From Brain Drain to Brain Gain

AVAILABLE FOR SUBSCRIBERS ONLY | #5 | MAY 2014 FROM BRAIN DRAIN TO BRAIN GAIN

THIS QUARTERLY REPORT INCLUDES AN OVERVIEW OF LESSONS LEARNED FROM THE U.S., THE EU AND ASIA IN ORDER TO HIGHLIGHT HOW RUSSIA MIGHT BENEFIT FROM INTERNATIONAL BEST PRACTICES IN ATTRACTING AND RETAINING TOP-TIER TALENT Expertise on Russia 24/7 GET ACCESS TO ALL RUSSIA DIRECT REPORTS WITH ONE CLICK

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For suggestions on future topics please write to Editor-in-Chief [email protected] BRAIN GAIN | #5 | MAY 2014

EDITOR’S NOTE

With the unprecedented scale of global workforce mobility, countries have been increasingly entering into a fi erce competition for talent. As states such as Russia are fi nding out, in a rapidly globalizing economy, shortages of skilled labor can lead to a decline in scientifi c achievement and a loss of economic productivity. Ultimately, the failure to address a nation’s talent gap could result in a decline in political infl uence in the global arena. Ekaterina Russia is now at a crossroads. After the fall of the Soviet Union, it Zabrovskaya became a net exporter of “brainpower.” However, Russia has not yet passed the critical point of no return and still has signifi cant Editor-in-Chief benefi ts that might help it become a magnet for professionals from all over the world. Important steps, however, need to be taken in the nearest future. This RD Quarterly presents a take on the leading factors for the Russian “brain drain” as well as an assessment of Moscow’s strategy for a future “brain gain.” It also gives 10 specifi c recommendations of how Russia can become more attractive to top talent. The report includes insights from Andrei Korobkov of Middle Tennessee State University, Dmitry Polikanov of the Russian Center for Policy Studies, and Michael Spaeth and Sergej Sum- lenny of Russia Consulting, who comment from the perspective of executive recruiters working in Russia. We invite you to read this May issue of RD Quarterly and share your opinions with us. Please send your thoughts, as well as any questions regarding Russia Direct and its products, to me directly at [email protected].

No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying, or by any information storage and retrieval system.

The views expressed are those of certain participants in the discussion and do not necessarily reﬂ ect the views of all participants or of Russia Direct.

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CONTENTS 3 Authors 4 Executive summary Introduction 5 Globalization and the Russian ‘brain drain’ − The ‘brain drain’ costs Russia $1 billion per year − Potential consequences of the ‘brain drain’ for Russia − How can Russia reverse the flow of the ‘brain drain’? − The return of the Russian diaspora − How can Russia become more attractive to top talent? − Russia exports talent, but doesn’t import talent

Part I 8 What the international experience in ‘brain mobility’ means for Russia − 4 ways to stop ‘brain drain’ − Cultivating ties with diasporas around the world − Putting a number on the scale and scope of the Russian ‘brain drain’ − Leading factors for the Russian ‘brain drain’ − Expat managers vs. Russian managers − The Russian government’s strategy for ‘brain gain’ − Box: How China and India are stopping ‘brain drain’

Part II 16 The ‘brain drain’ in comparative perspective: The US experience − The US experience − 5 components of US migration policy today − Intellectual migration as a tool of ‘soft power’ − Some negative consequences of US immigration policy − Can the US draw on the Canadian experience? − US immigration reform − Lessons for Russia

Part III 22 How Russia can ﬁ nd the right personnel in a changing world − Globalization is widening the Russian talent gap − Can Russia attract top foreign talent to fill this talent gap? − Problem #1: Extreme workforce mobility − Problem #2: An educational system that no longer prepares skilled workers − What the future holds for Russia 25 Top 10 policy recommendations 26 Recommended books and articles on ‘brain gain’ 27 Top 10 Twitter accounts for #BrainGain 28 Project team

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AUTHORS

Korobkov, Andrei Andrei Korobkov is Professor of Political Science at Middle Tennes- see State University. He holds a Ph.D. in Economics from the Institute of International Economic and Political Studies of the Russian Acad- emy of Sciences as well as a Ph.D. in Political Science from the Uni- versity of Alabama. He previously worked as Research Fellow at the Institute of International Economic and Political Studies of the Rus- sian Academy of Sciences and taught at the University of Alabama. Korobkov is the author of more than a hundred academic works.

Polikanov, Dmitry Dmitry Polikanov is Vice President of the PIR Center (The Russian Center for Policy Studies). From 2007-2012 he was one of the founders and key managers of the “Human Resources Reserve — Pro- fessional Team of the Nation” federal project. Since 2012, he has participated as an expert of the HR working group of the Open Gov- ernment in Russia. He graduated from MGIMO-University (Moscow State Institute of International Relations) and received his Ph.D. in Political Science there in 1999.

Spaeth, Michael Michael Spaeth is a Director and board member of Russia Consulting. Before 2012, he was an executive director at Konsu Oy, a business process outsourcer, and a research offi cer on the board of Salzburg München Bank AG. Spaeth has a Ph.D. in Economics from University of Munich. He has been living in Moscow since 2006 and is ﬂ uent in Russian.

Sumlenny, Sergej Sergej Sumlenny is Head of Public Relations at Russia Consulting and Germany Consulting. From 2006 until 2013 he worked as a Ger- man correspondent and chief of the Berlin bureau at leading Russian business weekly Expert. Before that, he worked as Chief Editor of a daily news program at Russian business TV RBC and as producer at the Moscow bureau of German TV and Radio ARD. Sumlenny has a Ph.D. in Political Science from Russian Academy of Sciences.

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EXECUTIVE As Russia looks to play an increasingly important role in global institutions SUMMARY such as the WTO and the G20, and as the Russian economy increasingly opens up to international trade, it’s also forcing a re-think of how globalization is impacting the composition of the Russian workforce. In some cases, globalization is leading to a “brain drain” as Russian workers choose to migrate abroad in search of better employment opportunities. In other cases, it’s leading to the creation of “brain gain” initiatives such as Skolkovo that help Russian cities attract and retain top-tier talent. In both cases, long-term trends set in place by globalization are leading to new thinking by Russian government leaders about the relative merits of immigration reform and the need for enhanced funding for the sciences and education. What follows is an overview of key trends within the Russian talent market, with an emphasis on new measures and initiatives that might help to reverse the Russian “brain drain” to the West; narrow the talent gap within Russia’s major metropolitan employment markets; and help to prepare the Russian economy for the next stage of globalization by creating a new generation of innovators, entrepreneurs and experienced managers. This RD Quarterly includes an overview of lessons learned from the U.S., the EU and Asia in order to highlight how Russia might beneﬁ t from international best practices. It also includes insights from Russian administrators, academics and executive recruiters about how best to think about the future of the globalizing Russian workforce, especially in relation to global workforce mobility and the ﬂ ow of talent across national borders.

