Russia May Trim State’s 18 Million Jobs to Boost Productivity

Russia’s government, which employs about 18 million people, should cut its workforce to spur productivity, Finance Minister Anton Siluanov said.

“When it comes to increasing labor productivity, you need to free up workers,” Siluanov told reporters in St. Petersburg today. “We’re afraid to cut jobs for workers in both the public sector and in the private sector.”

Russia, growing at the weakest pace since a 2009 contraction, can no longer count on recovery from that crisis and expanding exports to increase output, Elvira Nabiullina, who takes over as central bank chairman next week, said at the St. Petersburg International Economic Forum yesterday. Boosting the economy, which is currently growing slightly below its potential of 3 percent to 4 percent, will require improving productivity, cutting costs and boosting investment, she said.

In 2005, the public sector, which includes law enforcement, the military, state administration, education and health care, accounted for 23 percent of all jobs, though that share has since risen to 25 percent, or about 18 million people, according to Alfa Bank estimates.

Russian unemployment tumbled to 5.2 percent in May from 5.6 percent in April, the Federal Statistics Service in Moscow said yesterday in a report. Economists expected a drop to 5.4 percent, according to the median estimate of 18 analysts in a Bloomberg survey.

The economy is currently operating “at nearly full capacity,” Siluanov said today. “When unemployment is low, it’s entirely possible to conduct structural reforms to reduce the number of workers, and thereby increase labor productivity,” he said.

To contact the reporters on this story: Olga Tanas in St. Petersburg at otanas@bloomberg.net; Scott Rose in St. Petersburg at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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