VZCZCXYZ0002
RR RUEHWEB

DE RUEHMO #2546/01 2390516
ZNR UUUUU ZZH
R 260516Z AUG 08
FM AMEMBASSY MOSCOW
TO SECSTATE WASHDC 9684

UNCLAS MOSCOW 002546 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/RUS 
 
E.O. 12958: N/A 
TAGS: ECON SCUL RS
SUBJECT: RUSSIAN UNIVERSITIES FAILING TO MEET LABOR MARKET DEMAND 
 
¶1.  (U) This message is sensitive but unclassified and not for 
internet distribution.  It is the first in a series examining 
Russia's university reform process. 
 
------- 
Summary 
------- 
 
¶2.  (U) Russia's universities are failing to keep pace with today's 
labor market demands.  Instead, they are maintaining a Soviet-era 
focus on theoretical knowledge and academic learning.  While the 
number of students and both public and private institutions has 
grown markedly, a lack of investment in faculty and administration 
training, curriculum development, and facilities has left half of 
graduates unable to find or woefully unprepared for jobs in their 
fields.  Recognizing the deficiencies, the GOR has undertaken 
reforms, including planned accession to Europe's Bologna Process (a 
standardized modernization process for European universities) by 
2010 and introduction of a nationwide exam for high school graduates 
in 2009.  Further, with education as a National Priority Project 
since 2006, the GOR has injected cash and created new types of 
universities to modernize the system. 
 
-------------------------------------- 
University Education: State of Affairs 
-------------------------------------- 
 
¶3.  (U) Russia's university education system has failed to keep pace 
with the country's economic growth and with globalization in 
general.  After the collapse of the USSR, the GOR focused more on 
safeguarding the education system's previous achievements and 
strengths rather than on modernizing the system.  As such, Russia 
has maintained most of the features of the Soviet university 
education system, including its sectoral structure and high 
centralization - particularly in the areas of funding mechanisms, 
quality assurance, and faculty training. 
 
¶4.  (U) Some changes have occurred though.  For example, since the 
early 1990s, the largest change has been the expansion of 
universities' administrative and academic autonomy, especially in 
the areas of research, admissions, non-budgetary financing, student 
fees, and international cooperation.  Over the past 17 years, the 
country has moved from universal free higher education to 
establishing private universities and accepting some paid students 
at public institutions. In early 2000, the GOR joined the Bologna 
Process (the creation of a common European education space) with the 
aim of bringing its university system in line with European and 
global standards. 
 
¶5.  (U) In 2006, the GOR also started to implement the National 
Priority Project in Education, with the goals of support for 
innovation, improving cooperation between universities and 
businesses, increasing financial stability, and introducing a more 
transparent system of quality assessment.  Under the NPP, some 
universities, departments, and professors have made efforts to 
upgrade curricular and administrative processes through extended use 
of information technologies, access to leading research, and 
collaboration with colleagues in Russia and abroad. 
 
---------------------------- 
Growth without Modernization 
---------------------------- 
 
¶6.  (U) The number of universities in Russia continues to increase 
as new regional universities have opened, affiliates have been 
institutionalized, and large universities have expanded their 
networks of local branches.  Since 1990, the number of universities 
has doubled.  There has also been a concomitant increase in the 
number of students, which has almost tripled.  Furthermore, since 
1995 the number of private universities has more than doubled and 
the number of students attending them has increased eight-fold. 
 
¶7.  (U) The rapid growth in the number of universities and students 
over the past 15 years has brought with it a difficult challenge - 
how to maintain and ultimately improve the quality of education. 
The difficulty of this challenge has been exacerbated by the fact 
that the expansion in universities and students has not been 
accompanied by adequate investments in staff training, remuneration, 
teaching materials, equipment, and infrastructure. 
 
¶8.  (U) The inability of the university education system to evolve 
as quickly as the labor market has resulted in a severe mismatch 
between the skills taught in school and the skills demanded by 
Russia's employers.  One of the underlying reasons for this mismatch 
lies in the fact that the university system is more oriented toward 
the demands of consumers (i.e., students and their families), rather 
than the demands of the labor market.  In addition, the structure of 
Russia's labor market has changed significantly.  Employment has 
shifted from manufacturing and agriculture to trade and services. 
 
¶9.  (U) A few of the more elite and/or progressive universities have 
been able to adapt and become responsive to the needs of the 
modernizing economy, but most remain grossly deficient.  According 
to Minister of Education and Science Andrei Fursenko, only 15 
percent of all Russian universities are considered "high standard," 
that is providing training that fully meets the demands of the labor 
market.  A quarter of Russia's adult population (25.6 percent) has a 
university degree (higher than the OECD average and similar to the 
rates of Australia, Japan, Canada, and the Netherlands), but half of 
all graduates fail - or don't try - to find work within their field 
of specialization and require special training after entering the 
workforce.  This mismatch between education and the labor market 
has, in turn, led to lower economic returns on, and a devaluation of 
university education. 
 