SHUTTERSTOCK/LEGION-MEDIA

4 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG GLOBALIZATION AND THE RUSSIAN ‘BRAIN DRAIN’

Dmitry Polikanov INTRODUCTION

SHUTTERSTOCK/LEGION-MEDIA The international affairs arena is increasingly a fierce rivalry for all type of resources — not only energy and mineral resources, but also talent

n 2005, British experts made forecasts about the world 50 In 2013, global migration was approximately 232 million people,1 years into the future. This sophisticated review, which covered or nearly 3 percent of the world population — and this is only the Itechnological developments as well as socio-economic trends, offi cial data of the United Nations, which does not take into account maintained that, in 20 years, China would become a global scien- the hidden fl ows of migrants. Many of them are not just seeking a tifi c superpower, while Singapore, South Korea and Brazil would better lot in the developed countries and willing to take on low- be among the scientifi c leaders struggling to fi nd the right skilled paid jobs. In some cases, they represent the intellectual elite of their workers. In essence, skilled workers would become part of a mas- respective countries, who have higher education, academic merits, sive “brain circulation” moving from country to country in search and substantive potential, all of which they contribute to their new of new opportunities — they would belong to none of them and homeland. compete in a highly fl uid market for global talent. Nearly ten years after this forecast was made, it is possible to as- THE ‘BRAIN DRAIN’ COSTS RUSSIA sess how much of this vision has come true. The international aff airs $1 BILLION PER YEAR arena is increasingly a fi erce rivalry for all type of resources — not only energy and mineral resources, but also talent. What’s making Critics of the “brain drain”2 always point out its economic rami- all this possible, of course, is the unprecedented amount of global fi cations. Firstly, in countries where the government subsidizes workforce mobility, as workers are free to move across borders in secondary and higher education, the loss of a graduate means search of new opportunities and more attractive compensation. the loss of an investment. According to some experts, “poor”

1. “Population facts.” United Nations Report, September 2013, http://esa.un.org/unmigration/documents/The_number_of_international_migrants.pdf 2. Sam Vaknin, “The Labour Divide. Migration and brain drain”, June 2013, http://samvak.tripod.com/pp118.html

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Russia has not yet passed the point of no return and still has a chance to reverse the outflow of talent to other nations nations invest up to $50,000 in training a local university tive sides as well. There are many experts who prefer to speak graduate and must absorb a net loss in the case of his or her about “brain circulation,” “brain mobility” and “brain exchange” emigration.3 with respect to the modern world. In short, a “brain drain” can re- Secondly, they must sometimes cope with chronic shortages of verse direction, provided the incentives and stimuli are changed. skilled labor, which leads to a further decline in scientifi c achieve- And, in many cases, it is more of a circular fl ow, as talent con- ment, economic output, and innovation. stantly moves around the globe in response to changing eco- Thirdly, they sacrifi ce revenues in the form of taxes that they nomic conditions. could collect from highly paid workers or their businesses. Russia has not yet passed the critical point of no return and still Fourthly, they have to import expertise from abroad, often being has a chance to reverse the net outfl ow of talent to other nations. In forced to pay much more for foreign software specialists, teachers, the case of Russia, the strongest points the country can make in its engineers, managers, etc. favor are a good educational system, the presence of some leading Finally, foreign students living and studying in developed coun- high tech industries (aerospace, nuclear power, IT, etc.) and exter- tries directly support these economies rather than their home nal demand for the products of these leading industries. However, countries. For example, the United States and the UK gain more these benefi ts are at risk of quickly dissipating, meaning that steps than $20 billion annually in education fees and accommodation need to be taken sooner rather than later. costs from international students. THE RETURN OF THE RUSSIAN DIASPORA POTENTIAL CONSEQUENCES OF THE ‘BRAIN DRAIN’ FOR RUSSIA Think of all the advantages possible if Russia were to entice highly talented members of the Russian diaspora to return For Russia, this “brain drain” has consequences in addition to home. Top-level Russian workers who made good careers in merely fi nancial or economic considerations. One has to note the their new host countries would help to open the branches of social consequences as well — the “brain drain” ends up reducing international corporations in Moscow or St. Petersburg. They the size of the middle class. It also could result in Russia lagging be- would come back and establish their own companies in Siberia hind in the global competition for knowledge, making it dependent or the Far East. They would bring expertise, the ability to work on foreign inventions and technologies. in a multicultural environment and better understanding of risks There exists a latent “brain drain” model as well, in which gov- and opportunities in the global economy. When participating ernments provide tax benefi ts and other perks to large foreign in communities or alumni clubs at home, they would have the corporations willing to re-locate part or all of their operations to capacity to change the local education system, to reform aca- their countries. A typical situation today is the establishment of demic networks, or to implement innovations in management. free economic zones or areas with special terms for investors in The “brain circulation” model implying that skilled labor may developing countries. These foreign companies do create new jobs return home with new skills and technologies is based on the and pay taxes, however all profi ts and intellectual property fl ow in examples of ethnic Chinese who study in the United States and one direction: from the developing world to the developed world. then come back to Asia to set up large Internet companies, or software specialists, who made the global success of Indian outsourcing possible only after obtaining degrees and knowl- HOW CAN RUSSIA REVERSE THE FLOW OF edge in America. The Russian example might be the increasing THE ‘BRAIN DRAIN’? number of investors and entrepreneurs returning home after a stint in Silicon Valley, eager to use their new skills to launch new The “brain drain,” like any social phenomenon, holds some posi- ventures or start new companies.

3. “Brain drain or brain bank? The impact of skilled immigration on poor-country innovation.” National Bureau of Eco- nomic Research working paper series, December 2008, http://www.nber.org/papers/w14592.pdf?new_window=1

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HOW CAN RUSSIA BECOME MORE way to stimulate a good student to stay in Russia… is to ensure that ATTRACTIVE TO TOP TALENT? the conditions of life and professional development in our country are no worse than there [abroad].” For Russia, it is important to analyze the factors forcing highly skilled talent to move across borders. Certainly two of the major RUSSIA EXPORTS TALENT, BUT DOESN’T reasons for migration of skilled human resources are higher income IMPORT TALENT and greater potential for the realization of one’s potential. Another key factor is a higher standard of living — everything Bearing in mind the aforementioned features of “brain mobility,” from a comfortable and safe living environment to political stabil- it is evident that the process has become fi rmly established as a ity, freedom and respect for human rights. Yale Law School profes- feature of globalization and can hardly be placed under the control sor Amy Chua, in her book “Day of Empire: How Hyperpowers Rise of one or another state. Hence, nowadays any country assessing to Global Dominance,” maintains that real infl uence in the world is the risks of “brain drain” should actually focus on the balance of in- achieved only by those nations that demonstrate tolerance and, fl ow and outfl ow of talent. When it fi nds itself in the group of “net thus, can aff ord to attract talented migrants imbued with the spirit exporters” of top talent, this should be an alarming sign. of entrepreneurship. One recent study shows that 6 out of 10 innovators move to the Thus, it is important for Russia to provide the intellectual elite ac- United States, while the number of innovators who immigrated for cess to modern technologies, challenging projects and communi- permanent settlement there exceeds the number of respective ties of their peers where they can exchange ideas and feel like they emigrants by 15 times.4 India and China are leaders in net outfl ow belong to the international academic community. The latter fact of innovators in the 2000s, followed by Canada, the UK, France, accounts for the low number of successful repatriation projects in Italy, and Russia. But similar to Italy, Israel, India, or Brazil, Russia Russia — good laboratories within the country are short of inter- demonstrates nearly zero growth in the infl ow of innovators. national names and are often not fully integrated into the interna- Such poor balance implies that Russia should focus on both strat- tional academic community. egies — to give impetus to the infl ow of innovators (in order to The understanding of the objective causes of migration will re- compensate for the emigration wave of the 1990s) and to prevent sult in more politicians acknowledging the economic inevitability of the outfl ow of innovators. Each of these strategies provides for a “brain circulation.” As Russian Prime Minister Dmitry Medvedev put slightly diff erent tactics, which can easily be borrowed from inter- it, “There is no need to fi ght against it, it makes no sense. The only national best practices.

