Strategies for effective employment in the context of the current features of the Russian labor market: convergence of formal and informal mechanisms

Svinukhova Yuliya Nikolaevna Scientific Associate Institute for Social and Economic Research of Ufa Scientific Center of the Russian Academy of Sciences 450000, Russia, respublika Bashkortostan, g. Ufa, ul. Prospekt Oktyabrya, 71 s.ioulia@mail.ru Other publications by this author

This study was carried out within the framework of the state task of the UFIC RAS No. 075-01134-23-00 

The labor market naturally, like any other market, is influenced by various factors that provoke social risks and threats. For the Russian labor market, first of all, this is a number of specific institutional defects inherent in it, which provoke difficulties in achieving the desired social and labor status and limit opportunities for decent employment. Indeed, an analysis of research on the modern Russian labor market shows that its functioning is largely conditioned by the loss of the state's monopoly on mediation in employment ^[1]. Among the main institutional defects of the labor market throughout the Russian Federation (RF) are still:

- imbalance of labor demand and labor supply in interprofessional and territorial contexts;

- the weakness and passive policy of state employment intermediaries, primarily the State Employment Service (SES), which still reproduces the status assigned to it as an intermediary for servicing a limited segment of the labor market;

- stigmatization factors that directly correct employment strategies;

- forms of labor discrimination, including in employment, especially among women with children and young people entering the labor market for the first time, therefore, having no specific work experience;

- low information transparency or significant asymmetry of information ^[2-4].

Therefore, the study of strategies and mechanisms that contribute to minimizing these defects or features of the Russian ore market does not lose its relevance. In addition, the strongest external factor determining the dynamics of the Russian labor market, employment and unemployment today is the tense geopolitical situation. The conditions of sanctions restrictions against Russia, the structural restructuring of the economy bring qualitatively new challenges to the Russian and all its regional labor markets. Thus, expert forecasts of the unemployment rate show that there will not be a sharp and significant increase in this indicator. The main consequences are determined by pronounced industry effects. Therefore, the conditions of increased social risk will be determined, first of all:

- the threat and consequences of hidden unemployment;

- falling income levels;

- a reduction in the number of vacancies, namely in certain industries, on the other hand, an increase in the demand for labor in production and service.

Thus, the current structural restructuring of the economy causes such conditions of employment in the labor market, under which a fairly high level of competition for job seekers is formed in a number of professional areas (for example, information technology, higher and middle management, law, investment and consulting, finance, accounting, marketing, art, etc.), but in others The number of active vacancies significantly exceeds the number of active resumes and there is a problem of personnel shortage in the industries, primarily related to severe physical and harmful working conditions and its piecework payment ("blue collar", production and maintenance), as well as medicine, pharmaceuticals, logistics and transportation. At the state level, the Decree of the Government of the Russian Federation No. 337 of March 10, 2022 provides a list of industries and activities that have been most affected by the sanctions ^[5]. This list and analysis of data on the current state of the labor market, for example, in the field of IT and telecommunications, only confirm the forecasts associated with modern risks of employment of women and youth. For example, the dynamics of the IT and telecommunications sector in Russia already reflects these trends today: with a fixed reduction in wages and demand for specialists, the number of resumes submitted from applicants from January to August 2022 increased by 55% due to the entry into the labor market of a large number of applicants who have just graduated and are looking for employment for junior positions ^[6].  Many experts also point out that the conditions of increased social risk today will be determined, first of all, by industry effects, entailing difficulties in achieving the desired social and labor status among young people entering the labor market for the first time ^{[7; 8]}. These conditions add additional emphasis to the relevance of the study of mechanisms and resources to increase the competitiveness of job seekers in the modern labor market. With this in mind, the object of the study was effective employment. The subject is attracted channels and employment strategies.

It is obvious to assume that in the conditions of the above-mentioned sources of social threats in the modern labor market, applicants will build their strategies for effective, and therefore decent, employment based on the convergence of formal and informal mechanisms to achieve it, activating the potential of their social networks and connections (social capital).

Effective employment is the result of the applicant's productive activity in the labor market, starting with the available volumes, quality and degree of involvement of various types of social and information resources in the job search strategy. Its criteria, at least, will be:

- fair, decent wages (ensuring the principle of matching the price and cost of labor);

- safe working conditions;

- full employment with the preservation of social guarantees.

