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SOCIAL PROTECTION OF UNEMPLOYED FAMILIES WITH CHILDREN IN RUSSIA AND FINLAND
Galina I. Osadchaya, Moscow
Reforms in Russia and the economic crisis in Finland led to a reduction of the labour force in both countries. In Finland lay off affected one fifth of the employed. Unemployment tends to remain high there. According to the International Labour Organisation, the unemployment rate reached 9.1-9.5% of the economically active population in Russia in 1996-1997. Experts make assessments that the hidden unemployment affects 13 to 15% of the economically active population in the country.
High unemployment rates lead to the emergence of large groups of families with children, where one or both parents have lost their jobs thus creating difficulties in fulfilling their obligations to the family. There is a broad range of negative consequences of unemployment like lowering living standard, increasing crime rate, social devaluation of unemployed and their relatives, loss of professional skills, deprofessionalisation, undermining of the motivation for work. Therefore, unemployment becomes one of the most burning social issues in countries, which have not known this phenomenon for a long period.
That is why it is quite important to compare the status of the unemployed families with children in Russia and in Finland in order to reveal reserves of social protection systems. It is exactly the right time to carry out the comparison since both countries are currently developing institutional models for social support of their populations. The comparative study was carried out by teams from the Moscow Social State University (for Russia) and from STAKIS (for Finland) in 1995-19971.
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1. Models of Social Protection of Unemployed Families with Children
The comparative analysis of the protection system for unemployed families with children showed that there are no unified measures of support to these families either in Russia or in Finland. Social help is being provided within the employment and household policy of the state. The help is guaranteed and regulated in both countries by legal acts as the Constitution, Law on employment, Law on state unemployment benefits, etc. In spite of differences in names, benefits for such family are comparable in types and categories in both countries. These are unemployment benefits, monthly family and social support, allowances (information, legal, psychological).
The financial sources of the social protection system are also comparable. In Russia they are the Federal Budget, local funds, the Social Insurance Fund, the Employment Fund and the Russian Federation Pension Fund. In Finland they are the State Budget, unemployment insurance provided by the employers, municipal budgets, social insurance societies. The system of management of family protection is also similar. In Russia the protection is basically managed by the Ministry of Labour and Social Development and its subdivisions in the regions. In Finland the responsibility is being taken by the Ministry of Social Security and Public Health and its local services - the Unemployment Fund and the Institute of Social Insurance, which play a very important role in providing social support to unemployed families with children.
Nevertheless, there are some specifics in the countries under scrutiny. According to the Employment Law, unemployment benefits payment began in Russia as late as in 1991. In order to qualify for such benefits, the unemployed has to register in the employment agency, to search actively for a job and to have worked in the preceding year at least for 12 weeks. The value of the benefit depends on the size of the salary and is typically of
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the range of 75% of the average salary during the last two months for the first three months. During the following five months it declines to 60% and then within four months it is 45%. There are additional 10% benefits for every dependent. Besides, the unemployed person has the right of pecuniary aid for 100% of state minimum wage if the average income of the family is below the level of the double minimum salary. The tenure is paid for training courses of unemployed. 75% of the minimum wage is paid to unemployed who look for work but do not qualify for unemployment benefits.
The Finnish employment policy was reformed in 1985 and had the daily unemployment allowances noticeably increased thereafter. The main compensation (FM 118 a day) is paid 5 days a week for those who are eligible. The presence of unemployed dependent and children in the family increases the size of benefits, while the income of a spouse leads to their reduction. The benefits for dependents are paid for 500 calendar days, and then during 4 calendar years according to earnings and the number of children in the family. The daily allowances are taxable.
The state support for families with children is implemented in Russia in four types of household allowances. They are: family allowances for the birth of a child, thus children raising allowances and pensions; labour, tax, housing, credit, medical privileges to families with children; support to families with children like baby feeding, medicines, clothing, footwear, etc.; social services. All kind of household policies are set up in Russia by the federal legislation. At the same time, federal enterprises, institutions and organisations, any public funds and private citizens are free to establish additional benefits for families with children. Parents receive allowances on pregnancy and delivery, on the child’s monthly alimentation, paid maternity and paternity leave within the child’s 18 months. Allowances on the child’s alimentation are paid up to 16 years or finishing secondary school. The value of allowances is equal to 70% of the minimum
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wage for children below 6 years of age and 60% for children from 6 to 16 years. The amount of household benefits made out 0.8% of Russia's GDP in 1993.