4. Economic Research Working Paper No. 17. World Intellectual Property Organization Economics & Statistics Series, 2014, http://www.wipo.int/export/sites/www/econ_stat/en/economics/pdf/wp17.pdf

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ITAR-TASS

Part 1 Dmitry Polikanov WHAT THE INTERNATIONAL EXPERIENCE IN ‘BRAIN MOBILITY’ MEANS FOR RUSSIA

Over the past decade, the Russian government started to undertake efforts to change the situation with regard to the “brain gain”

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istory shows that it is impossible to stop the movement of intellectual talent with administrative actions. Any Hban on the export of “brain power” can be easily circum- vented — even if there is an international convention on this matter. Conventions on nuclear nonproliferation, for example, do not prevent nuclear physicists from the former Soviet Union and other parts of the world from migrating to countries with increasing demand for their talents, notably in the Middle East. Yet, just as medieval Venice attempted to block the migration of talented glassmakers from the Murano islands and the British Empire tried to restrict the migration of English and Irish crafts- men to the newly established United States, some countries today still try to prohibit the emigration of highly skilled workers, such as teachers and doctors. However, in most cases, people learn how to hide their educational levels and become even more encouraged to migrate for the sake of personal freedom.

4 WAYS TO STOP ‘BRAIN DRAIN’

1. Propaganda Propaganda seems to be a relatively eff ective instrument to limit “brain drain.” In the 19th century, Prussia, which was creating a sin- gle state and was suff ering from the outﬂ ow of skilled professionals, ordered its newspapers to publish special reports on the terrible living conditions of immigrants in the United States. In the same way, many countries today appeal to the patriotic feelings of the academic community and skilled labor, trying to convince them to work for the national economy. 2. Special visa arrangements Other nations place more emphasis on the attraction of special-

ists. For example, Australia, New Zealand, Canada, France, the UK MIKHAYLENKO NATALIA and others facilitate visa arrangements for foreign students. In the and employers, so that foreign students have immediate access to UK, Germany, Ireland or Japan there are special types of visas for jobs after graduation and, hence, more reasons to stay. highly skilled professionals in certain areas, such as in the IT sector. 4. Globalization of educational options Some countries even simplify the process of obtaining citizenship The globalization of education is also a “carrot.” In Scandinavia, for university graduates and their family members. Among other Germany, or Hungary there are more and more academic pro- measures, one may note the allocation of work permits for people grams taught in English. Singapore, Qatar or Malaysia sign agree- with student visas (notably post-graduates) or simplifi ed recogni- ments with the leading U.S. universities and open up their cam- tion of foreign degrees. puses or provide for dual courses, which help to obtain both the 3. Financial incentives national and the U.S. degree. Taking into account the lower costs of Another option is to use fi nancial incentives. Many nations provide education there in comparison with the United States or Australia, talented students and post-doctoral fellows with grants or simply such an approach makes sense. take on the costs of their education. The European Union is slowly increasing its research and development (R&D) budget (but mostly CULTIVATING TIES WITH DIASPORAS in private and not in public R&D activities)1 in order to persuade AROUND THE WORLD talented foreigners to stay in its laboratories and institutions. It is also important to ensure strong connection between universities Certain nations develop special relationship with the scientifi c

1. Patrick Boetler. “China spending more than Europe on science and technology as GDP percentage, new ﬁ gures reveal,” South China Morning Post, January 21, 2014, http://www.scmp.com/news/china-insider/article/1410178/china-spending-more-europe-science-and-technology- gdp-percentage

WWW.RUSSIA-DIRECT.ORG RUSSIA DIRECT QUARTERLY REPORT 9 BRAIN GAIN | #5 | MAY 2014 World Bank numbers indicate that the flow of talented workers from Russia is about 35 percent of the total number of educated human resources diaspora — they try to benefi t from the experience and connec- does not mean that they should be abandoned, but in most tions of their compatriots abroad. Such an approach is typical cases, they obtain greater impact if they complement the exist- of South Korea, India, China, Turkey or Latin America. ing strategies of preventing emigration or attracting fresh tal- For instance, in India, they introduced a non-resident card for ent. those Indians who settled abroad or belonged to the next generation of immigrants. With this document at fi rst, they enjoyed PUTTING A NUMBER ON THE SCALE AND the right of no-visa entry into India, but then the program was SCOPE OF THE RUSSIAN ‘BRAIN DRAIN’ expanded to allow them to buy land, etc. India also issues so- called diaspora bonds for non-resident Indians, using this as Russia plays a special role in the global war for talent. For many a long-term investment instrument for fi nancial restructuring years after the collapse of the Soviet Union, the country had and development of infrastructure. been a major exporter of “brainpower” in the form of skilled In Portugal and Mexico, diasporas are given political repre- immigrants. These Russian workers, in many ways, were the sentation. Over 4 million Portuguese abroad have the right to benefi ciaries of the sound educational system set up during vote for the president and have four seats in the parliament the Soviet era. reserved for them. With the breakup of the Soviet Union, Russia could hardly Diaspora services in Ireland and Mexico advocate for the expect to retain its attractiveness as a destination for skilled communities abroad and defend their interests. For instance, workers, especially for the intellectual elite. In 2013 the Russian the Irish Abroad Unit within the governmental department co- Federation ranked second in the number of international im- ordinates fi nancial assistance to voluntary and community or- migrants (11 million) after the United States (45.8 million),2 but ganizations abroad that provide assistance and deliver services most of them were not skilled workers, people aspiring to a uni- to vulnerable Irish immigrants. versity education, or individuals holding degrees and seeking Language and culture support are traditional instruments of jobs in research. retaining ties with former citizens, while the establishment of The statistics on the emigration of intellectuals from Russia exclusive clubs, special contests and prizes, as well as other vary. Many experts point to the economic crisis of the 1990s as forms of recognition assist signifi cantly in the present-day en- a major negative impetus for “brain drain” — the government vironment to maintain a connection with compatriots. “Birth- reduced its support of scientifi c activities, and many advanced right Israel,” a private organization sponsored partly by the enterprises, including those in the military-industrial complex, Israeli government, helps in organizing trips to Israel for young were shut down, changed their profi les, or were the victims of Jewish adults abroad (about 50,000 per year) and, thus, at- scaled-back R&D programs. tract their return. In the early 1990s, the country lost about 60-80 thousand According to a report by the Partnership for a New Ameri- scientists, according to some private sector experts. Most of can Economy, China in 2010 started a massive program to en- them were software specialists, biotechnologists, physicists courage the return of its highly skilled specialists who studied and mathematicians who came from Moscow, St. Petersburg abroad with substantial bonuses to research and university and Novosibirsk and had doctoral degrees. More moderate es- professors (over $150,000 per person). Research fellows are timates suggest about 25,000 scientists leaving Russia in the also off ered the opportunity to make joint programs without period 1989-2004 and about 30,000 working abroad with tem- permanent resettlement and, hence, become more involved in porary contracts.3 training national human resources. World Bank numbers, when compared with the fi gures of the However, the overall assessment of migration policies indi- Russian statistical service, indicate that the fl ow of talented cates that these return programs have limited success. This workers from Russia is typical of any other developing nation —

2. UNESCO Institute of Statistics, 2011, http://www.uis.unesco.org/Education/Pages/international-student-ﬂ ow-viz.aspx 3. “The Global Talent Comprehensiveness Index,” Human Capital Leadership Institute Research, 2013, http://global-indices.insead.edu/gtci/documents/gcti-report.pdf

