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Otkhodnichestvo, or Why Russian Economy is Rather Resilient

From Friday morning to Sunday afternoon Alexander sells delicious home-made honey and edible oil on an outdoor farmers market in Moscow. (As for my taste it is the best honey in Moscow and other experts confirm this judgement). Every Sunday afternoon, when market closes, Alexander drives back to his hometown Volgograd, some 600km south of Moscow — just to return to Moscow the next Wednesday together with his wife, his car packed with new luscious organic products from his beehives. In Moscow Alexander and his wife Lena sublease a single-room in an apartment nearby the market place. Lena is selling products on another farmers market in the capital, too.

This weekly cycle runs from early May, when outdoor farmers markets open, to late November, when the City regulation instructs them to close.

Alexander and Lena are otkhodniks, wandering workers.

To make a living otkhodniks temporary move out from their hometown to work and earn money elsewhere. They do not relocate to Moscow. No, out-of-town workers remain citizens of their hometown, they are enrolled in the OMS system, the public health system, and they pay taxes in the towns and villages where their houses or apartments are situated in.

Between 10 and 15 million individuals in Russia are otkhodniks, according to an estimate of Juri M. Plusin, Yana D. Zausaeva, Natalia N. Zhidkevich and Artemy A. Pozanenko, who recently published their path breaking study on Russian Labor Migrants (see my last post for a reference). Mostly married male blue collar workers in their young and middle-ages performing specialized tasks, wandering workers are a frequent feature of the Russian labor market – but yet an understudied subject, as Natalia and Artemy, who presented their book at the 6th Public Administration Discussion Meeting at the Higher School of Economics recently told an interested audience. The otkhodniks they interviewed as part of their extensive field studies in Russian cities, towns and villages, as well and their relatives and neighbors could not believe that social science researchers and policy makers have only patchy knowledge about this “phenomenon” of within-country labor migrants. In fact this special type of labor migration, otkhodnichestvo, literally, the state of being on the move for work, is not a phenomenon, but a regular feature of Russian economy and dates back at least to imperial 19th century Russia.

Oversimplifying the findings a bit there are four big centers throughout Russia that attract wandering workers: Moscow, St. Petersburg, Siberian region and regional cities and economy hubs. 500 kilometers away from Moscow is a peak of labor migration. Transportation within this radius of 500km it is relatively cheap. People can afford to travel to Moscow and back frequently. In turn Labor migration boosts private transportation companies. Beyond a distant of 500km labor migration towards Moscow decreases.

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Being an otkhodnik is nothing that puts shame on you. In a deprived region with an oversupply of labor and a low wage level there is nothing negative about moving out to work hard elsewhere and bring home money that will feed your family and help to educate your children. Nowadays otkhodnichestvo is more frequent in the Southern region of Russian than in the North.

Both local and state authorities have no large interest in interfering. They stimulate local growth; people do not move away from low populated areas. Within-country labor migrants save the large chunk of their earning and bring it home. This is a feature that they share with Gastarbeiter, guest workers, from former Soviet republics; but apart from their origin an otkhodnik is different from a Gastarbeiter. Gastarbeiter are away from Kirgizstan, Tadzhikistan or Moldavia for a long period of time (because there is no low-cost 6 hour bus ride from Dushanbe to Moscow), while otkhodniks are only 2 weeks or a month out. Mid-and short term labor migrants should also not be confused with foreign specialists, which have a special employment and visa status in Russia.

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– out for work

So far this sounds like a success story. Labor economist will consider this extremely high level of job mobility and adaptability as a positive feature of the labor market. Officially deprived regions become resilient because Labor Migrants spend almost all their earning in their native hometown rather than on Tverskaya Street in Moscow. All of this contributes to a rather high level of economic stability in the Russian regions. White collar workers in Moscow City skyscrapers do experience an economic downturn, blue collar otkhodniks constructing high-quality wooden dachas in the green belt outskirts of Moscow do not.

- Excuse me sir, are you an otchotnik?
– Excuse me sir, are you an otkhodnik?

