign investors? Let’s take a closer look.
First, in Russia, it is all still to do with the economic key player that is the extractive industries. A characteristic of developed countries is flexible automation of production processes, their capacity to be rapidly restructured, the application of new technology, and so on. This allows a quantum leap to be made in increasing work productivity.
The second cause is the imbalance in employment patterns. In the Russian economy to this day a huge proportion of jobs involve activity which does not contribute to a growth in GDP. These are the many kinds of security agencies, security departments, night-watchmen, caretakers, supervisors etc., of which there are significantly more in our country than in developed ones. As an example, for every 1,000 residents of Germany there 2.1 workers at security companies, whereas in Russia there are 6.99, i.e. 3.3 times more.
The third and by no means last reason in terms of significance is the excessive, I’m afraid to say, Russian bureaucracy. Here’s an example. Due to the extreme demands of regulators, banks are forced to employ far too many people just to fill in all the forms: when the regulators themselves use no more than 10% of the information they receive. Which works out at 90% of the working day of a section of employees being wasted, contributing nothing to the economy. And the same situation is characteristic of many other sectors, too.
Finally, experts consider one of the causes of the low work productivity figures to be the existence of an informal employment sector which, for understandable reasons, drops out of the overall productivity statistics for Russian workers. According to calculations by the HSE Centre for Labour Studies, it was only between 2000 and 2013 that there were over 9m workers included in the figures, accounting for only approximately 45% of the hours worked in our country.
But this is all, as they say, to do with Russia’s domestic set-up. Does this affect foreign investors at all? A little, yes. But only to a certain extent. Like in the banks already mentioned. In real production set up by them, foreigners see that Russians work in no way worse, and occasionally, better even than their counterparts abroad, as the whole working process in such cases follows the “curves” of production abroad, with modern foreign equipment, modern technology, and in return for, as a rule, decent wages.
In fact, there are the most diverse methods available to help increase the productivity of the workforce. And each has its strengths and its weaknesses. They can be applied both to purely Russian, as well as to foreign, enterprises or companies operating within the RF.
For example, as early as 2010, the RF government adopted the “Strategy 2020”, one of the most important objectives of which was declared to be increasing work productivity by 4 times by way of investing in modernizing the economy. New technology, so went the idea, would enable a sharp increase in work efficiency over a short period of time. But foreign investors are well aware of this themselves. More to the point, it is often they who inject such new technology into the Russian economy.
But the investment method, in fact, cannot bring about a substantial breakthrough, as technology introduced from outside already operates in other countries with whom Russia itself is in competition: which means that achieving even statistical supremacy isn’t going to work. For it to do so, the technology across the country needs to be replaced. And that is not a problem for foreign investors to solve but for the country itself. In the meantime, foreigners coming to our country have a distinct advantage in their fields. With their equipment and technology, they are simply “destined” to succeed and attain a high level of work productivity from their staff. How long will this situation last? It is difficult to say.
Nevertheless, even at modern factories or companies built by foreign investors, the work productivity of Russian staff can be increased. How? An innovative method, considered to be the most effective, is often called the “Lean Manufacturing” system. The method proposes a clean-up at the enterprise, maximum simplification of interconnections, and the liquidation of anything superfluous hindering intensive growth. Thus, the enterprise is freed from hold-ups and the need to overcome obstacles so that it can move forward and concentrate its efforts on developing new technology, goods, and services. A drawback of this method is the need to completely dismantle a firmly established system which by no means every director is willing to do.
There is one further method: the so-called “Effective Contract System”. Employment contracts, clearly written into which, aside from the basic parameters, are concrete indicators, the criteria for assessing their achievement and effectiveness, and forms of incentive payments should the necessary figures be reached. Such contracts are already in effect in Russia for workers in the education and culture sectors. In the long term, this system can become a viable method. But it has to be instituted properly so that workers' activity doesn't turn into a mere formality directed towards hitting certain targets to the detriment of the job in hand.
Overall, however, there is no single way of sharply increasing work efficiency. What is needed is a comprehensive solution to problems at various levels, using all available methods.
Official forecasts maintain that work productivity as a whole in Russia is set to rise, a basis of which may well be those measures undertaken by the government. So, the function of the state in standardizing work and wages is now already being restored, and the fixing of requirements to meet performance standards will enable workers to be protected from excessive labour intensification. And this will make the relationship between worker and employer (as it is in leading developed countries) a more transparent and civilized one.