Report - UNDP Russia

Employment in the energy sector accounts foronly 2% of total employment incomes, soimportance of the energy sector for the labormarket, incomes and wages is quite limited.Some experts believe that high salaries in theenergy sector are the main reason for highdifferentiation in salaries and incomes, and it istrue that, as of April 2009, 32.2% of energysector employees were among the best-paid10% in the economy as a whole. No othersegment has such a high share of its employeesamong the economy’s best-paid workers (therunners-up are financial operations, with24.6%, and real estate including rentaloperations, with 16.4%). But this does notentail that income and wage differentials aredetermined by the energy sector, since thesector accounts for only 12.7% of all the bestpaid10% of employees in the economy. Forcomparison, real estate employees are 12.5%of the 10% best-paid, state administration andmilitary security are 11.1%, transport andcommunications 10.6%, and financialorganizations 7.6%. Education, health care andsocial services together take 13.6% of bestpaidjobs, surpassing the share of energy. Also,the energy sector has relatively low intrasectoralpayroll differences: wages of the 10%best-paid employees in the sector are 12.5times higher than those of the 10% of the leastpaid. In the financial segment this gap is 26.7times, and it is 15 times in both education andhealth care. All that can be realistically said,therefore, is the opposite of what some expertsthink: the energy sector operates againstincome inequality by not making any largecontribution to low-paid labor.To summarize impact of the energyindustry on incomes, employment andinequality: the segment provides a verylimited number of jobs, most of which arewell-paid. Due to its small number ofemployees and low intra-sectoral wagedifferentiation, the energy sector is not thedriving force for sharp inequality in incomes. Alarge part of incomes generated in the sectoris redistributed through the budget, otherbusinesses associated with the energy sector,dividends, and social packages and bonuses,which are not counted in the monthly wageand income reckonings. The reasons forinequality are not to be sought in theresource-oriented economy as such, but in theexisting system of state institutions forredistribution of incomes.3.3. Household spendingon housing utilitiesand social measuresto mitigate price risesfor such servicesand for electricityAs shown above, the link betweentrends in the energy sector and the standard ofTable 3.6Impact of the energy sector on employment and inequalityIndicatorValue1. Share of energy sector employees in total numbers of employed, June 2009, % 2.52. Share of wages received by energy sector employeesin total wages paid, June 2009, %2.93. Share of wages received by energy sector employeesin total personal incomes, June 2009, %2.04. Share of energy sector employees, who are among the 10% best-paid employees in the economy,in all of the 10% best paid, April 2009, %12.761