But what is the untold story? Being away for a long time from wife and kids has a negative impact on family relations. After work men meet new women; the spouse at home may become acquainted with somebody new, too. One out of four marriages breaks up due to this. Juri M. Plusin and his co-authors also find that most short term labor migrants do not work in line with their education. So the question is whether a follow up employment can be career advancement.

About 50 percent of the work is unofficial black labor. No registration, no taxes. That also means no employment security and labor law enforcement.

Otkhodniks are well-informed about what is going on in Moscow, probably better than Muscovites are, and channel this knowledge to their hometown region. Juri M. Plusin and his co-authors thus conclude that modern otkhodniks are “agents of urbanization”.

- Lunch break
– Lunch break
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Public Administration from a Scientific Point of View

For the latest issue of the magazine Re(a)d Square Yulia Kazakova, the journal’s editor in chief, and Saule Ismagulova asked me to share my views on Administrative Sciences and Public Administration in Russia. Yulia is also a graduate student at Higher Schools of Economics’ School of Public Administration. The interview can also be found at readsquare.ru/public-administration-from-a-scientific-point-of-view.

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– Let’s begin with some questions about you. Do you have any experience of working in public administration?

I am a scientific researcher, not a public manager. I graduated from Heidelberg University with a PhD in political science. I’ve been studying decision-making in the public sector with a focus on governmental decisions, for instance, in labour market regulation. I have been fascinated by public economic approach to public administration since then. But often, in public economics as well as in political science, public administration is a black box- we don’t really want to know what is going on inside the box. After I finished my PhD I worked as a Research Fellow at the German Research Institute for Public Administration. And there I studied administrative processes more thoroughly. In essential feature of my research is to understand how public administration works, because otherwise you will build models that can hardly explain the reality.

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Moscow Kremlin as seen from Arbat Square, Nov 2015, (c) Tim Jaekel

– Why did you become interested in public administration? What are the most attractive points for you about it?

Public sector is responsible for a large chunk of economic activities, about 30-50%, depending on the country. If we do not have an efficient, high-quality administration, we will have less well-being for citizens. This is the initial starting point: how can we manage bureaucratic processes more efficiently? And that’s one of my main subjects as a researcher. Public administration is relevant because it contributes to people’s well-being.

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New Arbat Avenue with Moscow City looming, Nov 2015 (c) Tim Jaekel

– You have written articles and books where you analyzed public administration in different countries. It can be agreed that such researching process is a time-consuming activity. What does it represent and how is it usually organized?

First, you always have to come up with a good research question- that is to explain in one sentence what you are going to analyze in your research term paper, your PhD thesis or a journal article. That might sound simple, but it is hard work. The second step is to explain in two additional sentences why your topic is relevant at all. Researchers tend to ignore the question whether their activities are of any relevance for public practitioners or the general public. If it is not relevant, don’t write about it. The underlying hard work is to review the literature, develop a theoretical model and to look at processes in public sector management – waste management or public transportation, for instance. Because normally there’s no apple that falls on your head and make you think of Universal Law of Public Administration – there are just too few apple trees located on HSE campus. If you do a comparative research project a major point is case election. Here, you should ask yourself: Why do you want to compare certain countries? Why does this make sense? It’s time-consuming, but you have to conceive the research process from its ending – what do you want to achieve? And then it’s much easier to manage your research process.

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Moscow, upper part of one of the „seven sisters“ skyscraper, this one hosting the Federal Ministry of Foreign Affairs, Nov 2015 (c) Tim Jaekel

– Does an ideal model of public management exist? I mean whether you can give an example of some countries (regions or municipals) which, to your mind, can be characterized by high standards of public performance.

