The Index of Working Conditions and Its Impact on Employment in the Regions of Russia

Abstract

The problem of inequality and unstable working conditions remains one of the key issues in Russia’s socio-economic development. Significant differences in wages, working hours, and social security of employees not only create a gap in living standards, but also increase territorial polarization. The COVID-19 pandemic and subsequent economic shocks have shown that traditional employment indicators are insufficient for a comprehensive assessment of the real situation in the labor market. The article discusses the development and testing of an integral index of working conditions, which allows a comprehensive assessment of employment and socio-economic differences in the regions of Russia. Special attention is paid to the issues of index verification: assessment of internal consistency through the Kronbach coefficient, as well as comparison of equilibrium and alternative aggregation schemes, including the Principal Component Analysis (PCA) method. The calculations showed the presence of three stable clusters of regions: the “core” with favorable working conditions (Moscow, St. Petersburg, the raw-material regions of the North and the Far East), the “middle belt” of industrially developed subjects of the Central and Volga districts, as well as the “peripheral zone” of the North Caucasus and Southern Siberia, where low wages remain high income differentiation and a significant proportion of informal employment. Regions with oscillatory trajectories demonstrating migration between groups are of particular interest. Their dynamics reflect the sensitivity of the index to changes in the economic environment and institutional conditions. A comparison of the basic and PCA-weighted versions of the working conditions index showed a high degree of consistency (r≈0.80-0.83) but also revealed areas of instability. The results obtained confirm that the index of working conditions can be used as an analytical tool for monitoring working conditions, assessing risks and developing targeted public policy measures in the field of employment and social protection.