International Journal of Mechanical Engineering and Technology (IJMET)

(IJM
Volume 9, Issue 12, December 2018,
201 pp. 83–90, Article ID: IJMET_09_12_010
Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=12
ISSN Print: 0976-6340
6340 and ISSN Online: 0976-6359
0976

© IAEME Publication Scopus Indexed

FEATURES OF THE LABOR

LABOR MARKET
CRISES: SOCIAL CONSEQUENCES
CONSEQUENCES
Olga Sergeevna Schmidt, Ekaterina Konstantinovna Samrailova,, Alina Borisovna
Veshkurova
Russian University of Transport
ransport (RUT (MIIT), Obraztsova str, d. 9, p. 9,
Moscow, 127994, Russian Federation

Sergey
ergey Aleksandrovich Shapiro,
Shapiro Inna Vitalievna Filimonova
Academy of Labour
abour and Social Relations
elations (Atiso), Lobachevsky str., 90, Moscow,
119454 Russian Federation

ABSTRACT
The article aims at determining the social consequences
consequences of labor market crises
expressed
ssed in the growth of social and occupational tension. The authors analyze the
impact of the labor market crisis on the scale and structure of labor migrations and
socio-economic
economic characteristics of labor migrants’ employment. It is shown that the
emergence of social and occupational tension in the state entails tension in all aspects
of living environment that leads in turn to an imbalance in the labor market of the
country. It is proved that the balance between the advantages and disadvantages of
labor migration
ration as a consequence of the crisis in the labor market is established to the
benefit of the host country.
Keywords: Labor Market Crisis, Social Tension, Occupational Tension, Labor
Migration.

Cite this Article: Olga Sergeevna

Sergeevna Schmidt, Ekaterina Konstantinovna Samrailova,
Alina Borisovna Veshkurova, Sergey Aleksandrovich Shapiro and Inna Vitalievna
Filimonova,, Features of The Labor Market Crises: Social Consequences,
Consequences International
Journal of Mechanical Engineering and Technology, 9(12), 2018, pp. 83–90.
83
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1. INTRODUCTION
The labor market is a set of social and labor
labor relations between buyers and sellers concerning
the employment and labor use conditions. The implementation of employment relations is
based on the supply and demand mechanisms, and determines the quantitative and qualitative
parameters of labor reproduction.
tion. As a result, a certain balance of interests of employees and
employers is achieved, which contributes to the development of the national economy.

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IJMET/index.asp 83 editor@iaeme.com
Olga Sergeevna Schmidt, Ekaterina Konstantinovna Samrailova, Alina Borisovna Veshkurova, Sergey
Aleksandrovich Shapiro and Inna Vitalievna Filimonova

The employment sector can be considered as a kind of litmus test, which characterizes the
general macroeconomic situation in the country, the structure of its national economy, the
level of development of market forms of economy management, institutional support of social
and labor relations, and the level of entrepreneurial activity of the population. The
imperfection of the employment composition is both a consequence of the deep economic
crisis and one of the obstacles to overcoming it.
Overcoming the problems of high unemployment (overt and covert) and low-productivity
employment of the population is necessary condition to form prerequisites for economic
growth. For this reason, the study of international experience in ensuring productive
employment of the population is becoming increasingly important.

2. SOCIAL IMPLICATIONS OF THE LABOR MARKET CRISIS

The researchers recognize that the most acute problem of the crisis in the labor market is the
unemployment of the able-bodied population. It is defined as a social evil, because this
phenomenon has a number of extremely negative consequences. At the macrosocial level,
first of all, the following should be highlighted:
1. marginalization and poverty of certain population groups (occupational, gender, and age
groups);
2. the emergence of undesirable migrations;
3. the growth of social pathologies and manifestations of antisocial behavior, and as a
consequence, the formation of a criminal situation;
4. the formation of radically-minded subcultures;
5. strengthening social tension and instability, as well as increasing the level of conflictogenity in
the society or region: in world practice, the unemployment of 8 to 10% of population is
considered as critical threshold [1, p. 89].
6. Kara-Murza S.G. notes that in social terms unemployment is not only a field of social
problems, but also the source of massive suffering [2, p. 542]. The consequences of
unemployment at the microsocial level, in his opinion, include:
7. restriction of social opportunities of the individual, confidence in the future, a sense of
security, freedom, and the like;
8. the threat of degradation of the individual due to the loss of social ties, excommunication from
the workforce as a social environment, established way of life, resulting in a feeling of
uselessness to society, hopelessness, in the worst cases a person chooses antisocial behavior,
embarks on a criminal path;
9. negative impact on human health, primarily in psychological and moral terms, resulting in a
depressed state, which can contribute to the involvement in drug or alcohol addiction, or push
to suicide;
10. the unemployment undermines relations in the family due to the lack of income needed to
meet the material needs of the family, as well as through certain psychological effects such as
the loss of the breadwinner role, apathy, which necessarily entails family squabbles, finally,
the stigmatization of the "family of the unemployed".
Specifically, social and occupational tensions should be mentioned as the social
consequences of the labor market crisis.
Social tension, regardless of whether it has been growing gradually or escalated within a
short period, leads to the emergence of social conflicts that undermine the foundations not
only of social, but also of national security in general. The refore, ensuring social stability
becomes one of the important tasks for the state leadership.
Social tension is generated by the dissatisfaction of collective expectations regarding the
provision of a certain set of benefits, which can be considered as socio-economic