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PHOTOSHOT/VOSTOCK-PHOTO about 35 percent of the total number of educated human re- younger generation and sometimes even lack protégés or stu- sources.4 dents to whom this knowledge can be transferred. It is often diffi cult to place an exact gure fi on what this means Another alarming trend is the growing number of young peo- in economic terms. For instance, according to the famous Rus- ple who prefer not to return to Russia after obtaining an educa- sian scientist Sergey Kapitsa, who spoke about the 1990s, “In tion abroad. While the number of scientifi c emigrants is going the last 10 years, the Moscow Institute of Physics and Technol- down, there are about 35,000-50,000 Russian students in for- ogy alone lost about 1,500 specialists, or nearly 20 percent of eign universities, out of whom 10 percent have above-average all of its graduates. abilities. Nearly 40 percent of them dream of international ca- While this creates an image of elite Russian researchers leav- reers. Victor Sadovnichiy, rector of Moscow State University, ing en masse for brighter careers in the West, some surveys ac- maintains that about 15 percent of graduates leave the country tually suggest that the average Russian academic stays on the every year. periphery of Western science after emigrating. They are nor- mally older, have a Soviet education, lack international degrees LEADING FACTORS FOR THE RUSSIAN and are less integrated into the Western academic community. ‘BRAIN DRAIN’ Many of them end up with lower-prestige jobs in U.S. or Ger- man laboratories or work as guest professors in universities, but As in the rest of the world, one of the major reasons for the do not become academic stars. Russian brain drain is low wages. Despite the Russian govern- What’s more important, this creates a generation gap in the ment’s eff orts, the salaries of the young researchers (and even Russian academic community — the low number of young re- their elder colleagues) lag behind the compensations that they searchers and mid-career professionals is not commensurate can expect abroad. with the high number of scientists who are over 50 (who com- One may also add the high cost of living (especially in Mos- prise nearly half of the academic community). The latter fi nd cow) along with the poor quality of medical and legal services it diffi cult to transfer their knowledge and experience to the and environmental and transportation problems. Nonetheless,

4. “Education Indicators Focus,” OECD Publishing, July 2013, http://www.oecd.org/edu/skills-beyond-school/EDIF%202013--N%C2%B014%20(eng)-Final.pdf

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scandal (in the last couple of years, a public audit has demonstrated the low scientifi c value of many defended Ph.D. works due to plagiarism) contribute to the outfl ow of talent abroad. The state of Russian academic journals, most of which do not go beyond publishing domestic research results and are not cited abroad, limits the scope of self-realization and creativity. Scientists, even in the most fundamental way, also need an area to test their theories in practice. However, Russian industries (with some exceptions) do not demonstrate substantial demand for their research output. Low overall industrial potential results in the acute shortage of qualifi ed personnel in some modernizing sec- tors and leads to the outfl ow of ideas and academics abroad.

EXPAT MANAGERS VS. RUSSIAN MANAGERS

The war for talent is obviously not limited to the problems of scientists only. One of the factors aff ecting global competitive-

NATALIA MIKHAYLENKO NATALIA ness of a country and its corporations is the availability of highly professional managers, including those from a multicultural en- material issues are not the only ones. The prestige of science vironment. and work in the university in Russia is much lower than in the However, Russia is at the beginning of this process. Its brain ex- United States. The latter actually invests a lot in maintaining change potential and the eff orts of the state and businesses are the image of the global science and technology center — popu- focused mainly on retaining or attracting members of the aca- lar academic institutions and stories about their stable multi- demic community (i.e. the intellectuals) rather than managers. billion-dollar funding help to promote the United States in the Consider, for example, the situation with MBA graduates, in- eyes of European and Asian students and post-graduates. cluding those who received their degrees from foreign institu- Those scientists who are ready to stay and work in Russia face tions. Until 2008, it was quite fashionable to run for the MBA another non-material “academic factor”— the lack of advanced program and employers demonstrated more interest in hir- equipment, absence of foreign superstars, deteriorating quality ing those with the MBA diploma, especially if it was obtained of scientiﬁ c schools, closed nature of the academic communi- abroad. ties and the presence of a bureaucratic apparatus managing However, the trend came to an end after the 2008-2009 eco- the Russian sciences. nomic crisis, and currently more and more employers prefer In addition, the perceived prestige of Russian higher educa- experience to the basic MBA degree. While there is a need for tion plays a role. Low rankings in the international ratings, on- skilled personnel, including top managers, fewer companies going discussion about educational decline and the occasional work deliberately on seeking and recruiting MBA graduates.

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Another similar story is the change of attitude towards top- For foreign managers the benefi ts were evident as well. They level migrants, also known as expats. Throughout the 1990s receive new experiences, better career prospects (expats in and before 2009 (especially when the Russian economy was Russia are mainly engaged with positions that are higher than booming) it was quite popular to have foreign managers. The at home) and substantial compensation packages, including branches of international companies often preferred expats not exceptional bonuses for the risk of working on a developing only for their exceptional skills, but also for their effi ciency and market. In addition to the wages, which are levied with one of productivity. the lowest income taxes (13 percent in Russia vs. 40-50 per- Many companies needed foreign managers and board mem- cent in some European countries), they were provided with bers in order to impress investors, especially if they were rais- special advantages for the families (elite schools and kinder- ing money in the capital markets or expanding their global gartens for kids, housing allowances, health insurance, corpo- operations. Companies mainly hired expats when they were rate cars, etc.). concentrated on short-term economic projects. As a result, However, the situation changes as more and more expats are these companies needed people with experience and knowl- replaced with Russian employees. It is expensive for companies edge of well-tested and internationally recognized technolo- to pay for personal assistants, full resettlement of families, im- gies. migration procedures, and so on. Russia’s further accession to the WTO raised interest in em- Moreover, a standard contract of a foreign manager is three ploying foreigners who were aware of the global rules and reg- years. During the fi rst year, he or she adapts to the situation; ulations. Expats also help to improve the image of the company during the second one, he or she works at peak potential and and are useful from the point of maintaining connections with fi nally, during the fi nal year, he or she spends time in prepara- foreign partners. Besides, their largest benefi t is their corporate tions for the departure home. As there are more and more Rus- culture — in many cases they were used as pacesetters for the sian managers who know well the specifi cs of the local market, standardization of internal procedures and processes in accord- understand the psychology of the Russian consumer, and cost ance with the best international practices. less (due in part to their specialized Russian experience and

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© RIA NOVOSTI More Russian universities are starting to invite foreign professors and participate in the international rating programs poor command of English), the era of expats is coming to a ga-grants designated for joint projects between the Russian and close in comparison with the period of the 1990s and 2000s. foreign scientists and for attracting Russian compatriots abroad to Thus, generally speaking, Russia is not undertaking signifi - invest their intellectual potential in national science. cant steps for “brain gain” (or for preventing “brain drain”) in The Global Education program launched by the Agency for Stra- the sphere of management. tegic Initiatives and the Russian ministries should provide educational loans for the most talented to study abroad, but with manda- THE RUSSIAN GOVERNMENT’S STRATEGY tory return and work for the civil service or priority industries. FOR ‘BRAIN GAIN’ More and more Russian universities are starting to invite foreign professors and participate in the international rating programs. Over the past decade, the Russian government started to under- The policy of the Ministry of Education and Science focuses on take eff orts to change the situation with regard to the “brain gain”. encouraging international exchanges and opening up the Russian The funding for science and education has increased (e.g. the fed- academic community through targeted benefi ts for those institu- eral budget spending on R&D in the last fi ve years doubled to 371 tions, which demonstrate global results (e.g. good positions in the billion rubles),5 even though it is still below the standard levels for citation indices). medium-ranking developed nations. The concentration of universities (the establishment of the so- New grants for young researchers, presidential and regional called federal universities and the reduction in the number of prizes and contests, competitions of innovators and various fairs “dummy” institutions) may also help to consolidate the resources aimed at connecting them with businesses and sponsors — all for the sake of breakthrough. these are positive trends. Russia introduced the practice of me- One may also note the evolution of the educational system — new