¶10.  (U) Universities for the most part lack the infrastructure that 
would meet modern requirements, with 21 percent requiring complete 
overhauls.  This includes computer and telecommunications 
facilities, laboratory equipment, informational and methodological 
resources (including libraries and electronic databases), as well as 
classroom and dormitory conditions.  Laboratory equipment in most 
technical universities has not been modernized for almost two 
decades.  Today the majority of medical students use the same 
textbooks and practical guidelines that were used twenty years ago. 
Another key weakness in Russia's university system is the 
insufficient qualifications of much of the academic and managerial 
staff.  This reflects that fact that talented graduates prefer to 
work in other sectors of the economy, where compensation is higher 
than it is in the education system.  Age is therefore also becoming 
a problem, as 21 percent of the faculty is now older than 60. 
¶11.  (U) Other challenges include weak links among university 
research institutions and industry, a lack of long-term sustainable 
funding sources, and egalitarian access to quality university 
education (with high costs of both formal and informal education 
services and low territorial mobility of students).  The Russian 
system of university education has not so far played a significant 
role in applied R&D and innovations.  Primary tasks in this sphere 
include diversifying funding sources, stimulating the demand for 
qualified research staff, streamlining the regulatory environment 
for R&D, securing intellectual property rights, and introducing 
methods of assessing the effectiveness of R&D. 
¶12.  (U) Since the turn of the century, with the general 
macroeconomic improvement in the national economy, public 
expenditures on university education have been gradually increasing. 
 The major problem today is not as much in the amount of public 
funding (although still low in comparative perspective) as in the 
inefficient financial management and allocation mechanisms, 
including the inadequate compensation system.  In addition, the 
development of a system of state support for education via credits 
and the introduction of various student scholarships and grants are 
only at a very early stage of development.  The development of 
endowment funds ultimately may provide the necessary basis for 
long-term sustainable funding of Russian universities.  However, 
endowment legislation became effective in Russia only in February 
2007, and the endowment culture in the university system is only in 
an embryonic condition. 
-------------- 
Reform Efforts 
-------------- 
 
¶13.  (U) Bologna Process:  As part of the government's efforts to 
modernize the university education system, Russia adopted a law on 
new university education standards in 2007.  These standards are 
scheduled to come into force by 2010, when Russia's completes its 
accession to Europe's Bologna Process.  The new standards include 
moving away from the five-year university education system inherited 
from the Soviet Union (with the degree of "specialist") to the four 
year undergraduate (Bachelor's) and two year graduate (Master's) 
systems that prevail in European university systems.  These changes 
shift the balance of university education from a system based on 
academics and knowledge to one based on practical components and 
competencies.  The shift from a specialized five-year program to a 
two-level system is expected to improve the link between what 
universities teach, especially at the graduate level, and what the 
labor market demands. 
 
¶14.  (U) Although Russia signed the Bologna Declaration in 2003, the 
practice of introducing individual features of the new system 
already had started as early as 1992.  After an initial wave of 
enthusiasm, however, the process has dramatically slowed down. 
Today only 12 percent of graduates have a Bachelor's degree and only 
4 percent have a Master's degree.  Critics of the Bologna Process 
fear that the structural changes that the system demands will 
destroy positive aspects of the Russian university system, 
especially its emphasis on academics, while failing to improve the 
disconnect between university education and the labor markets. 
 
¶15.  (U) Faculty and administrative personnel at many of the 
universities oppose the reforms, and feel they are being excluded 
from influencing the direction of university education in Russia. 
They disagree with the proposed reduction in Master-level programs, 
the shift to mostly paid graduate education, and feel two years is 
 
insufficient to redesign curricula.  .  Some observers estimate that 
up to 80 percent of university faculties and administrations oppose 
the reforms.  Businesses, however, welcome them.  According to 
research done by the UNITY HR Agency, up to 80 percent of businesses 
support further reform of the university system and an equal share 
prefer to recruit graduates with a Bachelor's degree. 
 
¶16.  (U) The Unified State Exam and NPP:  In 2001, Russia launched 
the Unified State Exam (Russian abbreviation - EGE)- a nationwide 
test for high school graduates and university applicants.  After a 
six-year pilot period, in 2009 all high school graduates will take 
the exam and results will be mandatory for all Russian university 
applications.  EGE is primarily aimed at equalizing territorial and 
economic differences in test results and university entrance. 
Despite some positive results in the diversity of social backgrounds 
among first-year students at universities, EGE is still a subject of 
debate, primarily due to the quality and range of the test questions 
and technical problems.  In addition, some teachers have strong 
reasons to oppose the reform since it threatens their illegal income 
both in direct bribes and payments for entrance exam preparations. 
 
¶17.  (U) The National Priority Project (NPP) on Education, which 
began in 2006, is meant to help modernize Russia's university 
education system through a variety of measures, including support 
for innovation through cash disbursements, limited structural 
reforms, and the creation of new types of universities.  In 
2006-2008, for example, the Russian Government rewarded 57 
universities with RUB 30 billion ($1.25 billion) for creating 
innovative education programs.  Another component of the NPP is the 
creation of "federal" and "national" universities.  The federal 
universities in Krasnoyarsk (Siberia Federal University) and 
Rostov-on-Don (Southern Federal University) are expected to serve as 
the models for an eventual network of federal universities (one per 
each federal district) based on the integration of science, 
business, and education (with the involvement of venture funds and 
techno-parks).  The NPP also envisions the creation of several elite 
business schools to increase Russia's competitiveness in the 
international economy.  So far, two such schools have been 
identified:  the Skolkovo Moscow School of Management and the 
Graduate School of Management at St-Petersburg State University. 
 
------- 
Comment 
------- 
 
¶18.  (SBU) Infrastructure shortcomings, deficits in qualified 
teaching and management staff, weak linkages between the education 
system and the labor market, and the lack of buy-in from the 
university community itself will continue to pose significant 
challenges for university education in Russia.  However, the GOR's 
stated commitment to reform, backed up by relatively substantial 
public expenditures and concrete programs, as well as positive 
trends in some universities, does offer some hope for the long-term. 
 End comment. 
 
BEYRLE