There is no “one size fits all model of public management. The main objective of public administration should be to contribute to citizens’ well-being. But people have different preferences. If you have children, you want to have playing fields, high-quality public schools. Safety, recreational areas and green environment are the things that most people consider important. Others want to have a say in budgetary issues, so municipalities have to balance expenditures and inflows. A lot of goals should be achieved, but these goals are always conflicting. There is a limited amount of resources, and public sector has to decide how to allocate them (for example, how much money should be spent on building new roads?). It’s a task of managing an allocation process. A good public administration is the one which at least tries to maximize as many goals as possible and keep the side effects limited. That’s a challenging process because resources are always limited. If they try successfully, they are a good public administration. But there are different models that can succeed.

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Moscow, Metro station Arbatskaya, Nov 2015 (c) Tim Jaekel

Sweden and Switzerland are two fantastic cases for researchers. In Switzerland there is a wide range of direct democracy at all layers of government. If the municipalities want to raise their local income tax rate, they have to call people to the ballot box. This creates consensus, and at the same limits inefficiencies in the public sector.

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Moscow, Nov 2015 (c) Tim Jaekel

Sweden has an outstanding tradition of performance measurement and performance evaluation in the public sector. And they particular focus on the quality of public service delivery, and they made large steps to go beyond the common and flawed cost-per unit approach we saw in the 1990ies as part of the New Public Management doctrine. They established the notion that citizens and taxpayers have a right to receive the best quality of public services. This is why I like to do research on Sweden.

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– What is special about Russian public administration? Does it have definite peculiarities that differ it from that in other countries? Can you give some examples of its advantages and drawbacks?

The strength of Russian people is that they are able to adapt to any circumstances. I see that in Moscow the city government is willing to adopt new practices. There are a lot of things changing in everyday life: new time tables and public transportation, which are better compared to the old ones. The city government is open-minded, willing to try new things. A drawback of Russian public administration can be given from everyday life experience. Sometimes frontline staff is unfriendly – or let us say – rude. If you go to a public museum and ask a staff member where is this and that, they might look at you in a way like ‘what do you want from me?’ Another potential drawback is that too strict hierarchical thinking limits the opportunities offered by thinking and doing things differently. But these are just some examples. Russia is an extremely multifaceted country.

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Moscow Nov 2015 (c) Tim Jaekel

– They say that innovations are becoming a significant part of the successful public service performance. What innovations have been introduced in the practice of public service in the last several years? Does innovative public management have limits?

Firstly, E-government is a large trend in innovative behavior. To deliver more public services online is a common trend in the US, in England or Germany alike. Another innovation is the adoption of citizens’ service centres and one-stop agencies. The relevant question is why some public organizations innovate while others do not. Prior research found for instance that innovative organizations staff includes externally hired professionals, and that the organization offers knowledge and skill training which in turn increases encouragement on innovative behavior. But we have limited evidence on how policy-choices from other organizations affect decision making. In my own research I for instance analyze how the performance of an organization and strategic interaction among jurisdictions contribute to innovative behavior in Public Administration.

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– It’s not surprising that when local public servants give an account to higher organs, they can embellish their reports with more positive results of their work. What do you think: why do they prefer telling about positive things rather than problems and how can this gap in local public sector be solved?

This is kind of human behavior: everybody wants to be successful and achieve goals- I do not know anybody who wants to showcase his own failure. But this is not reasonable for any modern public sector organization. You have to communicate shortfalls and the underlying reasons properly. Organizations have to find a balance between reporting the very last digit of available performance data – open data do not has be a fetish but a tool for holding bureaucrats to account – and reasonable non-disclosure. To identify potential performance gaps and the underlying reasons is important for improvement. From interviews with practitioners in different countries I found that most of them will only share their experiences and knowledge behind closed doors with peers they consider to be trustworthy. An organization thus has to establish a culture of internal trust, a positive culture of error tolerance and channels for knowledge transfer without any fears of being blamed – but this is different from merely sweeping things under the carpet.

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Pictured: Moscow, Residence of an Embassador (bottom left), and Appartment complex that looks like an open book (located in Kompozitorskaya ul.)

– At HSE day you gave the lecture called «Blame games and risk avoidance: how decision making is linked to relative performance and potential peer effects». Please, share your impressions about the lecture.