5. “Science Indicators: 2013,” National Research Institute – Higher School of Economics, 2013, http://www.hse.ru/primarydata/in2013

14 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014 technologies of distance learning may help to prevent the “brain drain.” Russian students are among the most active users of online HOW CHINA AND courses, such as those provided by Coursera. Such education innovations imply that Russian students stay at home and can actu- INDIA ARE STOPPING ally get their jobs in Russia while securing international degrees or certifi cations. So far, distance learning is mostly connected with the improve- ‘BRAIN DRAIN’ ment of skills rather than comprehensive education process (and the employers add little value to the fact of obtaining such degree). ndia and China, which account for nearly one-quarter However, in the foreseeable future, such networked universities of all students studying abroad, undertake substantial may drastically change the situation in the area of education and, I eff orts to attract talent. In 2012, more than 2.6 million as a result, will reduce the outfl ow of students. Chinese students completed their education abroad and In order to connect the sciences, education and employment, the only 1.09 million returned to China. However, China has government gives tax benefi ts for small innovation enterprises in also managed to increase the number of foreign students the universities. A signifi cant amount of money is spent on special studying within the country — from 80,000 to 330,000 scientifi c “natural reserves” — the so-called academic towns (nau- in just the past decade. kogrady) and special innovation zones like Skolkovo, which should To make this possible, the Chinese government increases combine institutions, laboratories and industrial facilities. the budgets of universities and tries to ensure their top By 2013 nearly 1,000 companies were residents of various innova- places in the global rankings. They also give foreigners tion clusters in Skolkovo and enjoyed exclusive tax advantages. The more options. In addition to traditional “export” courses Skolkovo Institute of Science and Technology (in collaboration with (such as the learning of Chinese), China now provides MIT) will focus on bringing together Russian students (Master’s and high-quality training in bioscience, IT and other in-de- Ph.D. programs) and foreign professors along with potential inves- mand disciplines. Academic training is complemented tors. The studies are planned to commence in 2014, and by 2020 with investments in research, allowing the creation of con- the institute will be mostly established. Since all the courses are run ditions for the most promising students to stay. in English, Skolkovo may become a good testing ground for invit- The Chinese undertake some controversial measures as ing students, innovation experts and businesses from Russia and well. As positions in the international university rankings abroad. depend on the quality of personnel and citation indices, The newly established National Council for Professional Qualifi ca- some Chinese educational institutions prefer to buy the tions under the auspices of the Russian President should bring to- right to include foreign experts in their lists of professors. gether the demands of business and the professional training pro- This does not mean their physical presence in China (es- fi les of the Russian educational centers. There are more and more pecially as distance learning courses become widespread) large corporations that invest not only in R&D, but also in corporate or signifi cant involvement in the work of the universities, educational and training facilities, giving young people the chance but helps to meet some formal criteria. to obtain extra skills and guaranteed jobs. Russia is using best training practices by participating and organizing international competitions, such as the Global Management Challenge (which is billed as “the world’s largest strategy and management competition”). They are mostly aimed at popularizing professions and companies. However, good results in such contests are inspiring for many and help young talents to fi nd their jobs at home, as employers track their success and fi nd the competitions to be in keeping with management trends. As far as the attraction of skilled and talented immigrants is con- cerned, Russia is considering the possibility of introducing facilitat- ed schemes of granting citizenship. The procedure will be applied to qualifi ed specialists who studied in Russian state-owned universities and lived in the country for more than last three years. There are visa facilitation arrangements for foreign specialists and businessmen depending on their skills and level of income. Many foreign students come to Russia to obtain free university education, as they win national fellowships provided by the Russian government to other states in accordance with some quotas.

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Part 2 Andrei Korobkov THE ‘BRAIN DRAIN’ IN COMPARATIVE PERSPECTIVE: THE US EXPERIENCE

Intellectual immigration is one of the key factors that ensures U.S. dominance in the global economy and markets of advanced technologies

16 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014 For a long time, U.S. immigration policy did not pay particular attention to immigrants’ qualifications, giving priority to their ethnic origin

ith the development of globalization, the prob- THE US EXPERIENCE lem of “brain drain” has acquired truly global sig- Wnificance. And Russia has not managed to sidestep Meanwhile, the problem of intellectual immigration is not the issue, especially since the collapse of the Soviet Union unique to Russia. Of particular interest in this respect is the U.S. fundamentally changed Russia’s position in the global talent experience of immigration policy. This is not surprising given structure. that the country is home to the largest immigration system in Today, Russia is playing three fundamentally different roles the world. Immigrants now make up more than one-eighth of in the process: as a host country of migrants; as a country of the country’s population, with about 23 million of them eco- emigration, mainly to the “Old Abroad” (i.e. outside the former nomically active. Soviet Union); and as a transit country for those trying to get Immigration is an important factor not only in terms of quan- to the West. titative growth, but also qualitative changes in the makeup of But perhaps the most painful aspect of contemporary mi- the U.S. population, which already exceeds 315 million people. gration, as perceived by society, is this: After the collapse of It continues to grow very rapidly and is expected to hit 438 the Soviet Union, Russia became the center of the largest im- million in 2050.4 migration system in the world after the U.S. (12.3 million in- Immigration accounts for approximately one-third of the habitants of Russia were born abroad, compared with 40.5 country’s total population growth, and is seen as an economic million in the U.S.).1 Yet, in both countries, the most heated stimulus, nourishing the economy with both low-wage work- debates on immigration surround the rising pressure on the ers and highly skilled professionals (saving money on having labor market and social protection mechanisms, as well as the to educate them). rapid changes in the ethnic, religious, and linguistic structure Nevertheless, for a long time, U.S. immigration policy did not of the population. pay particular attention to immigrants’ qualiﬁ cations, giving However, in Russian society, the problem of emigration from priority to their ethnic origin and country of birth in order to the country is also a sore point (although the figures are sub- retain a high proportion of immigrants from Western Europe stantially lower these days: Since 1991, 1.3 million Russian citi- (primarily on the basis of regional quotas established in the zens have received official permission to reside permanently early 20th century). outside the former Soviet Union).2 Especially unpleasant is the fact that the departees, both temporary and permanent, 5 COMPONENTS OF US MIGRATION POLICY contain a high proportion of skilled labor, including intellec- TODAY tual workers — the estimates vary wildly from 30,000 to over 500,000 people,3 but it is clear that we are talking about hun- The modern system of attracting foreign specialists to the U.S. dreds of thousands. At the same time, far less attention is paid began to take shape after the onset of the Cold War, and in- to the positive aspects of intellectual emigration and the im- cluded ﬁ ve main components. First, alongside the adoption portance of simultaneously attracting intellectual emigrants of the Marshall Plan in 1947, Americans invited people from to Russia. all over the world to come and study en masse, as a result of

1. Julia Preston. “Mexican Migration to the US May Be Reversing, Report Says.” International Herald Tribune. 25 April 2012, 2., Pew Hispanic Center. “A Nation of Immigrants: A Portrait of the 40 Million, Including 11 Million Illegals”. http://www. pewhispanic.org/2013/01/29/a-nation-of-immigrants/). 2. Vishnevsky, A.G., ed. Russia’s population 2003-2004: 11th-12th Annual Demographic Report. M.: Nauka, 2006, 325. 3. The ﬁ rst such assessment was made in 1998 by S. Egerev, who claimed that 30,000 Russian academics were working abroad, including 14-18,000 in the fundamental sciences (“Draining brains. Interview with S. Egerev by N. Davydova.” Moskovskie Novosti. No. 46, 1998) Meanwhile, former U.S. Ambassador to Russia Michael McFaul said that more than 40,000 Russian-speaking scientists were working in Silicon Valley alone (Michael McFaul. “U.S. and Russian experts to establish closer ties” 29.2.2012. http://m-mcfaul.livejournal.com/6297.html. 4. Statistical Abstracts of the U.S. Washington, D. C.: U.S. Bureau of the Census.

