THE CLOSURE OF THE RUSSIAN LABOUR MARKET

This paper reports on recent research on the job search and placement strategies of Russian employees. Wage differentials have increased enormously in Russia, which would lead a labour economist to expect that informal methods of job search would have declined as people have to widen their search to get better jobs while employers open up competition to reduce wages. In fact the data clearly show that it has become increasingly important to have the help of personal and family connections to get a job. This closure of the labour market is on the initiative of employers, who take the opportunity of easier labour market conditions not so much to reduce wages, as to pursue much more selective hiring policies. This helps to explain why very high wage differentials persist, despite the high rate of labour mobility in Russia. Hiring through personal connections not only provides a firmer guarantee of the professional, social and personal qualities of the applicant, but also worsens job matches, and reinforces the ‘feudalization’ and criminalization of post-soviet management and the social exclusion of those not embedded in appropriate networks.