"In August the general level of unemployment in Russia decreased by 15.3% in comparison with August 2011 and by 4.1%% in comparison to July 2012 at the beginning of September 3.955 million people were looking for work, or 5.2% of the economically active population according to an analysis by Rosstat (the result was according to the methodology of the International Organization of Labor through a survey of the population). 'This is a historic minimum,' according to Andrei Korovkin from the Russian Academy of Science's Institute of Economic Forecasting, 'The previous record was set in May 0f 2008 when 4.097 million people were looking for work.' According to the leading expert of the Center for Macroeconomic Analysis and Short-Term Forecasting Igor Polyakov, an even lower figure was achieved back in 1993, but back then Rosstat had a number of complications with its methodology, and so the figure from this August should be considered the record...
"In August, the unemployment rate in the United States was 8.1% and in the countries of the Eurozone it was at a historic maximum of 11.3% while the European Union's overall unemployment rate was 10.4%. The highest level of unemployment was in Spain (25.1%) and the lowest in Austria (4.5%). For comparison, in France unemployment was 10.3%, in the United Kingdom 8%, and in Germany 5.5%."
Does a lower unemployment rate mean that Russia's economy is now "better" than France's? Not really. A country can achieve a very low unemployment rate while still being relatively poor and having a number of serious structural issues. Matt Yglesias put it very well when he said:
"contrary to a lot of confusing commentary out there in the punditocracy, the problem of reducing unemployment is simply not identical to the problem of fostering long-term economic growth. In other words, Argentina is considerably poorer than the United States or even Spain and yet unlike the United States it's currently enjoying full employment and unlike Spain it's not currently in the midst of a catastrophic depression."
This is exactly right. Russia, you might recall, responded to its dramatic 2009 slump by engaging in one of the world's largest and most aggressive stimulus programs and by substantially cutting interest rates (the fact that these rates were really high going into the crisis and that Russia didn't run into the zero bound probably helped matters). All of this stimulus had the eminently predictable effect of boosting domestic demand, driving economic growth, and lowering unemployment.
Did the massive stimulus effort make Russia's court's function like Denmark's? Did temporary tax cuts makes Russian enterprises as transparent and productive as their German counterparts? Did running a large budget deficit make the Russian government as accountable and democratic as the Dutch? No, no, and no. Russia, in late 2012, still has a number of very serious structural problems. Unless these problems are resolved, they will prevent Russia from ever becoming anywhere near as wealthy as advanced Western countries.
But Russia's economy is, at the moment, not in some sort of death spiral: it's arguably in better health than it's ever been. Indeed the supposedly ineffective, bumbling, and rotten Russian government has formulated one of the more effective responses to the 2009 economic crisis, a response considerably more effective than the uncoordinated and half-hearted measures seen in most of the EU and far better than the actively harmful response of the UK government. This doesn't mean that Russia is on track to become some sort of economic hegemon, it's far too poor for that, but it does mean that its economy is not on a precipice of catastrophe and that this ought to color our impressions of the country's likely short-term trajectory: countries with growing economies and very low levels of unemployment don't typically collapse.
By Mark Adomanis
Forbes.com
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