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 Features of The Labor Market Crises: Social Consequences

determinants of social harmony. At a time when social tension becomes a form of destructive
social reaction (conflict, denial of recognition, sabotage, passivity, destructive and hostile
actions), it creates a threat to national security. Monitoring of social sentiments (forming a
subjective aspect of social tension) and determination of social well-being deterioration
factors based on the statistical data analysis (objective aspect of social tension) are the main
prerequisites for the formation of balanced managerial decisions on the distribution and
redistribution of public resources [3].
To monitor social sentiments, it is necessary to classify the social tension factors (Table
1).

Table 1 Social tension factors [4]

Factor Characterization
Material security It is measured in the regions based on the parameters characterizing both the level
of self-sufficiency and the level of social protection
Tensions in It is characterized by the following parameters: the unemployment rate; the
employment proportion of full-time employees, who were in conditions of forced part-time
employment; the average duration of job search by the unemployed; the level of
load on the workplace; the level of employment.
Medical and It plays a special role in the formation of social well-being, the unsatisfactory
demographic condition of which is one of the main prerequisites for the emergence of social
situation tension. It is evaluated based on the following parameters: the level of premature
mortality; average life expectancy; primary disability; infant mortality rate; divorce
rate; rate of natural increase; and net migration rate.
Living conditions High quality of life is a necessary condition to form and implement social capital,
and is also the basis to ensure social stability. Living conditions are assessed by the
following parameters: a housing; number of hospital beds; level of coverage of
children by preschool institutions; crime rate; conviction rate; per capita capital
investment in the region; and the quality of drinking water.
Together, these factors are the main indicators of social protection of citizens. First of all,
they objectively demonstrate the quality of the state's performance of social functions. In
addition, indicators of social security, based on compliance with basic social standards serve
as a basis for subjective assessment by the population of the satisfaction level of their own
economic interests and needs. The situation of chronic dissatisfaction of population’s needs
leads to deterioration of social well-being of citizens, which can be one of the prerequisites
for the emergence of social tension.
Employment tension, which leads to general social tension among the population, is
characterized as occupational tension, because the labor shortage arises under the influence of
unregulated occupational mobility of the country's labor resources. Factors of occupational
tension emergence can also be divided into several certain significant groups (Table 2).

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Olga Sergeevna Schmidt, Ekaterina Konstantinovna Samrailova, Alina Borisovna Veshkurova, Sergey
Aleksandrovich Shapiro and Inna Vitalievna Filimonova

Table 2 Occupational tension factors

Factor Characterization
Wage level Highly skilled employees often earn less than those with secondary education that
may be the impetus for a change of profession to a less prestigious, but with higher
salary.
Tension per Supply exceeds demand per workplace by 300%
workplace
Lack of core of An excessive number of specialists in the most popular professions (economist,
employment lawyer, etc.) do not allow newly-minted graduates to fulfill themselves, so they are
forced to work not by specialty.
The crisis in the labor markets has also an impact on the scale and structure of migration,
and socio-economic characteristics of employment of migrant workers. Therefore, in our
study we analyze this effect in more detail.

