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17.04.07
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A Laborious Process
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By Josh Wilson and Tanya Chebotareva
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Russia’s New Approach to Illegal Migration Offers a Partial Solution.
The new amendments to Russian migration legislation came into effect on Jan. 15, 2007, making it easier for CIS citizens to be employed in Russia. Now these workers can obtain work permits from the Federal Migration Service (FMS) by themselves, and employers only need to notify the State Employment Agency upon hiring a CIS citizen.
At the same time, punitive measures for hiring illegal labor have been intensified. Employing a foreign citizen without a work permit is punishable by fines from 250,000-800,000 rubles ($10,00-$31,000) for corporations. Furthermore, the fine is applicable for each illegal employee, not for each case where violations are found. A business may also be forced to suspend its activity for up to 90 days as further punishment.
The new convenience of obtaining work permits has resulted in a proliferation of them. During the first month and a half of this year, 150,000 people were issued the right to work in Russia – three times more than last year. At first glance, these new regulations provide some hope for Russia’s labor shortage and demographic problems. However, officials say that the new laws have not been designed for those coming to Russia to work, but for those already there. Thus, it can be seen not so much as a measure to increase the labor force, but as one to eliminate the gray areas from Russia’s current labor force – and perhaps generate more tax revenue in the process.
Since the Russian economy has grown much faster than those in most other former Soviet republics, illegal immigration and illegal employment in Russia has become a major problem. By FMS estimates, there are currently 10-12 million illegal immigrants in Russia. Only 1.4 million immigrants are working in Russia legally, according to Mikhail Zurabov, Russia’s Minister of Health and Social Development.
Many government officials think that granting amnesty is unpractical. They explain that such a policy can be useful in Western countries where migrants often live in the same location for a number of years and can almost be considered citizens. Most immigrants who come to Russia have no intention of long-term residency. The goal is to make as much money as possible and then to return to families in their home countries to build businesses and homes there. Thus, the amnesty will likely not result in a more stable labor force, and might actually contribute to capital flight from Russia.
Nevertheless, the FMS is starting a program to legalize these immigrants in the near future. The Ministry of Justice has made several recommendations concerning how the new policy should be implemented. Workers who have resided in Russia for longer than 90 days without a migration card should still be able to obtain a work permit, although 90 days is the maximum time that immigrants have to find legal employment after arriving to Russia.
In order to take part in the amnesty, immigrants should submit an official declaration explaining why they have no migration card, present a work contract to begin after the work permit is obtained, as well as proof of immigrant registration, issued by the employer on the work contract. The applicant also has to present medical certificates demonstrating the absence of certain infectious diseases such as HIV/AIDS and that they are not addicted to illegal drugs.
Critics in the government argue that the proposed regulations will not be effective, partially for economic reasons. While not requiring departure and re-entry will save the immigrants time and money, the required medical tests can be quite expensive, and these individuals do not have rights to the free medical service offered to Russian citizens at state clinics.
Adding the medical tests to the 2,000 ruble ($80) fine and other associated costs and fees, the total cost could easily add up to more than 5,000 rubles ($190). For many immigrants, this is more than a monthly wage. In a country where many employers like construction companies prefer to hire employees illegally to avoid regulations and taxes, immigrants who are in Russia simply to make fast money will likely ask themselves why they should even bother.
Most employers agree that the proposed regulations are perfectly reasonable. Medical tests will help prevent diseases from entering Russia; work contracts will protect the rights of both migrants and employers. However, under the current bureaucracy, it is still difficult and expensive for employers to process work permits. According to present requirements, fees and charges can add up to 13,000 rubles ($500) and require 3-4 days of taking documents from office to office.
Large companies are more likely to undergo official inspections, leading to greater compliance with the new laws or a decrease in hiring immigrants. However, most businessmen think that small enterprises will continue to operate much as before.
Quota System to be Extended.
In a further effort that may restrict legal immigration to the Russian Federation, the government plans to extend the controversial employment quotas introduced earlier this year. For now, such quotas exist only in the area of retail sales, where immigrants are limited to 40 percent of available jobs. As of Apr. 1, 2007, immigrants were prohibited from working as retail sales agents altogether.
Critics contend these measures led to increased prices for consumer goods and job cuts, further restricting a strained labor market in Moscow. Nevertheless, the government plans to extend the quotas to several other professions by the end of 2007. These quotas will be determined from information currently gathered by the government from employers. Employers must apply to the government for approval before they hire foreigners, and must state the education and profession of the foreigner on their application form. Based on information gathered from these forms, the relevant Russian ministries will create migrant labor quotas that will take education and profession into account.
The Moscow government has already begun creating a commission that will oversee compliance with the new legislation in the booming local construction industry.
Like the amnesty proposal, critics charge that this plan will also fall short of its goals. Businessmen are already bypassing current quotas by simply declaring workers as sales managers, marketing specialists, logistics engineers or other professions not applicable under the current legislation. Many companies simply do not register the workers.
Russia’s labor market remains complex and filled with gray areas. Whether the new legislation will be effective in relieving certain current problems has yet to be seen.
Tatyana Chebotareva and Josh Wilson are market analysts with Alinga Consulting Group, a company providing accounting, audit, legal, and human resources services in Moscow. |
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