WWW.RUSSIA-DIRECT.ORG RUSSIA DIRECT QUARTERLY REPORT 17 BRAIN GAIN | #5 | MAY 2014 which the country received the ability to pick and choose the 1. Stimulate an infl ux of highly qualifi ed specialists to best workers. ease the burden on the national educational system Second, a network of public research centers (such as the Na- and reduce the cost of training, and tional Institutes of Health) was created, and mechanisms were 2. Off er large-scale programs for foreign students to put in place to provide grants for research projects on a com- attend U.S. institutions to secure the best workforce petitive basis. and promote the formation of pro-American groups Third, public (or rather, state) universities began to spring up, among those that later return home, taking with them making it possible to “deepen” the academic pool nationwide; a new political culture and ideology. many of these universities now compete on an equal footing with the leaders — Yale, Harvard and Princeton. INTELLECTUAL MIGRATION AS A TOOL OF In Russia, meanwhile, scientifi c potential is still concentrated ‘SOFT POWER’ in a limited number of cities, although the recent decision to establish a network of federal and research universities is a Hence, intellectual (especially educational) migration acts as an step in the right direction. eff ective mechanism of “soft power” by expanding U.S. politi- Fourth, the 1950s began to see the formation of California’s cal, economic, and cultural infl uence. Silicon Valley, with minimal government participation. Russia The value of this was understood even during the Marshall in recent years has attempted to create its own versions, pri- Plan, when thousands of young Germans were invited to Amer- marily Skolkovo. Nevertheless, the most important diff erence ican universities. Many of them remained in the U.S., and those between these ventures and the U.S. model are the numerous who returned home often became carriers of a new political administrative structures and elements of centralized state culture. control that are found in Russia. They were followed by a new wave of intellectual migration, Fifth and fi nally, as already noted, after 1965 the U.S. radically initially from Western Europe and Japan, then South Korea, revised its immigration policy, opening up its borders to immi- Taiwan, and other parts of Asia, as well as Latin America. The grants from developing countries and qualifi ed professionals. 1970s and 1980s saw the rise of China, followed by Eastern Eu- As a result, U.S. policy to encourage intellectual immigration rope and the post-Soviet countries. is today aimed at achieving two main goals: This allowed the U.S. to pick and choose highly qualifi ed

Intellectual migration acts as an effective mechanism of “soft power” by expanding U.S. political, economic, and cultural influence NATALIA MIKHAYLENKO

18 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014

AP professionals and continuously replenish the intellectual elite. gineering. Even in the face of large-scale immigration, 64 per- Today, foreign students and immigrant staff account for about cent of U.S. companies have diffi culty recruiting qualifi ed staff half of all faculty employees in the fi eld of natural sciences. in the fi elds of management, natural sciences, and IT,7 which Foreigners make up more than a third of doctoral degrees in threatens America’s hold on the increasingly competitive glob- the natural sciences, including 57 percent in engineering disci- al intellectual market. plines, 54 percent in computer science, and 51 percent in phys- Science teaching in schools is also suff ering. The report “U.S. ics.5 The share of highly skilled immigrants in the U.S. workforce Education Reform and National Security,” prepared under the is 3.2 percent (even in Western Europe, the share of skilled non- direction of Joseph Klein and Condoleezza Rice, notes that Europeans is only 1.7 percent).6 U.S. “students leave school without the basic math and science Thus, intellectual immigration is one of the key factors that skills needed for modern industry. Too often they fail the tests ensures U.S. dominance in the global economy and markets of for military service. The State Department and intelligence ser- advanced technologies. It is also of no small importance that vices do not have the requisite number of linguists and ana- the training of foreign elites technologically binds their coun- lysts for critical regions. By almost all criteria, U.S. schools are tries to the U.S. economy. failing to provide the level of education necessary ... to ensure leadership in the 21st century.”8 SOME NEGATIVE CONSEQUENCES OF US It is also of note that the U.S. has seen the appearance of di- IMMIGRATION POLICY asporas of high-status foreigners who have begun to lobby for the interests of their countries of origin. There is a fl ip side of the coin: The years-long focus on “importing For example, at the start of this century, engineers of Chinese brains” en masse means that today the U.S. educational system is and Indian origin controlled one-quarter of all high-tech busi- not able to prepare an adequate number of qualifi ed specialists nesses in Silicon Valley. As a rule, at least one of the founders of from among its “own” students in the natural sciences, to the ex- any newly opened business there today is either an immigrant tent that doctoral programs need a constant infl ux of foreigners. or a fi rst-generation American. Today, only 4.5 percent of U.S.-born students graduate in en- In 2000, there were 300,000 professionals in high-tech in-

5 Klein, J. and C. Rice, chairs. U.S. Education Reform and National Security. NY: Council on Foreign Relations, 2012, 10. 6 Dixon, L. “Brussels Plans to Woo Skilled Migrants.” Financial Times. 24 October 2007, 2. 7 Klein, J. and Rice C., 42. 8 Ibid; x.

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dustries and 35,000 doctors of Indian origin — despite the fact tem of points. Introduced in 1967, it off ers signifi cant advantages that immigration from India to the U.S. only really started dur- for people below the age of 35 with a college degree or pro- ing the Cold War. fessional qualifi cations (a similar system is used in Australia): 62 However, the intellectual immigration is not limited to devel- percent of permanent residency permits are issued on the basis oping countries: The U.S. today has more than 400,000 skilled of qualifi cations.9 workers from Western Europe, only 50,000 of whom say they As a result, the proportion of high-skilled immigrants in the would like to return home. Canadian workforce is 7.3 percent, 2.5 times higher than in the U.S.10 Moreover, Quebec provides additional privileges to CAN THE US DRAW ON THE CANADIAN speakers of French. EXPERIENCE? However, in Canada itself, the system has been criticized — both because it often ignores the humanitarian aspects of immigra- Many critics are urging the U.S. to move to a Canadian-style sys- tion, and because it fails to take suffi cient account of the needs

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9 Fareed Zakaria. “Broken and Obsolete: An Immigration Deadlock Makes the U.S. a Second-Rate Nation.” Time. 18 June 2012, 20. A detailed description of the Canadian points system is available at: http://www.cic.gc.ca/english/immigrate/ skilled/apply-who.asp 10 Dixon, L. “Brussels Plans to Woo Skilled Migrants.” Financial Times. 24 October 2007, 2.

20 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014 Without the development of policies to attract and collaborate with the world’s intellectual elites, Russia could fall hopelessly behind the leaders of the labor market. In particular, the governments of Alberta, Overall, the experience of both the U.S. and Canada primarily Manitoba, and some other provinces emphasize that professions points to the signifi cant benefi ts of intellectual migration and with the most vacancies are now of average skills complexity, the ability of the government and society to integrate large such as middle and junior medical staff , whereas the points sys- numbers of migrants, without endangering the foundations of tem benefi ts the most qualifi ed — and costly — personnel. democracy.

