'We Are Seeking to Translate Research into Policy Solutions'

Vice Rector Lilia Ovcharova

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Social Policy for Sustainable Development and Inclusive Economic Growth is one of HSE University's strategic projects. The project is aimed at translating scientific achievements into practical solutions for social and economic policy. HSE researchers and their partners have been actively involved in this work, and the first results have been obtained. In her interview with the HSE News Service, Vice Rector Lilia Ovcharova, Academic Supervisor of the project, spoke about what has been done so far.

— How did the idea of the project come about? How did you build the team?

HSE University is known in Russia and abroad for its research into the problems of human capital and human potential. Yaroslav Kuzminov, HSE Academic Supervisor, is a recognised expert in this field of scientific knowledge. Having created the Human Capital Multidisciplinary Research Centre, which united scientists from three universities and an academic institute, we saw a big gap between the well-established requirement for scientific publications and the requirements for developments used for managerial decision-making.

Therefore, we began thinking of conducting research whose results could be used for policy-making to improve the living standards of the population

The aim of the strategic project is to develop a national model for sustainable development. Russia is a country with high-quality human capital that can become a driver of development in an inclusive economic growth model.

— What are the key elements and stages of the project?

The priorities of our project are the concept of inclusive economic growth and evidence-based social policy. Many proposals to stimulate economic growth and increase the well-being of citizens have appeared in the public space, but few of their authors have evidence-based policy tools, so such tools need to be developed and put in place for general use.

A typical example is mortgages. Of course, the opportunity to purchase housing is a benefit that improves the quality of life of families. However, it would be a mistake to regard mortgages as a demographic policy tool that can increase the birth rate.

Families with below-average incomes who take out a mortgage after the birth of their first child adjust their reproductive intentions and decide not to have any more children until the loan is repaid

— What is the main feature of the strategic project ‘Social Policy for Sustainable Development and Inclusive Economic Growth’?

The development programme of our university involves a transition from individual and group research activities to large projects visible outside the university. This transition was ensured by research aimed at introducing a standard need-based allowance for families with children and pregnant women in Russia.

Our second U-turn is from isolated ideas to full-cycle projects, where developments are introduced into the educational process and also used as a case study for evidence-based policy. The strategic project has made a significant contribution to this U-turn. In particular, the research project on industry-specific sustainability models has launched a master's programme in Corporate Sustainability Management, and the Continuing Professional Development (CPD) initiative has launched three educational modules on ESG criteria.

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— What results do you expect from the projects and what have you done so far?

We are striving to implement our proposals, seeking to translate research into concrete policy solutions. For example, for many years we have been promoting a standard need-based allowance for families with children in Russia. This is quite a costly initiative. We had to convince politicians of its feasibility and propose a mechanism for its implementation. Many years ago, we supported the gradual introduction of this allowance for different age groups of children.

We are proud that our initiatives formed the basis for the decision to provide allowances for families with children aged 7–16 from July 2022 and for the need-based allowance for all families with children from January 2023

At the same time, we realised that the relatively generous poverty benefits were at odds with low wages. Given the generous benefit system, the low minimum wage demotivates some people to work harder. That is why we started promoting the idea of accelerated indexation of the minimum wage, and we were heard. Last May, it was decided to increase the pension, the living wage and the minimum wage by 10% from July 1. We believe that we should strive to reach the level of a minimum wage that is 1.5 times the subsistence level by 2030.

— What scientific work formed the basis of these decisions?

There are lively discussions in the scientific community about the impact of raising the minimum wage on employment and the economy. Some authors argue that raising the minimum wage increases the number of unemployed people and has a negative impact on economic development. Others, on the contrary, argue that it has a positive effect on the market, helps eliminate low-quality jobs, increases wages in the informal sector and, as a result, increases labour productivity.

Our research has proved that raising the minimum wage can be an important for stimulating economic growth and increasing productivity for the Russian economy

Firstly, we have a high employment rate but a low share of labour in GDP: 42–43%, compared to the 50%+ in countries with more extensive levels of human capital use. This means we have a macroeconomic window of opportunity to increase labour contribution to GDP.

Secondly, we were able to prove that if we increase the minimum wage by 10% at a time when inflation is low, the main negative consequences of such a decision (the transition to part-time work, increased unemployment) will not have a significant impact on the economy and the labour market. If the minimum wage increases when inflation is high, even a 20% increase does not lead to statistically significant negative changes in the economy.

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— What other scientific achievements do you think are important?

I would primarily mention the study of platform employment and the recently published report on this study by the HSE Institute for Social Policy. Our researchers previously focused on the study of qualified platform employment.

However, life has shown that platforms are primarily opportunities for those in difficult situations, so these platforms are in demand among people who have failed to find employment in the standard market

This is an important outcome: attempts are now being made to develop tools to regulate platform employment, and it is important to understand that it is highly differentiated in terms of the quality of workers and the content of their work.

Another important case study is the research into productivity change factors during the non-market crises of the 1990s, the 2020 pandemic, and the current one. This research was conducted by the Centre for Productivity Studies led by Ilya Voskoboynikov.

The Centre found that between 1995 and 2002, labour reallocation was the main tool of productivity growth. In the 1990s, it was facilitated by high inflation. In the current crisis, we have no room for structural manoeuvring because of high inflation. Therefore, for effective labour reallocation, we should employ mechanisms of re-training and packages to increase territorial mobility, such as a mortgage programme to help workers who move to the location of their new job to buy a flat or a house and sell it at their previous place of residence.

Yet another important result is the systematisation of the effects of sanctions on the affected economies

The structure of the economy changes under sanctions and this can be the key to success if we trigger drivers of change and remove constraints on economic and entrepreneurial activity. We have also understood that foreign direct investment has not left countries despite the sanctions.

There is also a negative impact: inequality is growing, not poverty. Although poverty in Russia is cushioned by social support programmes, low-income groups tend to be at risk of falling incomes because of sanctions. Raising the minimum wage to the level of two subsistence levels would curb the growth of inequality. In addition, economic productivity is declining despite import substitution measures.

We also continue to explore the topic of active longevity and increasing life expectancy at older ages. A group of demographers led by Mikhail Denisenko has seen a failure of investment in the health of people over 75 years old. There has been obvious progress in the 50–65 age group, but there is still a lot of unrealised potential in improving the quality of healthcare for people over 75 in Russia.

Finally, labour market monitoring has examined the specifics of the employment of university graduates by field of study and type of university.

The team led by Sergey Roshchin has shown that students who combine study and work earn more at the start of their careers, so this combination is the right track for many professionals

HSE University has excellent competencies at developing tools to promote economic growth and sustainable social development. We used to prefer publishing papers based on our research results. The priority of our current strategic project, however, is the practical implementation of key findings and recommendations.

— How often can you apply scientific approaches to practical solutions?

Many decisions take a long time to be pushed through; personally, it often took me decades.

My colleagues and I have been pushing for family placement of orphans since the 1990s. Back then we were told that no one would take them in, but over the years this has become a common practice

I hope that the process of raising the minimum wage to the amount of two subsistence levels and creating a system of long-term care for the elderly will not take so long.

— What departments and research teams are involved in the project inside and outside of HSE University?

The strategic project unites about 20 HSE divisions, including our St Petersburg Campus. You can find their names on our website. The external participants are our partners in the consortium of the Human Capital Multidisciplinary Research Centre, which in addition to HSE University includes RANEPA, MGIMO, and the Institute of Ethnology and Anthropology of the Russian Academy of Sciences.