Diversity within capitalism: the Russian labour market model
| Date | 28 June 2011 |
| Pages | 395-412 |
| DOI | https://doi.org/10.1108/01425451111142693 |
| Published date | 28 June 2011 |
| Author | Rostislav Kapelyushnikov,Andrei Kuznetsov,Olga Kuznetsova |
| Subject Matter | HR & organizational behaviour |
Diversity within capitalism:
the Russian labour market model
Rostislav Kapelyushnikov
Institute of World Economy and International Relations,
The Russian Academy of Sciences, Moscow, Russia
Andrei Kuznetsov
Lancashire Business School, Preston, UK, and
Olga Kuznetsova
Manchester Metropolitan University Business School, Manchester, UK
Abstract
Purpose – The purpose of this paper is to investigate labour market practices in a transition
economy in relation to broader institutional configurations.
Design/methodology/approach – Through a review of relevant literature and the analysis of
statistical data the paper reveals some specific factors influencing labour market practices in a
transition economy.
Findings – The paper establishes a link between inefficient enforcement and the emergence of
compensating institutional arrangements on the one side and the unusually broad implementation of
flexible working time and flexible pay on the other as a crucial factor that made the stabilization of
employment in Russia possible.
Originality/value – The paper reveals how a formal regulatory system, which on the face of it is
similar to what is a norm in the majority of European countries, may coexist with a distinctive labour
market model and explores issues of relevance to academics, researching in the field, policy-makers,
human resource managers, employers and employees.
Keywords Employment,Enforcement, Institutions, Russia
Paper type Research paper
1. Introduction
Although originally dealing with firms and their role in the process of economic
adjustment (Hall and Soskice, 2001), with time the varieties of capitalism (VoC) concept
expanded to include the meso and macro levels as well. Following this trend the
current paper focuses on the labour market and labour relations system, which
literature identifies among the institutional features that distinguish the different types
of capitalism (Tat Yan Kong, 2006). If the employers choose to rely on skilled and
experienced employees producing complex quality products as their business strategy,
such strategy fosters a whole set of consequences in terms of training provisions,
decision-making respo nsibilities, autonomy , task quality, teamwork, employee
motivation, etc. This creates skills specificity at company and industry levels that
helps to establish long-term relations between employers and employees, increasing
job security and employee well-being, and eventually translating into a more stable
rate of employment. Literature usually holds these features to be more typical of the
so-called “coordinated market economies” (Gallie, 2007; Harcourt et al., 2007), in which
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Diversity within
capitalism
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Employee Relations
Vol. 33 No. 4, 2011
pp. 395-412
qEmerald Group Publishing Limited
0142-5455
DOI 10.1108/01425451111142693
firms generally have greater strategic interaction with local stakeholders and other
actors such as suppliers and trade unions.
In this paper we seek to probe the labour market in Russia within the framework of
the VoC approach. Its noticeable attribute is that employment has always been
relatively stable despite a sequence of economic shocks that it had to withstand.
Surprisingly, correlation between changes in GDP and employment dynamics has been
weak, which distinguishes Russia from the transition economies of Central and Eastern
Europe where the employment dynamics have been following changes in economic
growth more intimately. May this be interpreted as a sign that the institutional system
in the country is moving towards a coordinated type? In search for answers we look at
employment conditions in modern Russia.
There is a substantial body of publications dealing with the labour market in Russia
(notably Boeri and Terrell, 2002; Commander and Tolstopyatenko, 1997; World Bank,
2003), however they do not embrace the institutional setup as their main focus, while
the current paper does. Our approach is influenced by the view expressed in literature
that entrepreneurial actors are constrained by institutions, but at the same time
perceive institutions as resources and are looking for ways to make institutions work
for them (Hall and Thelen, 2009; Streeck, 2004). As Streeck and Thelen (2005, p. 19)
explain, “[...] institutions are the object of ongoing skirmishing as actors try to achieve
advantage by interpreting or redirecting institutions in pursuit of their goals, or by
subverting or circumventing rules that clash with their interests.” In line with this
thinking we scrutinise the enforcement regime in Russia as we seek to explicate why
the formal regulatory system, which on the face of it is so similar to what is a norm in
the majority of European countries, may coexist with a labour market model so
distinctive in many respects. To preview our findings, we find a link between
inefficient enforcement and the emergence of compensating institutional arrangements
on the one side, and the unusually broad implementation of flexible working time and
flexible pay as the two crucial factors that made the stabilization of employment
possible on the other. The example of Russia, therefore, confirms the thesis that in the
modern world the pressures for convergence are counteracted by idiosyncratic national
institutional arrangements which are the outcome of specific historical pathways,
interlinked in a complex whole and persistent over time (Whitley, 1999). At the same
time our analysis emphasises the limitations of an approach based on a bi-polar model
(CME versus LME) understood too literally. Institutional systems, in transition
economies in particular, prove to be difficult to classify as they continue to develop in
response to economic and social pressures. Accordingly, in the final part of the paper
we look at how the Russian model of the labour market has reacted to the current
economic crisis.
2. VoC, institutions and enforcement
Within the rather wide spectrum of comparative capitalisms literature Hall and
Soskice’s (2001) VoC paradigm has established itself as one of the most influential
conceptual frameworks (Deeg and Jackson, 2007). VoC theory makes two important
contributions that are particularly relevant to this research. First, it puts social
institutions in the centre of comparative analysis, maintaining that institutional
variation across nations is economically significant because institutions are critical in
determining the quality of the relationships the firm is able to establish internally (with
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