US IMMIGRATION REFORM LESSONS FOR RUSSIA

Reforming the U.S. system of stimulating intellectual migra- It seems obvious that Russia has enormous potential to learn tion depends on the success of immigration reform in general. from America’s history of intellectual migration. Meanwhile, any discussion of the concept often causes serious A clear understanding is required of the fact that intellectual friction — the last successful compromise in this area came in migration is an important part of the global migration ﬂ ow, 1986. Although the White House has developed a comprehen- which itself is a component of the global labor market — a sub- sive reform project, its adoption is being hampered by the Re- set of the global market. Without the development of policies publicans in the House of Representatives. and concepts to attract and collaborate with the world’s intel- A special place in President Barack Obama’s concept belongs lectual elites, Russia could fall hopelessly behind the leaders. to the so-called DREAM Act (“Development, Relief, and Educa- The global labor market, including intellectual migration, is a tion for Alien Minors”). Its adoption would facilitate and accel- reality of the era of globalization. In these circumstances, no erate the process of acquiring citizenship for children of illegal bans or enforcements can possibly work. This is particularly evi- immigrants who attend college or serve in the U.S. Army. The dent in relation to elite groups of migrants, who are highly rated concept of immigration reform also foresees a more liberal visa in the global labor market and demand freedom of creativity. regime for skilled workers and entrepreneurs willing to invest in That is why the search for solutions to harness the positive as- the U.S. economy. pects of both intellectual immigration and emigration is vital.

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Part 3 Michael Spaeth and Sergej Sumlenny HOW RUSSIA CAN FIND THE RIGHT PERSONNEL IN A CHANGING WORLD

Never before has the Russian market been in such need of a workforce with an international background and very specific international skills

22 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014 Since 2008, there has not been any dramatic growth in the number of well-educated foreign professionals in Russia

he Russian job market is a good example of how economic CAN RUSSIA ATTRACT TOP FOREIGN TALENT concerns, high demand for well educated professionals TO FILL THIS TALENT GAP? Tand globalization of the job market have strongly infl u- enced the employment activity of companies. For the past few Although Russia urgently needs a high number of well-educated years, the Russian job market in metropolitan areas (especially professionals, the Russian job market does not look very attrac- Moscow) has seen the demand for talent far outpace the supply tive for foreigners. Since 2008, there has not been any dramatic of highly skilled talent. Due to the lack of qualifi ed staff , compa- growth in the number of well-educated foreign professionals in nies must respond quickly in attracting and retaining employees, Russia. Although new Russian legislation introduced in 2010 al- many of who are fully aware of their own market value and can lows well-paid foreigners (those with salary of more than 2 mil- negotiate higher salaries and other perks. lion rubles per year, or about $60,000 in U.S. dollar terms) to In January 2014, Russian Prime Minister Dmitry Medvedev re- obtain a Russian visa and a job permit without any obstacles, vealed his concerns about the sustainability of the Russian job there are only several thousand foreigners who go to Russia as market. “The generation of the 1950s is now leaving the job mar- “highly qualifi ed specialists.” According to Russian statistics, ket and will go on pensions, and the generation of the 1990s is there were only 1,100 Germans, 900 British, 850 Americans, 800 just entering the market. Under such conditions we will suff er French, 530 Turks and 520 Chinese who were characterized in from lack of skilled personnel, not from the lack of jobs,” he said. 2011 as “highly qualifi ed specialists.” And some of these “foreign- He added that the Russian government would be ready to sup- ers” actually include former Russian citizens living abroad who port re-educational programs for personnel but cannot agree are now returning to Russia. with the concept of “once obtaining a profession, it is one’s pro- The reason for Russia’s diffi culties in attracting top foreign tal- fession for the whole life.” ent is the decreasing competitiveness of the Russian job market on a macro level. The wages in Moscow are no longer dramati- GLOBALIZATION IS WIDENING THE RUSSIAN cally higher than in Europe, and the local infrastructure is still TALENT GAP underdeveloped or very expensive. For example, an employee in Berlin can use free kindergartens, while in Moscow he or she can In the Russian labor market, fi nding employees with foreign lan- get the same quality only by paying several thousand dollars per guage skills, knowledge of specifi c cutting-edge technologies year. That means you can get the same quality of life in Moscow and experience within a certain industry is not easy and may but you need to pay much more money for that, which ends up be diffi cult even in the Moscow region. In many ways, this is the making the jobs in Moscow less attractive. result of globalization. In Russia, there is a need for certifi ed fi - While the Russian job market off ers many opportunities to nancial advisors, lawyers and tax advisors with an international young professionals to take responsibility and occupy a top po- background; engineers with an international background and sition at a relatively young age, the Russian market is still per- very good language skills; and all sorts of technicians with inter- ceived as unattractive for young professionals who hope to get national backgrounds. The upshot is that excellent technical and an international background. As Russia is a very specifi c market fi nancial skills, combined with an international background, can that requires very special skills, a young professional from Eu- make one’s career in Russia very successful. rope who starts his career in Russia risks spending his or her Against this backdrop, fi nding highly qualifi ed Russian-speak- whole life working on this market, as skills from Russia cannot be ing employees with international experience is relatively rare. For readily applied to other markets. The best example is complicat- example, a European engineering company that wants to em- ed Russian custom regulations that force companies to search ploy both a German and Russian-speaking engineer with a Eu- for highly educated customs advisors. Such professionals are ropean diploma who can work for several months on a specifi c urgently demanded in Russia but cannot work in Europe, where project in Russia’s northern regions should be ready to pay either goods are already moving between borders without customs. a huge salary that is dramatically higher than a comparable salary in Germany, or search for months without fi nding the right PROBLEM #1: EXTREME WORKFORCE candidate. The lack of highly qualifi ed professionals who speak MOBILITY both Russian and English or German fl uently is especially severe among technical specialists such as engineers, technicians, etc. In Russia, many companies suff er from massive workforce turn-

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© RIA NOVOSTI over as people migrate from the Russian provinces to Moscow. university degrees (compare this to Germany, where the fi gure It is very typical in the Russian job market that some employees is closer to 20 percent). At the same time, a fi ve-year university may change their jobs every year should they fi nd a better pay- education with lots of theory and almost no practice often does ing opportunity. There is no concept of being a “company man” not help young people to obtain any skills that would help them or of “company loyalty” due to a lack of tradition. The workforce to work in the real world. At the end of the day, this means that fl ow from the Russian provinces to Moscow and then from Mos- young people have to receive a new practical education within cow to Western countries remains one of the most important a company. Trying to improve the current situation, many Ger- challenges for companies who have their business activity in man companies working in Russia have started to introduce a Russia. so-called German “dual educational system.” It lets young people High workforce mobility provides incentives for companies to who have recently graduated from high school to start learning obtain the best professionals at current market rates, but also a new job as an apprentice in a company, receiving a solid salary. creates uncertainty on the market as employees cannot prove For two or three days a week, young people learn the practi- their reliability anymore. There are also no legal barriers in Russia cal and theoretical foundations of their new job, and for the rest against an employee changing his or her employment to a com- time they attend a common school. After two or three years of petitor immediately after terminating his or her current employ- education, they pass exams and obtain the diploma of a skilled ment. What makes this situation particularly delicate is the fact worker — typically issued by a company and a local chamber of that employees can terminate their contracts within 14 days and commerce. The introduction of the same educational system in at the same time, may take unused vacation. Thus, this leaves a Russia, based on cooperation between foreign companies, Rus- company particularly exposed to certain individuals occupying sian high schools and the government, could rapidly improve the key positions and leaving with practically no notice. current quality of the workforce and help to modernize the Rus- sian economy. PROBLEM #2: AN EDUCATIONAL SYSTEM THAT NO LONGER PREPARES SKILLED WHAT THE FUTURE HOLDS FOR RUSSIA WORKERS The Russian economy – like any modern globalized economy — Another big challenge for the Russian job market is the growing requires an infl ux of young, well-educated professionals who are diffi culty of hiring recent graduates with the requisite skills. In ready to work in an international environment, who fl uently speak short, many graduates obtain an education that is not related several languages, and who have practical business experience. to his or her future job. It is typical in Russia that only a univer- When you consider demographic factors such as low birth rates sity degree with at least fi ve years of education counts toward and an aging population, and it’s clear that never before has the fi nding a job. This means that in the accounting business, for ex- Russian market been in such need of a workforce with an interna- ample, about 80 percent of the personnel are employees with tional background and very specifi c international skills.