Undoubtedly, the qualifications, region or territory, and work experience of the applicant are the basic factors that have the greatest impact on the successful outcome of employment. Gender studies add to this range the gender and age characteristics of job seekers. However, the analysis of modern research shows that today the competitiveness of job seekers in the labor market is determined not only by the characteristics of human capital outlined above. It also depends on another important factor. They are social capital. It is the combination of human and social capital, as well as the ability to use social networks (network resources) and connections in any of their manifestations when looking for a job that determine the competitive position of an individual in the labor market today. No wonder the author of the most famous book on employment R. Balls notes that: "Today, the most competent in the profession are not always hired. Success is more often achieved by those who know well how to get a job" ^[9], thereby indicating one of the characteristic dynamic trends of the modern labor market and highlighting the relevance of turning to the study of employment strategies and channels.

In sociological science, there is accumulated experience in the study of the functions of social capital. Based on the generalization, it can be concluded that social capital at the micro-level of social processes (individual) realizes itself as:

- the basis of social control;

- the basis of the individual's social support;

- a source of personal benefits.

Harry Becker, defining the difference and mutual influence of human and social capital on the basis of the social graph, describes social capital as a resource that can be used to achieve individual interests. That is, the resources of one individual through the implementation of social ties can act as a source of satisfaction of the individual needs of another. This approach to understanding social capital quite often forms the basis of modern sociological research. The analysis of the available applied research confirms that the use of social capital expands the possibilities of improving socio-economic and socio-labor status, obtaining certain personal benefits or benefits in various spheres of life. The data of Fig.1, compiled on the basis of the study by A.N. Krasilova: "Social capital as a tool for analyzing inequality in Russian society", conducted under the leadership of O.I. Shkaratan ^[10], clearly show that the use of social connections finds its application in all major spheres of life of Russians.

Figure 1. The use of social capital by Russians as a resource realized through social connections in various spheres of life, %

It can be seen from the data in Fig.1 that the spheres of the most intensive functioning of social capital as a resource for solving individual problems and needs are the spheres of finance, everyday life and employment. This means that Russians most often resort to the help of social capital to solve financial problems by borrowing money, get help in everyday life, get access to high-tech medical care or advice from a leading specialist. It should be noted that the data on the rating of social capital attraction areas shown in Figure 1 are relevant to modern Russian realities. So, today more than 60% of job seekers use social connections in their strategies when searching for a suitable job or to move up the career ladder.

The results of existing research on the problems of social capital in the labor market indicate its productive role in the field of social and labor relations. A number of them, devoted to the study of the role of social capital in the labor market, determine that social capital acts as a resource that increases the competitiveness and adaptation of various social groups (for example, youth) and social strata (middle class, low-income segments of the population) in the labor market.  They also indicate that social capital can be a source of improving the qualitative characteristics of employment ^[11]. From this point of view, social capital is a factor of competition of labor market subjects. According to the thesis of A.T. Konkov, social capital, having an appropriative character, with respect to interaction in the labor market, is able to influence the competitiveness of job seekers by increasing their accessibility or the possibility of obtaining prestigious and highly paid jobs. In this context, social capital can be defined not only as a social resource for employment, but also as a social elevator, since it opens up opportunities for access to more promising jobs, and also increases the chances of career advancement. In addition, A.T. Konkov justified such effects of the use of social capital in the labor market as:

- overcoming the incompleteness and asymmetry of information about the labor market, including obtaining insider information about vacancies and workplace conditions, employer requirements and the nature of competition;

- increasing the number of alternatives available to market participants and the possibility of choosing between them;

- the ability to influence the actions of actors making decisions about hiring or creating jobs ^[12].

Thus, we can define social capital as a risk reduction factor in the labor market, considering it as a buffer – a "safety cushion" that provides a certain degree of effective employment and job retention, as well as rapid recovery of social and labor status in case of job loss.