3. LABOR MIGRATION AS A CONSEQUENCE OF THE LABOR

MARKET CRISIS AND ITS EFFECTS
Migration pressure has increased significantly over the past three decades in consequence of
rapid globalization. The following are the main factors contributing to the increase in
migration flows:
• inequality among countries in terms of real wages and living standards, deepening property
differentiation of the population, increasing the number of social groups living below the
poverty line, and the lack of decent work at home country;
• the liberalization of economic activities, functioning of transnational corporations, and the
formation of global integration networks that leads to the internationalization of production
and geographical expansion of trade, as well as requires the free movement of human
resources;
• demographic crisis and general ageing of population in developed countries, demographic
explosion in developing countries; and increasing the scope of urbanization;
• cheapening of transport and communication services, the possibility of on-line interaction
through the global Internet;
• deepening of differences among individual countries and regions in the levels of protection of
citizens' rights and freedoms, the state of personal security; as well as political instability;
civil, inter-ethnic armed conflicts causing an increase in the number of refugees;
• aggravation of global problems of mankind, including resource supply, climate change,
namely global warming, devastation, natural disasters, the risk of flooding and hunger.
Estimates of the importance of migration processes for social development are ambiguous,
because migration, which is an integral and one of the most characteristic features of the
modern dynamic way of life, has both positive consequences as well as negative effects.
Positive factors include redistribution of the global labor resources, equalization of the degree
of economic development, overcoming differences in the living standards of the peoples in
different countries, migrants' remittances to the countries of origin for household consumption
and investment, as well as rapprochement, interpenetration, and mutual enrichment of
cultures. Negative consequences are associated with changes in the reproductive behavior of
migrants; weakening and breaking of family ties; spreading of a welfare mentality among
family members of migrant workers; loosing skilled employees and the intellectual potential
of the state; deskilling of specialists; assimilation and loss of ethnic background and cultural

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 Features of The Labor Market Crises: Social Consequences

self-identification; the lack of social protection of migrants, discrimination, and xenophobia;

the growth of illegal migration, forced labor, and human trafficking.
A positive effect of the outflow of certain skilled employees for countries of their origin is
the reduction of unemployment. In countries where the labor market is unable to absorb the
available domestic labor force, emigration eases financial pressure on the state and reduces
unemployment. If the system of higher education has expanded to the limit, where it is
difficult to effectively attract graduates to the labor market or there is a mismatch among the
specialties and the real needs of the economy, the loss of unclaimed specialists through the
immigration is minimal.
The outflow of highly skilled employees from countries of their origin is a common
negative consequence of migration changes caused by the labor shortage in certain strategic
industries, as well as intense technological change and the interest of individual countries in
reducing the costs of human potential formation. The country of origin is losing the human
potential of high quality and the means to build it, thus hindering economic and innovative
development. The UN estimates the funds lost on education of potential migrants at 2 bln
USD per year [5]. The country of destination receives high-quality human resources and saves
money on their formation, thus stimulating economic and innovative development. The
outflow of professionals leads to a general decrease in skills, deterioration of the human
potential quality and, accordingly, a decrease in the investment attractiveness of the country.
The most negative impact is caused by the departure of a small group of scientists, whose
achievements determine the scientific and technological progress in the country of origin.
This effect is largely magnified by the fact that these scientists usually work with university
students and postgraduates, and thus their departure affects the formation of the future
educational, intellectual, and innovative potential of the country of origin. Emigration of
scientists and university professors contributes to the further emigration of talented students.
This development threatens to destroy scientific schools created over the decades, as well as
to degrade the academia at the national level. Training of students abroad and providing them
with opportunities for further employment in the country of destination leads to the loss of
potential qualified personnel and reduces human potential in the countries of origin.
The outflow of highly qualified specialists leads to a decrease in tax revenues to the
budget. Skilled employees pay more taxes and require less support from the state social
security system.
Thus, in the event of migration, the cost of human capacity building to countries of origin
does not pay off.
At the same time, in some cases, the prospect of emigration may lead to a partial increase
in human potential in the countries of origin. The demand for highly skilled employees in the
international labor market encourages potential emigrants to improve their skills, and thus to
build human capacity in their country of origin. Potential employees can expect to earn higher
incomes abroad, and therefore they are motivated to get an education. As long as the majority
of these people do not emigrate, the level of education and human potential in the countries of
origin increases [6]. A study of migration in the Philippines proves that a large proportion of
educated Filipinos motivated by the prospect of emigration are employed domestically [7].
Emigrants also leave a certain number of relatively prestigious jobs in the country of origin,
increasing thereby the employment opportunities for existing population and stimulating them
to develop skills that partly encourages further development of human potential.
To a large extent, migration is selective and primarily affects the youngest, the most
dynamic and the most prepared people. Thus, during the 1990s, the rate of international
migration of persons with occupational qualifications was superior by about three times over
the rate of migration of unskilled workers.