In Finland, the paid leave is given for 263 workdays upon the child’s birth. Family allowances are paid for children below 17 years of age. Families with children have tax privileges, alimentation allowances, housing benefits. Social services are an important form of the social family support. Since 1990, parents in Finland have the right to choose the most suitable form of children care for children bellow 3 years - whether to keep the child in the local day care centre or to receive the child benefits for keeping him or her at home. Since 1996 parents of children below 4 have the same right. The size of benefits is FM 1900 which makes out 80% from the social norm accepted in Finland. In 1994 the family with children benefits formed 5,6% of Finland’s GDP.
The complete characteristic of the unemployed family with children social support value requires a definition of Russian and Finnish social minimum. In Russia it is the Living Wage Budget which defines the poverty line. It consists of food basket’s cost (68% of LWB), general commodities (21%), services (9%) and taxes (2%). Its value depends noticeably upon the region where the family lives and constantly changes because of inflation. In December 1998 LWB was in Moscow 1600 roubles.
In Finland life allowances are accepted as a social minimum. It is 80% from the basic national pension amount and full payments to it. This norm is 2021 Finnish marks a month. It is assumed that the social minimum provides funds for food and clothing, covers part of the public health costs, personal hygiene and sanitation in the house, local transport, subscription for a newspaper, television license, telephone, hobby, rest, as well as other daily personal expenses. Some additional expenses are also taken into consideration such as public health costs, childcare
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expenses and other family needs. For children below 10 years the expenses rate is 66% of the basic amount for adult persons.
There is a major difference between the two systems. In Finland the system for support of unemployed families with children is a combination of market principles and welfare. The state guarantees the person a descent level of living regardless of the results of labour. In Russia, the secondary redistribution of primary incomes currently does not ensure the minimum of benefits needed for everyday life. There is one more principle difference of the social support systems. The size of minimum wage is used for calculating all household allowances in Russia. This is a mythical value equal to 7-9% of the costs of living. In Finland the social minimum ensures the satisfaction of most essential people’s demands.
2. Income Status and Social Self-evaluation of Unemployed Families with Children
The empirical analysis of the situation of unemployed families with children in Russia and Finland shows that losing the job by one and especially by two parents generates two complex family problems. The first is the reduction of material welfare. The second is the deterioration of social self-evaluation and inner family relations. Both problems have different dimensions in both countries in comparison.
There is more that one million officially registered unemployed in Russia who have families with small children. 9.8% of them bring up children in incomplete families. As a rule, the head of these families is a female. 10.4% of the families of unemployed have many children. Thus, each fifth unemployed family is in the area of the double risk and has a special need of state support. Another serious problem is connected with the fact that each sixth parent in families of unemployed with children is bellow 30. Because of the low level of practical experience, in-
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sufficient connections and low level of incomes before unemployment young families with children are especially vulnerable in case of unemployment.
A recent public opinion poll2 discovered a substantial decline of Russian unemployed family with children income status. According to official data based on the subsistence level, there are about 30% of Russians below the poverty line. The respondents’ self evaluations showed that close to 70% of the unemployed and members of their families are below that level. Before loosing the job only 20% evaluated themselves as poor. The lowest in the income status are the unemployed women in the age between 30 and 40 years.
The survey revealed some qualitative and quantitative dimensions of everyday activity characteristic for unemployed Russian families with small children. The results show that unemployment is the major factor for diminishing the capacities of families to adapt to the new conditions. This makes the realisation of family functions difficult. Socialisation of children, maintenance of material welfare, health, cultural needs’ satisfaction are negatively affected by unemployment. The low level of parents’ incomes within a long period usually determine a low level of educational attainment by children, bad condition of their health, and will limit their upward mobility.
There were 138,960 unemployed families with small children in Finland in 1994. According to Finnish scientists, unemployment affected each fifth Finnish family at that time. The sociological analysis3 bears the witness that the incomes of unemployed families with children differ from employed families by the structure of budget and value. In unemployed families the average income is lower by 22% as compared to that of employed families. The income from wages was at the level of FM 212,000 and in families affected by unemployment at the level of FM 93,600, which is 2.2 times less. The relative levelling of
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incomes becomes possible by means of social transfers (social payments, allowances).
The most significant parameter of working and unemployed families' social status is their share in the upper and lower decil groups. The frequency of unemployed families with children among the 10% poorest in Finland is by 3,6% higher than among families which are not affected by unemployment. The study does not provide the basis to draw conclusions about the income status of unemployed family with children before parents were affected by unemployment. It is possible, that their income status was low at that time too, as far as their professional and educational status was lower than the average.