The institutional structure of the modern Russian labor market is represented by the interaction of formal institutional conductors and intermediaries and informal employment mechanisms. But, at the same time, in the modern labor market, in the entire space of the Russian Federation today, it is the Internet and the above–mentioned system of social connections and networks, including personal connections and acquaintances, that is, social capital, that are operating quite intensively. Moreover, it is the share of this informal sector – informal employment channels, that accounts for the largest percentage of attraction. Examining the behavior patterns of job seekers in the job search process, it can be concluded that most often in the regional labor markets, an informal mechanism is implemented in the form of patronage, recommendations, a source of information about the workplace, professional and acquaintance employment.

An assessment of the prevalence and effectiveness of attracting formal and informal employment channels based on official data confirms that social capital in the modern Russian labor market is turning into the most active institution of effective employment. The trends of attracting various channels of job search in the employment strategy in the post-Soviet space and in the modern Russian labor market in dynamics are shown in Fig. 2 and 3.

Figure 2. Structure of formal and informal employment channels in the Russian post-Soviet labor market, %

Shown in Fig. 2 and Fig. 3 data clearly illustrate the movements of various employment channels in the ranking by popularity and frequency of their use by job seekers. Thus, the most significant change is seen in the dynamics of the use of social capital (social networks, connections). By 2021, the frequency of accessing this channel when looking for a job has increased significantly. His shift towards leadership is the most noticeable and stable. Another significant change in the structure of employment channels is associated with the emergence of the Internet as an active intermediary in job search (triple place in the rating of attracted channels with 62.8% of the frequency of its use by job seekers in job search strategies). Independent appeal to the employer, which has been leading for many years in the practice of employment of Russians, is gradually shifting to the center of the rating.

Figure 3. Rating of formal and informal employment channels attracted by job seekers when looking for work in the modern labor market (2020-2021), %

Thus, these data confirm that the involvement of informal employment mechanisms is regarded by job seekers today as an effective means of finding a job. Thus, 69.0% of applicants indicate the use of social capital when looking for work in general ^[13]. Moreover, the analysis of official statistics shows some intra-group specifics of attracting various job search channels in the employment strategy. But in general, the stability of the rating of formal and informal job search channels remains. The distribution according to the structure of employment channels, depending on the gender of job seekers, is generally as follows. In the leading positions among the employment channels in terms of the frequency of involvement in the job search strategy, both women and men have social capital – appeal to acquaintances, friends, relatives (67.3% and 71.0%, respectively). In the second place in terms of frequency of use is the Internet (59.8% women and 66.1% men), in the third place is a direct appeal to the enterprise, to the employer (25.0% women and 25.4% men). It should be noted that a number of studies speak about the determinants of the choice of employment channels – the socio-demographic characteristics of applicants and the characteristics of workplaces and enterprises. So, in particular, T.Yu. Stuken substantiates the dependence of the use of types of employment channels on the age, gender and educational characteristics of applicants ^[14]. Indeed, if we look at the statistical data, we will see some difference in the frequency of attracting certain channels in the job search strategy within various socio-demographic groups, for example, age groups. This concerns the frequency of Internet use, when certain age cohorts of youth turn to Internet search more often than other age groups, which is quite obvious. Also, the older age groups of applicants are most often the other age groups, due to their professional experience, use a direct appeal to the employer. And women, for example, are traditionally more likely than men to turn to the NHS. Men, on the other hand, most often turn to the media when looking for a job – 27.6% of men and 21.6% of women use this channel for employment.

The data of regional statistics on the structure of citizens registered in the NHS very clearly confirm the relationship outlined above. So, it can be clearly indicated that for such two socio-demographic groups as youth and men, the NHS, as an employment channel, has the least popularity when looking for a job. Of the total registered labor market of the Republic of Belarus in 2022, 39.1% were men and 60.9% were women. The age structure also clearly confirms a certain trend – in the practices of job search among young people, the appeal to the NHS occupies the last positions. 86.9% of citizens registered in the NHS are applicants in the age groups of 30 years and older. According to the Employment Information Portal of the Ministry of Family and Labor of the Republic of Belarus, the share of young people in the structure of registered unemployed who applied for employment services in the NHS in 2022 accounted for only 13.1% of the total population (4.9% falls on the age groups of 16-24 years, 8.2% – 25-29 years) ^[15]. This is an extremely revealing statistic of the presence of such institutional defects in the Russian and regional labor market as the significant influence of stigmatization factors and the bias in the banks of vacancies of the NHS towards working specialties.

