In this article, we study the minimum wage setting reform in Russia that aimed to decentralise the fixing of the minimum wage and to increase the involvement of social partners into this process. The old system of minimum wage setting was based on a single nationwide minimum wage which was differentiated across regions and occupations via a cumbersome framework of coefficients. The new system is a mixture of the government-set minimum wage at the federal level and collective agreements at the regional level. We show that the system of minimum wage setting has become more flexible. The reform succeeded in raising the real value of the minimum wage and increasing earnings of low-paid workers without causing significant negative effects in terms of employment. The reform did not lead to greater regional variation of minimum wages. Nevertheless, it introduced some new imbalances: an unintended consequence of the reform was the emergence of separate regional wage sub-minima for private and public sector workers in many regions. The major challenge in coming years is to strengthen the institutions of collective bargaining, introduce evidence-based evaluation and boost the capacities of government and non-government monitoring agencies.
Youth unemployment rates in most countries are considerably higher than total unemployment rates and increased significantly in many countries following the global financial crisis. Young people in long-term unemployment risk becoming a ‘lost generation’. We investigate individual and family characteristics predicting young people’s vulnerability to the scarring effects of long-term unemployment. After overviewing aggregate youth unemployment trends in several European countries, we focus on Russia and Italy – countries with contrasting structural and institutional conditions and exhibiting different macroeconomic trends – in order to determine whether, despite these differences, there were similar patterns in the relationship between individual and family characteristics and the of risk of unemployment and its adverse impacts. We use a Heckman probit model to estimate the unemployment risk of young people – compared to adults – during the period 2004–2011, before and after the global financial crisis. Despite many differences between the two countries, most of the explanatory variables acted in the same direction in each and so we compare the relative size of such effects. The policy significance of the findings is that personal and family characteristics are more amenable to modification than macroeconomic variables. Specific school-to-work interventions are needed to avoid creating a ‘lost generation’.