The Legislative Duma of Tomsk Oblast
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JUNE 25, 2015. ADDRESS BY SPEAKER OKSANA KOZLOVSKAYA AT THE 43rd SESSION OF THE LEGISLATIVE DUMA OF TOMSK OBLAST
Dear deputies!
Dear guests!
The St. Petersburg Economic Forum this June knocked the bottom out of the idea about Russia’s isolation and reiterated the interest of the global community in developing relations with the Russian business and government. In three days the forum received a record high number of guests from 120 countries. More than 200 contracts worth 300 billion rubles were signed. According to estimates by Beijing, with all agreements in sight, the value of all contracts signed at the forum will amount to an overwhelming trillion rubles.
Geopolitics has gone off the today’s world agenda. Russia has become more open, which evidently uplifted the spirits of all participants in the forum. There is more confidence in being able to overcome the economic hardships in spite of all external constraints.
The latest investment climate rating of Russian regions was presented at the forum. According to the Russian Agency for Strategic Initiatives, Tomsk Oblast has a comfortable business environment for investors. It shares the same group with Moscow, St. Petersburg, Khanty-Mansi Autonomous Okrug, Yamalo-Nenets Autonomous Okrug and a number of other strong regions. The governor of Tomsk Oblast Sergey Zhvachkin signed an agreement with the Russian Federal Road Agency Rosavtodor on a pilot project to build a road from Tomsk to Taiga, Kemerovo Oblast, on public-private partnership terms.
Among the hottest topics discussed at the forum was the growing impact of population ageing on the productivity of labor on the global scale. Experts say that the current downward trends of economically active population will soon reduce the global GDP twice. Many countries which have been driving global growth in the last 30 years will face a higher dependency ratio in the coming decades. Russia is no exception of this trend.
The risks can be managed through changing the society’s attitudes towards working mothers and youngsters, increasing the retirement age and helping ‘young pensioners’ to stay employed.
Some numbers for reference. The population of Russia at the beginning of 2015 was above 146 million people. For the second year running the population of the country has been naturally increasing (more than 30,000 people). Life expectancy has grown to 71 years.
At the same time, Moscow’s Higher School of Economics has warned of a worrying situation in the labor market – the post-war generation is displaced by the meager generation of the 90s, which exponentially increases the dependency ratio – more than 700 elderly people and children per 1,000 working people. The working population is the foundation for the government’s social and economic policy and a key driver for the development of economy and investments.
According to the International Labor Organization, only a quarter of the world’s workers are on permanent contracts. 35% are self-employed, 13% are on temporary or short-term contracts, and 12% are working informally. It is alarming because informal types of labor generally have lower productivity.
For more than 6 years Tomsk has been demonstrating good demographics. Resident population of the region has exceeded 1,070,000 people through natural increase and migration. Life expectancy has almost reached the national average rate of 71 years. With the opening of the perinatal center Tomsk Oblast has had the lowest infant mortality rates in Siberia. The population of children below 15 years old is increasing.
At first glance, the key demographic indicators such as birth rate, life expectancy, and migration are having positive trends.
On the other hand, these indicators improving means an increasing dependency ratio, shortage of qualified workforce, and an increased load on the budget in terms of healthcare, education and social security spending.
Moreover, not every individual of productive age can work and actually works. And not every individual will in good faith perform their tax duties. It is a very serious problem. Out of 76 million of economically active population of Russia only 60 million are officially employed. Analysts say half of the 16 million who receive part of their salary off the books are willing to ‘come out of the shadow’ and pay full income tax so that they get full pension in the future. As a rule, those are individual entrepreneurs and small firms will low headcounts eligible for special taxation systems.
It is a very topical subject for Tomsk Oblast as more than 40% of its economically active population are individual entrepreneurs or are employed with small business.
Many federal forums are discussing tax benefits and guarantees for small business today. One of the proposed tools is a mandatory ‘patent’ supported by an insurance payment for all citizens older than 18 years who are not officially employed or are not registered with an employment center. In its autumn session the State Duma will review a bill on self-employment. I suggest we together with the Oblast Administration also join the work on this document.
It is also very important to formalize informal employment. According to the Ministry of Labor, in 2014, almost 400,000 Russians were employed informally. 80% have been formalized already.
Tomsk Oblast also contributed to this effort. In the five months of 2015 the region found more than 8,500 individuals who did not have properly formalized employment. However, only 20% have been formalized yet.
At the same time, almost 10% of Tomsk companies (2,500 organizations) report zero headcount. This situation can’t be tolerated by legal business and the society on the whole.
Dear colleagues!
Today, I deliberately touched upon only one key demographic problem which is the increasing dependency ratio. We have to admit that the existing system of government support for the business and our social policy do not take that fact into account. I assume that the Oblast active employment program needs rethinking, too. Primarily in terms of reframing all Oblast-run government programs for small and medium-sized business, agricultural sector, and innovations, to take due account of the new composition of labor force, stimulate active ageing, and refuel the economy with young blood.