Thus, we see the intra-group specifics of the use of formal and informal employment mechanisms. However, the overall structure of the rating of the leading employment channels remains relatively stable. And in general, we also see that both men and women in different age groups are quite actively relying on such employment channels as: using social capital – attracting personal connections, kinship, dating; attracting Internet resources.

Figure 4 shows the distribution in the structure of employment channels relative to the youth cohort, obtained on the basis of sociological data.

Figure 4. Youth employment practices in the Republic of Bashkortostan – monitoring materials of the ISEI UFIC RAS, data retrospective, % ^{[16; 17]}

The use of social capital as a practice of youth employment is a fairly common phenomenon. A retrospective analysis of the data, coupled with an analysis of the latest available Rosstat data on the dominant channels of job search, shows that the use of social capital in the long term remains one of the most popular mechanisms of employment among young people. In 2021, in the age groups of 16-34 years, on average, up to 65.7% of young job seekers included contacting friends and relatives for employment in their strategies ^[13]. And this "... is quite consistent with the institutions that have developed in the field of labor relations in Russia" ^[16]. The rationale for this fact may be that the power of such an informal employment mechanism as social capital can help young people overcome the institutional defects inherent in the Russian and regional labor markets, which are traditionally voiced by young respondents in sociological studies as: "young people are the last to be hired and the first to be fired," "young people are paid less," etc.

However, an analysis of the research available in this field has shown that the value of social capital as a mechanism of employment is not always stable. There are studies suggesting that the effectiveness of social capital as an informal employment channel directly depends on the productivity of the social network (N. Lin) and has a direct proportional dependence on the current economic situation. Evaluating the system of social connections (social capital) as a resource for maintaining employment and improving social and labor status, it should be noted that in the conditions of the current deterioration of the socio-political situation and economic instability, the efficiency of using this resource is somewhat reduced. This happens because the unfavorable socio-political and economic situation imposes restrictions on the official, professional and economic position of friends and relatives in the system of social relations of applicants. That is, it narrows the possibilities of using friendly, professionally-familiar employment. But despite this, the overall value of this resource for job seekers in the national labor market remains. So, according to research, up to 4/5 of all job seekers are attracted to this resource, and only 4% consider this unacceptable. In addition, the effectiveness of attracting social capital in the employment strategy is indicated by the data obtained during the study by D.A. Gerasimchuk. According to the data provided in her study, job seekers who used their social connections for employment have the highest quality employment results, which is expressed in receiving higher wages, guarantees of employment on a permanent basis, the greatest satisfaction with such aspects of work as: career opportunities; work schedule; working conditions ^{[11, p. 18]}. Studies of the effectiveness of attracting social capital in employment indicate that the mere fact of its use in job search does not necessarily mean the fact of employment. The main effect of its effectiveness is associated with the improvement of the qualitative characteristics of employment. So, T.Yu. Stuken points out that the use of kinship and friendly ties in employment on the Russian labor market in itself does not so much increase the likelihood of employment, as it turns out to be a factor of positive influence on wages in the case of using weak social networks (connections), that is, employment at the invitation of the company's management or with the help of the professional community ^{[14, p. 75]}. However, further analysis of regional studies in this area suggests the need to take into account the specifics and dynamics of a particular national or regional labor market when determining the effectiveness of social capital on it. Thus, N.V. Makovskaya, exploring the institutional transformation of employment channels in the national labor market, on the contrary, notes the importance of the determinant of strong social ties. She points out that unlike in Russia, where the use of weak social ties in employment leads to a positive impact on earnings, in a particular regional labor market – Belarus, the influence of the help of relatives and acquaintances in employment correlates with the earnings and position of the employee at the enterprise ^[18]. Thus, the impact of social capital on employment outcomes varies depending on the type of social connections used in employment and the conditions of functioning of specific national and regional labor markets.