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Olga Sergeevna Schmidt, Ekaterina Konstantinovna Samrailova, Alina Borisovna Veshkurova, Sergey
Aleksandrovich Shapiro and Inna Vitalievna Filimonova

Labor migration is accompanied by financial transfers, i.e. money transfers and

investments, which are growing annually. The effect of transfers on families and countries of
migrants’ origin is generally assessed as positive phenomenon since remittances significantly
affect the welfare of households, as well as allow reducing poverty and social insecurity of
their recipients.
Remittances to developing countries, which are a significant source of foreign exchange
earnings, are growing particularly rapidly. The importance of remittances for developing
countries is clearly demonstrated by the comparison with other financial flows from abroad,
in particular, with foreign direct investment and financial assistance. Over the past decade,
remittances to developing countries amounted to about a third of export earnings.
Traditionally, the largest recipients of remittances are countries with large populations,
which are suppliers of numerous migrants, namely China, India, the Philippines, and Mexico.
Despite much lower absolute amounts, remittances to relatively small countries, among which
Tajikistan, Liberia, Kyrgyzstan, Lesotho, and Moldova are the leading ones, are more
significant in terms of proportion of transferred money. Thus, the amounts of these
remittances range from a quarter to almost half of GDP.
However, the countries from which remittances are made, are the main countries of both
permanent and temporary labor immigration, and at the same time are among the most
developed states. Thus, in 2016, 17.2% of all transfers were sent from the USA, 9% – from
Saudi Arabia, 7.2% – from Switzerland, 5.2% – from Germany, 3.8% – from Spain, and 3.3%
– from Korea. While the majority of transfers are received from rich countries, however, 30-
45% of remittances come from the countries characterizing by the average level of well-
being. For example, in 2016, 6% of transfers were sent from the Russian Federation. China
and Malaysia are also among the top 20 donor countries [8].
According to the UN estimates, the proportion of remittances in GDP in countries with a
very high level of human potential development is up to 4%, while in some countries it is a
significant part of GDP (45.5% – in Tajikistan, 38.3% – in Moldova, 20-30% – in Honduras,
Jordan, Haiti, and 10-19% – in Jamaica, Kyrgyzstan, El Salvador, Nepal, the Philippines, and
Guatemala) [8]. It is almost impossible to determine the exact amounts of international money
transfers, because their significant proportion (up to 50% according to expert estimates) is
transported through informal channels and is not taken into account.
Crisis response measures, such as protectionist policies and increased immigration
controls imposed by destination countries, as well as layoffs, wage cuts, and deteriorating
working conditions resorted to by employers, and increase in forced labor make the situation
of migrant employees even more vulnerable.
In the context of economic growth and the expansion of the labor market, the so-called
"immigrants' employment niches" are being formed, gradually deepened and expanded. They
include, first of all, the simplest professions and unskilled labor in the service sector,
construction, agriculture, as well as labor-intensive work in the manufacturing industry under
the conditions of lower wages in comparison with local workers, as well as absence or
minimum of social guarantees. However, in the context of the financial and economic crisis
and the narrowing space of productive employment, many of the local population are forced
to agree to less prestigious works, as well as to do their own housework, thereby displacing
labor migrants from the labor market.
The unregulated legal status (only one third of hired migrants work under a written
employment contract, while the rest are working based on the oral agreement) and the
unstable nature of employment cause a low level and even the lack of social protection of
labor migrants in the workplace. Only half of the workers are protected by social insurance,
and every fifth employee is not entitled to any kind of social security or benefits (including

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 Features of The Labor Market Crises: Social Consequences

paid leave). Discrimination in the labor market is a problem that migrants constantly face in
employment. Other difficulties are associated with the inability to ensure proper working
conditions and hygiene, to implement one's own knowledge and skills in accordance with
education and qualifications, inability to access social services and participate in public life.

4. CONCLUSION
Analysis of the factors of social and occupational tension in the labor market has shown a
trend which is based on the nature of their occurrence and relationship. In general, the
emergence of one of these types of tension in the state entails tension in all other economic
realms. Thus, it is appropriate to note that these factors are interrelated. In turn, the emergence
of tensions leads to an imbalance in the country's labor market.
Speaking about labor migration as a consequence of the labor market crisis, it should be
noted that the recipient countries obtain from migration the economic benefits such as
improving competitiveness of goods produced by reducing production costs using cheaper
labor, and ensuring demand for goods at the expense of additional population that stimulates
the growth of production. Moreover, if migrant workers work in the informal economy sector,
they do not affect the social and pension sectors.
At the same time, the balance between the advantages and disadvantages of labor
migration as a consequence of the labor market crisis is inclined towards the benefit of the
host country. In the context of the labor market crisis, addressing the problems associated
with both the return of labor migrants to their countries of origin, and the stay of migrants in
their countries of temporary employment (especially in the case of job losses) requires
fundamentally new measures on the part of both donor and recipient countries. When
developing migration policies and designing different strategies, it is necessary to take into
account the challenges of both a general nature, as well as national, religious, and local
conditions in each country.

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