24 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014 TOP 10 POLICY RECOMMENDATIONS By Dmitry Polikanov

1. Legislate a permanent and planned increase in state funding for science and education, so that the recipients regard scientifi c innovation as a long-term national policy irrespective of any changes in economic policy. 2. Raise the living standards for scientists, including the creation of specialized academic towns, government subsidies for housing and tax benefi ts for young scientists and innovators. 3. Boost investment to modernize the equipment and infrastructure of Russian science as well as to create special programs to facilitate practical connections between science and industry. 4. Use the experience of Skolkovo as a template for the nation. Taking into account the size of the Russian territory and its population, the country needs, at least, fi ve such centers of excellence in various regions. 5. Recognize national scientifi c achievements in order to raise the prestige of the profession. This recognition process should be accompanied by tougher quality requirements for the academic activities of universities and research centers. 6. Identify potential targets for “brain infl ow.” It is diffi cult to compete with the United States and other top-tier talent magnets. However, Russia can still attract talents from the second echelon — Eastern Europe and Asia — and recruit both their students and scientists with international experience. 7. Make “internationalization” of the workplace a top priority. As in sports (e.g. the Sochi Olympics), Russia should not hesitate in hiring “legionnaires” — foreign professors, foreign scientists, etc. This will mean higher competition for the local academic circles, but the results may be quite promising. For that purpose, the country should ease its visa regime and, provide more grants and fellowships for projects with and international component. Such requirements can be imposed on the Russian educational and academic institutions in the form of key performance indicators that regulate funding. 8. Encourage universities to establish joint degrees with their international counterparts and introduce more courses in English. For global scholars and foreign students, it is more effi cient to have the opportunity to teach and study in English, while learning Russian in parallel. The current system with its particular emphasis on teaching Russian to foreigners from the scratch is discouraging for many and does not facilitate the acquisition of knowledge due to the poor command of the Russian language by many students. 9. Raise the position of Russian universities in the global rankings. The experience of China and other nations indicate that, to a large extent, it is a matter of political will and the accomplishment of certain technical criteria, all of which can be achieved with relatively little resistance and investment. 10. Use global institutions to raise the profi le of Russian educational institutions. Nothing prevents Moscow from launching some international initiatives on bridging the knowledge gap or developing university initiatives within the framework of the G20, BRICS, and many other forums, to which Russia still belongs. Bearing in mind Russia’s academic legacy, the country should be more active in promoting the idea of placing global and European scientifi c projects in Russia — there is a need for “a Russian CERN” or some Pan-Asian academic initiative or research center.

In conclusion, it is important to remember that “brain drain” or “brain circulation” is a process involving human beings. Their behavior and preferences are not driven solely with ﬁ nancial incentives. Talent needs a comfortable environment, recognition and values to believe in. The United States and the Soviet Union both had a coherent ideological system attractive to intellectuals — it gave them the feeling of belonging to some national mainstream and acknowledged the importance of their eff orts. In order to win the war for talent at home and abroad Russia needs to off er workers a similarly strong idea for motivation, to create “the Russian dream.”

WWW.RUSSIA-DIRECT.ORG RUSSIA DIRECT QUARTERLY REPORT 25 BRAIN GAIN | #5 | MAY 2014

RECOMMENDED 1.Stuart Anderson. Creating Staying Power for U.S.-educated In- BOOKS AND ARTICLES ON ternationals. International Educator, 17 (6), 2008, 4-7. ‘BRAIN GAIN’ 2.George J. Borjas. Heaven’s Door: Immigration Policy and the American Economy. Princeton, N.J.: Princeton University Press, 1999.

3.Building a 21st Century Immigration System. Washington, D.C.: The White House. May, 2011. http://www.whitehouse.gov/sites/de- fault/ﬁ les/rss_viewer/immigration_blueprint.pdf

4.Zvi Eckstein and Yoram Weiss. The Absorption of Highly Skilled Immigrants: Israel, 1990–1995. June 15, 2001. https://tad. colman.ac.il/paper-all/15160.pdf

5.Nina Glick Schiler and Thomas Faist, eds. Migration, Devel- opment and Transnationalization: A Critical Survey. New York: Berghahn Books, 2010.

6.Andrei Korobkov and Zhanna Zaionchkovskaya. Russian Brain Drain: Myths and Reality. Communist and Post-Communist Studies Special Issue on Disintegration of the Soviet Union. Twenty Years Later. Assessment. Quo Vadis? Richard Sakwa and Andrey Kazant- sev, eds., vol. 45, no. 3-4, September-December, 2012, 327-41.

7. Barbara Marshall, ed. The Politics of Migration: A Survey. Lon- don: Routledge, 2006.

8.Douglas S. Massey et al. Worlds in Motion: Understanding In- ternational Migration at the End of the Millenium. London: Claren- don Press, 1998.

9. Joseph S. Nye Jr. Soft Power: The Means to Success in World Politics. New York: Public Aff airs, 2004.

10.Lydia Potts. The World Labor Market: A History of Migration London: Zed Books, 1990.

26 RUSSIA DIRECT QUARTERLY REPORT WWW.RUSSIA-DIRECT.ORG BRAIN GAIN | #5 | MAY 2014

TOP 10 TWITTER ACCOUNTS FOR @DmitryLivanov #BRAINGAIN Dmitry Livanov is Russia’s Minister of Education and Science

@Minobrnauki_ru Offi cial Russian-language Twitter account for Russia’s Ministry of Education and Science

@OECD_Edu OECD Education provides policymakers with the information to improve the quality of education worldwide

@MFA_Russia Offi cial Twitter account of Russia’s Ministry of Foreign Aff airs

@sk_en The Skolkovo Foundation is creating a global R&D hub in Moscow as part of a broader strategy to create a new Silicon Valley in Russia

@RSGov Rossotrudnichestvo account with updates on Russian culture, science and education

@GovernmentRF Offi cial Twitter account of the Prime Minister and the Russian Gov- ernment in English

@WorldBank Offi cial Twitter account of the World Bank

@UNESCO Offi cial Twitter account of the United Nations Educational, Scientiﬁ c & Cultural Organization

@PIR_Center The Russian Center for Policy Studies carries out research, educational and publishing activities on issues related to Russian foreign and domestic policy

WWW.RUSSIA-DIRECT.ORG RUSSIA DIRECT QUARTERLY REPORT 27 BRAIN GAIN | #5 | MAY 2014

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