Employment Restructuring in Russian Industrial Enterprises

Labour market developments in post-Soviet Russia have presented liberal economists with an apparent paradox: the absence of mass compulsory redundancies in the face of substantial collapse in output. The seemingly irrational `labour hoarding' in Russian enterprises has been interpreted as either influenced by workers choosing a wage cut in exchange for job security, or enterprises resisting redundancies in order to obtain state funding, or as a result of rent-seeking firm behaviour. However, systematic research on employment decision-making in industrial enterprises presents another picture. By combining documentary sources with interviews conducted in six industrial enterprises in Russia, this article will suggest that the disproportionate correlation between employment and production decline lies in the fact that the acute technological and structural degradation of the post-Soviet economy has resulted in enterprise adjustment being made through demand for labour.