The critical environmental and sustainability issues of Russia:
- Lack of Manpower
Russia, which currently has a population of 146.9 million, has lost more than five million inhabitants since 1991, a consequence of the serious demographic crisis that followed the fall of the Soviet Union. The first generation born in the post-Soviet years, which were marked by a declining birth rate, is now entering the labour market, which is likely to see a shortage of qualified manpower and a resultant curb on economic growth. This new, smaller generation, is also reaching the age to have children, which has resulted in a further drop in mortality in 2017. “Within the next 10 to 15 years, Russia will have fewer young people- so a young specialist with new skills – interpersonal and technical, including computer programming – will be worth gold,” former finance minister Alexei Kudrin said recently.
- Retirement Age
The retirement age in Russia – 55 for women and 60 for men – is among the lowest in the world. While state pensions are very low, with the demographic decline the system still represents a growing burden for the federal budget. Putin has said several times that reforms would be necessary but has so far always judged that the moment for them had not yet arrived. While liberals like Kudrin advocate a gradual increase in the retirement age to 63, tampering with this Soviet-era social benefit may prove unpopular in a country where retirees often have trouble making ends meet with their meagre pensions.
- Diversifying the Economy
The economic model that saw high energy prices fuel meteoric growth during Putin’s first two terms in power from 2000 to 2008 has run its course. Rich in vast reserves of hydrocarbons, Russia is at the mercy of fluctuations in their prices, as shown by the 2015-2016 crisis. The economy remains structurally dependent on the commodities sector, which is clearly negative for the growth outlook. To wean itself off this dependence, Chris Weafer, founder of consulting firm Macro Advisory, suggests investing in entrepreneurs and small businesses by making “money for investment and consumption more affordable and more easily available”. He also said that Russia should encourage investment into “robotics, smart technologies, artificial intelligence”. As an example of what can be achieved, Lev Jakobson, first vice rector at Moscow’s Higher School of Economics, points to “quite impressive growth in the productivity of the agricultural sector”, which has broken harvest and export records in recent years.
Corruption significantly impedes businesses operating or planning to invest in Russia. High-level and petty corruption are common, especially in the judicial system and public procurement. The business environment suffers from inconsistent application of laws and a lack of transparency and accountability in the public administration. Russia’s regulatory inefficiency substantially increases the cost of doing business and has a negative effect on market competition. The Russian Federal Anti-Corruption Law requires companies to actively implement anti-corruption compliance programs. However, compliance with these provisions in practice is lagging behind. Russian law criminalizes active and passive bribery, facilitation payments, gifts and other benefits. However, effective enforcement of anti-corruption legislation is hindered by a politicized and corrupt judicial system.
Russia’s law enforcement and security officials have committed more crimes in 2018 than they did the previous year, according to a media report citing official data. Authorities investigated 6,613 crimes committed by members of 10 key security and law enforcement agencies in 2018, according to data from the Russian Prosecutor General’s Office. The number of investigated crimes at the 10 key agencies increased by 8.4% from 6,101 in 2017, while the number of investigations among all law enforcement officials decreased by more than 40% in 2017-18. Police officers committed the most crimes in absolute numbers, with 3,819 preliminary investigations into Interior Ministry officers last year. Prison service officials followed with 1,018 investigations and bailiffs with 681.