The results of the study strengthen the assumption that the status of unemployment negatively affects social activity and substantially reduces interfamily contacts. Unemployed persons feel themselves lonely more often than the employed ones. In general terms, unemployed are typically dissatisfied with life. They and their family members take no active part in public life, seldom visit restaurants, clubs, discos. Often buy cheap food of low quality. The status of unemployment influences health conditions and promotes psychosomatic diseases. Unemployed persons feel depression, insomnia and are inclined to neurasthenia and flabbiness more often than the employed persons.
3. Efficiency of the Social Protection to Unemployed Families with Children and Possibilities for Its Improvement
The comparative analysis of unemployed family with children in Russia and Finland provides the basis for evaluation of the social protection system efficiency for a given social group at risk.
The noticeable reduction of Russian unemployed and their family members’ living standard in contrast with Finnish unemployed proves that the Finnish system of social security coped
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more successfully with the social support to unemployed families. It manages to prevent poverty. The redistribution of incomes in reasonable limits substantially compensates the economic disadvantages of those who have lost the job. One of this instruments redistribution is the „allowance on living", given to families below the poverty line. This allowance is a state warranty of ensuring the material welfare of each Finnish family at the average cost of living accepted in the country.
The reduction of social expenses in 1992 did not have negative impacts on the economic status of the families under study and generally on the purchasing power and the real consumption of population groups referred to the lower decils of income. Actually, their level of consumption became close to the consumption of those whose income was at the average in the country. The percentage of comparatively poor remained unchanged through the years of economic decline in Finland. Research data show that the Finnish State, being a typical welfare state, successfully managed the problem of poverty of vast groups of the population. The economic crisis intensified the dependency of households on the state.
While the Finnish social protection system coped with the unemployed family with children social support problems, in Russia the system has a lot of unused reserves. Unresolved problems of Russian social policy are the absence of special penalties for violators of social legislation and the absence of functioning mechanisms for implementation of the legal provisions for social protection. As a result, the unemployed families often do not get the legal privileges they have to enjoy. The social allowances are paid irregularly. Another factor reducing the efficiency of social protection in Russia is the merely symbolic real value of household allowances. It is based on a mythical minimum salary as a standard for calculating social allowances, rather than on calculation of real living expenses. The role of the local governments in the provision of social support to unem-
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ployed family with children is weak. The state does not guarantee welfare to individuals even at the minimum level. That is why the overwhelming majority of respondents (72%) evaluates the material support as insufficient.
The negative impacts of unemployment on personal self-appraisal is clearly documented in Russia, where unemployment is still a new phenomenon in social life. Respondents note growing anxiety, uncertainty, reduction of tolerance.
The analytical work of the conducted study formed the basis for developing some principles for improving the system for social protection of unemployed families with small children in Russia. The most significant proposal is to develop a special support scheme called „Unemployed Families". The key issue is certainly the reduction of the level of unemployment. But the real help to families affected by unemployment in the education of their children, health maintenance, acquisition of non-food goods, providing normal feeding is also existentially important. The programme for social support to unemployed families with children should be aimed at activating the unemployed. In the very focus of their activities there should be the efforts to increase their level of education and vocational training. On the second place, the programme should promote the development of abilities to maintain the health of all family members and to improve the educational level of children in unemployed families. Thirdly, the programme should provide welfare to families affected by unemployment at the level accepted in society. Fourthly, the programme should aim at the development of social services.
Setting up the scales of social allowances in accordance with the real living expenses should play an important role in raising the efficiency of the social protection provided to unemployed family with small children in Russia. The precise implementation of all normative documents concerning the amount and regularity of payments, as well as the increasing role of regional
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structures in the social support to these families are also rather important.
NOTES
1 The research group which carried out the comparative study consisted on the Russian side of V. I. Zhukov, G. I. Osadchaya, V. N. Kovalev, V. P. Vasilyev, and on the Finnish side of M. Heikkella, X. Vaaltonen, and T. Sihvo.
2 The sociological study on families affected by unemployment and having small children was conducted in 1995-1996 in Moscow, in Nizhegorodskoy and Kaluzhskoy regions. 537 respondents were polled. Legal documents and statistical materials covering the issue of the social support to families in Russia were analysed.
3 The poll was conducted in Finland in 1994 on a representative sample. 2404 families with small children were interviewed. Among them 221, or 9.2%, were families affected by unemployment.
© Friedrich Ebert Stiftung | technical support | net edition fes-library | Februar 2000