I enjoyed delivering the Lecture in Gorky Park very much. Russian students are respectful to teachers and interested in learning new things. At the same time they are also keen to try out new things. If they want to solve a problem, they’ll find a way to do it. This is a good combination.

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Pictured: Moscow, Khram Spasa Preobrazheniya Gospodnya na Peskakh, Nov 2015 (c) Tim Jaekel

– Which qualities and skills should a rational public manager possess, to your mind?

A modern public manager hates blind obedience; she is keen to deviate from the ‘good old tradition’ for the sake of citizen’s well-being. She is sensitive to performance gaps, that is, she intends to maintain an acceptable level of performance, or to improve performance. She is used to learn and to share knowledge with her peers in other jurisdictions. Finally she is open-minded, and highly motivated.

Thank you for the interview!

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Picured: Head of one of the seven sisters skyscrapers, this one located at Smolenskiy Chausee, Nov 2015 (c) Tim Jaekel
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The magic of Nizhny Novogorod

Don’t call it just Novgorod, our guide advised me. You can say Nizhny, but just Novgorod is wrong. Nizhny has always been ‘the city’. The meaning is that, founded in 1211, it has always meant to be a city; it was not created just as a settlement. In 1932 Stalin decided to rename the City into Gorky, i.e. it was given the name of the famous Russian writer. Gorky himself, still alive at that time strictly opposed the idea. And believe it or not, soon after the city turned from Nizhny Novgorod into Gorky, Gorky started to fell ill. Bad Karma. Eventually the city was renamed again in 1991. (So Nizhny Novgorod = Gorky = Nizhny Novgorod; I will use both terms interchangeably).

 

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In the Great Patriotic War 1941-1945 Gorky made highly significant contributions to the production of military equipment. One out of 2 submarines, every third tank, including famous T-34, and one out of four airplanes were produced in the cities’ numerous factories. German Wehrmacht never reached the City (Plan Barbarossa to capture Moscow in a Blitzkrieg failed already in 1941 as a result of the battle of Moscow), but military planes did; the city was bombarded 43 times.

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Eternal Flame

A large chunk of the magic of Nizhny derives from the fact that the city is located on the mighty Volga River, which is the largest river in Europe, some 3,500 km long. And Volga River meets with the river Oka, some 1,500 km long. The location where they meet is a must see. You can easily do so by visiting the Kremlin.

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Due to its military importance the Gorky was a closed city until 1991, i.e. it was invisible to foreign tourist. It was not displayed on foreign maps. And cruisers on the Volga River passed the City at night, when most tourists were sleeping.

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Nizhny consists of two parts. The Kremlin, the old city, and the Higher School of Economics are located in the first one on the one side of the River Oka. The second part, industrial part of the City on the other side of the River Oka, was only merged with Nizhny in 1920. Nizhny is the 5th largest city of Russia, with some 1.5 registered inhabitants (Gastarbeiter and sans-papier come on top of that). Though Nizhny has a Metro, the public transportation system strongly relies on public buses, and to some extent tramways. In fact the first Tramway in Russia was established in Nizhny in 1896. They proudly display this fact on the railcars of a particular line. Nizhny will host some of the matches of the Soccer World Championships in 2018. This is expected to lead to a large increase in infrastructure investment in the years to come.

Until 1917 Nizhny was famous for its international fair. Back then Moscow was usually said to be the heart of Russia, St. Petersburg was the Brain (until today, a lot of senior federal decision makers graduated from St. Petersburg, just take the President, and the Prime minister as examples) and Nizhny was the pocket or the valet (because Nizhny provide so much goods, and merchants made a lot of money there). The fair was closed in 1917, reopened again 1922-1930 during a period of economic policy experiments, and then again closed.

So Nizhny is worth a trip. You can reach the City by bullet speed train within 3 h 48 minutes from Moscow Kurskaya. Fast, clean, safe, still reasonable price. And no boarding time.

Nizhny_Frau_entspannt (c) Tim Jaekel, 2015