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New Economy - New Opportunities

The 7th Youth Economic Forum “New Economy - New Opportunities” was held in Petrozavodsk on November 12-14, 2015. Being a discussion platform, it gathered over 200 young scientists and specialists dealing with theoretical and practical issues of social and economic development. They came from different regions of the Russian Federation and foreign countries. Four exchange students of PetrSU from Finland and Germany attended the Forum’s general plenary, a round table dealing with cross-border cooperation, and a lecture about the paradoxes of the Russian labor market. The two of them shared their impressions with us.

Olli Rönkä, University of Oulu, Finland, round-table session “Entrepreneurship and cross-border cooperation”
This session was held in the Institute of Economics and it consisted of eight speakers from Russia and Finland. The speakers represented either businesses, public governmental bodies or educational bodies from each side of the border. I found this session very useful, since I’m specialized in cross-border cooperation between Finland and Russia. The session gave me new insights and new perspective for the subject.
I found the Deputy Minister of Ministry of Economic Development in Republic of Karelia, Dmitry Kislov’s presentation the most interesting. He talked about the new Karelia ENPI CBC program for the period 2014-2020, its current situation and future prospects. He emphasized that the new program has some new changes compared to the last program and that the program’s regions have more power to decide their development priorities – even though the decision process is still highly top-down with Brussels as the main decisive body. Small and medium enterprises are in the major part of funding and their networking across the border is one of the priorities. He said that one of the problems in this upcoming program is rather partial: projects, which align under the top-down set priorities get more funding. That gives unfair advantage to these projects. Lastly he revealed that application process for funding starts at some point next year. This topic is very close to my thesis’ topic and therefore I found his presentation fascinating.

Caroline Finkeldey, University of Bremen, Germany, lecture on “Paradoxes of Russian labor market”
The Youth Economic Forum was quite interesting for me, even though I don’t study economics. Especially the talk of Dmitry Kislov and the lecture about the Russian labor market provided me with new, useful information.
The lecture on paradoxes about the Russian labor market was held by Vladimir Gimpelson from National Research University “Higher School of Economics”, Moscow, and dealt with the current situation at the Russian labor market and which things make it specific. All labor markets have their own regulations and norms, but at least in Western countries a general pattern can be seen. When there is a crisis or an extern shock, sales decrease and companies start to fire people, while the salaries stays the same though. This means, that in the economy, the unemployment rate will rise, while the average salary stays stable. The labor markets works using supply and demand. In Russia though, this is not the case. Looking at statistical data from the last 20 years, it can be seen, that when the GDP is falling due to a crisis, that the employment rates stays stable, but the salaries decrease. This can be explained by different factors. Already in the USSR it was common, that even if there was not enough work for everyone, people would still come to their jobs and would just pretend doing something. In today’s Russia the workers union still have a big power over the employers and can force them not to fire people. Most workers’ contracts are stable ones, as well, so the employer also has no legal rights to dismiss people. As the company still has to be run economically, therefore the salaries will be dropped. This could also be seen in 2015, when the employment rate stayed stable, but salaries dropped, so other family members, e.g. teenagers, pensioners, would start working to provide for their families. Another paradox at the Russian labor market is the surprisingly low unemployment rate. This can be explained by wrong counting and people not declaring themselves as unemployed, as they don’t want to rely on the institutions, but rather search for work on their own or work informally paid.

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