The Internet is the second in the ranking among formal and informal job search channels. Its use as an effective employment channel was noted by 62.8% of applicants (see Fig. 3) ^[13]. Based on research data ^[19], it is safe to say that the main trend in employment strategies is shifting the advantage of search towards the use of Internet resources. And it is most pronounced in youth groups – 20-29 years old. In all age groups of job seekers in the labor market, there is approximately the same proportion of attracted alternative channels in the employment strategy. However, in the groups of applicants aged 20-29, there is a preponderance towards the use of Internet resources. But at the same time, social capital continues to be among the leaders. Moreover, with a noticeable advantage over other alternative employment channels. Applicants from 30 years old and up to the age group of 45 years turn to social capital and Internet resources in almost equal proportions when applying for employment. In the following age categories of job seekers in the labor market (from 45 to 60 years) there is a noticeable shift in priorities towards employment by means of using the opportunities of social capital.

The increasing popularity of the Internet as a job search channel is due to the fact that it provides opportunities for quick job search and provides opportunities to choose from a large number of diverse and attractive alternatives. It is obvious that the main factors of the growing popularity of this resource are also its capabilities such as: round–the–clock access, search convenience, efficiency, an expanded list of vacancies on websites, the advantages of an electronic resume, which is appreciated both from the demand side - by job seekers, and from the supply side - by employers, for whom it is characteristic to consider that the strategy Internet search is mostly used by the most qualified employees.

However, not only specialized employment sites can become a source of employment through Internet resources. The same social capital functioning on the Internet can become a source of career prospects. Becoming a part of the virtual social space, which is today a characteristic feature of the modern stage of development, social capital retains its adaptive capacity. Social networks and messengers are today strengthening their positions as platforms for posting active vacancies. And the message in them that a person is in search of a job today can increase the chances of quality employment. The social capital functioning in social networks and messengers, outlined by the applicant's social graph on the Internet, expands his entire egoset – the sum of all social connections and contacts of a person. That is, it increases the sum of all social connections and contacts of a person precisely by including indirect contacts in it – all contacts from the environment in social networks and messengers, determined not only by direct kinship and friendship. And for a person looking for a job, this means expanding the field of information. Both social networks and messengers on the Internet, included in the applicant's social graph, can unwittingly become for him, for example, an indirect source of information about the workplace.

So, a secondary analysis of sociological data shows that the demand for the strategy – Internet search and attraction of social capital, reaches a total of 70%, and the practice of appeals to state employment services is only 21.6%, appeals to non-state services – 12.0%.

If we look at the dynamics of job search channels in the Russian labor market (Figures 2 and 3), we will see that the use of the NHS in employment strategies has a traditionally low percentage. The weakness of formal state institutions in the modern Russian labor market largely determines the fact that today the frequency of involvement of informal employment mechanisms in employment strategies is growing.

A classic illustration reflecting one of the most serious institutional defects of the Russian labor market – the weakness, passive policy of the NHS and, accordingly, the uncertainty on the part of applicants in the effective search for decent jobs with its help, is the dynamics and ratio of such basic indicators of the labor market as the level of the general (according to the ILO methodology, based on sample surveys of the workforce) and registered unemployment. The trend of a steady gap between the two unemployment indicators, formed on the basis of very low registered unemployment rates, is universal for Russia. Consider the trends of the regional labor market (see Figure 5).

Figure 5. Dynamics of the levels of general and registered unemployment

in the Republic of Bashkortostan, % ^{[13; 15]}

Researchers often call this trend one of the "riddles" or "paradoxical features" inherent in almost all Russian regional labor markets ^{[3; 4; 20]}. Many of them, in particular R.I. Kapelyushnikov, see as objective reasons for this not only the purely statistical nature of the gap in indicators. But the main thing is that the registered unemployment reflects the institutional potential of the NHS. Despite the fact that the difference in the dynamics of the above unemployment rates in the regional labor market is decreasing, the gap has traditionally remained. It remains quite obvious, even despite some positive dynamics in the post-pandemic period and taking into account the current socio-political tensions. This is due to the fact that, for some reason, not every unemployed person, for example, registered according to the ILO methodology, is registered or seeks help from the NHS. And this is happening against the background of the fact that independent job search by job seekers, outside the NHS segment, is crowned with a fairly high performance. This is a characteristic feature of the modern Russian and its regional labor markets. As R.I. Kapelyushnikov notes: "... the Russian labor market constantly generated a significant number of vacancies, so that many unemployed people could successfully search without seeking help from state employment services" ^[20].

