Hlib Parfonov
Executive Summary:The Russian economy appears to be experiencing “reverse industrialization,” shifting from the development of high-technology industries to labor-intensive sectors. This trend is negatively impacting Russia’s industrial output and economic development.
Russia’s industrial growth is uneven, with the military-industrial complex showing the most growth while civilian sectors stagnate. Russia’s ongoing full-scale invasion of Ukraine is draining the workforce, particularly as conscription is expanded.
There are more job vacancies than skilled employees in Russia due to the surplus of graduates in subjects such as humanities and social sciences and the shortage of technical and specialist graduates.
Kremlin reforms that attempt to align the education system with labor market demands are raising concerns from students and families about fairness and quality of training. These changes are reshaping Russia’s economic and social landscape in ways that may be difficult to reverse.
On February 6, Russian President Vladimir Putin stated that it is necessary to limit student enrollment in unproductive specialties. At a meeting of the Council for Science and Education, Putin argued that the recruitment for specialties that do not fulfill demands in the economy and the labor market must be reduced. Preventing non-specialist educational institutions from teaching specialist courses is also important, according to Putin, in order to avoid low training standards (Kremlin.ru, February 6). This development is the result of “reverse industrialization” (обратная индустриализация, obratnaya industrializatsiya), a trend that has been unfolding in Russia for a few years now. Reverse industrialization refers to economic development that departs from the production of high-technology and reverts instead to the growth of labor-intensive sectors (RIA Novosti, April 21, 2022). This phenomenon is associated with a reduction in the share of high-tech industries and an increase in employment in sectors that demand low-skilled manual labor. According to analysts from the Bank of Russia, after an initial downturn in production and gross value added, a “reverse industrialization” phase may follow, characterized by the development of less advanced technologies and partial import substitution. Such products’ technical and economic efficiency, however, may be inferior to that of modern counterparts (RIA Novosti, April 21, 2022).
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