In addition, as sociological studies show ^{[17; 20; 21]}, motivation for independent job search among job seekers is traditionally high in the Russian labor market and in its regional segments. This is also confirmed by official data (see Fig. 2 and 3).

Also, based on the analysis of labor market indicators, another aspect is visible. And it is connected with a gender subtext, when the factor of stigmatization or social stereotypes regarding receiving benefits in the labor market is included in the basis of the motive for non-conversion of men to the NHS. As R.I. Kapelyushnikov notes, in Russian realities, the effect of this factor on men is more pronounced than on women. This is probably the explanation for the fact that in the Russian and its regional labor markets, it is men who are less likely to involve appeals to the NHS in their job search strategies than women. Thus, the official statistics data given above clearly demonstrate this aspect.

At the same time, among the objective factors constraining the popularity of such a formal employment channel as the NHS, there are still: high time costs; information asymmetry and incompleteness of information, a shift in the structure of vacancies in favor of working specialties; mandatory visits to employment centers and conversations with consultants. Many job seekers face a lack of incentives to confirm their status as unemployed in the NHS.

Insufficient efficiency of the NHS entails, on the other hand, distrust of job seekers or their dissatisfaction with the quality of services provided in the NHS (Fig. 6).

Figure 6. Level of satisfaction with the quality of services provided by the NHS, % ^[13]

Unfortunately, a large proportion of assessments fall on the lower part of the scale of satisfaction with the activities of the NHS. Statistical confirmation of the low popularity of formal state employment channels in effective employment strategies also actualizes the need to develop a set of measures to improve the activities of the regional employment service, which will complement the already proposed set of directions to support employment and reduce risks and threats in the regional labor market ^{[3; 22]}. Thus, one of the main directions for adaptation in the labor market should be the improvement of the network for informing about vacancies in the regional labor market. Priority measures should include: expanding the list of vacancies offered; expanding the possibility of remote (Internet) access to the databases of vacancies of the NHS; simplifying the procedure for recognizing the unemployed; improving the service culture.

In addition, in improving the activities of state intermediaries in employment and employment promotion, it is necessary to include the expansion of the application of the practices of the National Social Initiative in the direction: "Labor market and employment support" – the life situation "To get a job through the Employment Center of the population" by regional Employment Centers (TSN). At the regional level (RB), practices of organizing mobile educational classes on the basis of TSN with departure to remote areas could act as such; practices of organizing TSN internships for young specialists at enterprises of the republic in the most popular specialties in the region on the terms of providing housing for young specialists during the internship and paying for travel.

So, the data of available studies on the effectiveness of employment with the help of the NHS suggest that, in general, the use of their services is to a certain extent effective ^{[14; 18]}. However, an analysis of the intensity of the use of formal and informal mechanisms in employment has shown that, in general, the popularity of many formal employment intermediaries among job seekers is low (the NHS, private employment agencies, the media). At the same time, the state employment portal "Work of Russia", Trudvsem.ru it is also inferior in popularity to the largest online platform HH.ru mainly because of the low alternative of choosing vacancies. Such job search channels as social connections and networks, the Internet remain the most popular in effective employment strategies in the Russian labor market. But, it should be noted that the institutional state employment intermediaries themselves (regional employment services) in the recommendations on effective employment offer job seekers to use all kinds of sources of information about vacancies, at the same time activate the potential of their social networks and connections and actively include a request for employment assistance to friends, former colleagues, acquaintances, etc. in their strategies for finding a suitable job ^[23].

Thus, in the modern labor market throughout the Russian Federation, effective employment strategies are formed on the basis of convergence of formal and informal mechanisms for finding decent jobs. The convergence of formal and informal intermediaries becomes an adaptive mechanism for achieving decent employment in the modern Russian labor market. The intensification of the use by job seekers of such an informal employment resource as social capital is a reaction to the presence of characteristic institutional defects and features of the modern Russian labor market identified at the beginning of work. Thus, reducing the duration of unemployment is, perhaps, one of the objective and undoubted socio-economic effects of the use of social capital in employment strategies.