Ladies and gentlemen,

Today we are going to discuss critical problems, whose solution will have an impact on the future of this country.

The government is laying special emphasis on this issue.

What we need in the near future is a readjustment of social and economic policy to hit long-term targets of economic development. This means that we should shift the stress from anti-crisis support for industries, companies and the public to building up a new industrial potential, innovation, modernisation and upgrading the workforce.

It will take upgrading a major part of the today's workforce to restructure and modernise the Russian economy. Investment in human resources, in higher living standards, prosperity of Russian families and enhanced social security will be our strategy as budget expenditures are being streamlined.

Our top priorities are as follows:
• to overcome current negative demographic trends, stabilise the population size and create prerequisites for its growth;
• promote sustainable growth of incomes in balance with increasing efficiency and rising quality of the workforce;
• create reliable tools for labour market regulation; and
• ensure universal access to quality healthcare, education and culture on the basis of modernising these sectors.

It is hard to prioritise the targets on this list because each has a crucial importance. However, I would like to begin with problems pertaining to the demographic situation in Russia and its improvement.

We are tackling the main tasks for sustainable demographic development in compliance with the Strategy for the Demographic Policy of the Russian Federation until 2025, approved by a presidential decree.

Due to the consistent implementation of federal and regional demographic policies, birth rate increased by close on 22% and death rate came down by over 12% in 2005-2009, with a 19.6% reduction in infant mortality rate. These changes cut the natural decline in the population by almost 250%.

We have stabilised the demographic situation for the first time in many years. At present, the population approaches 142 million, which is the same figure as at the beginning of 2009.

In 2006-2009, average life expectancy increased by almost 4 years to 69 (63 for men and 75 for women).

At the same time, next decade will be influenced by many adverse demographic factors due to the changing population structure.

The aging of the population is continuing. It is a major problem, increasing the load on the pension and healthcare systems. There were 580 dependents per 1,000 working age population in 2005, while the forecast for 2020 is 837.

The number of women of reproductive age will shrink by 4.1 million, or 10.7% in 2020 against 2009. This decrease will concern the 20-29 age bracket, that is, the most active reproductive age. Their number will shrink by 4.6 million, or 38%.

Proceeding from the impending demographic situation, to stabilise the population and achieve its growth, we need to step up measures reducing public death rates, with focus of the working age population, and greatly improve general and reproductive public health, with focus on children and young people.

Special attention will be paid to the campaign to increase the birth rate, which envisages both financial incentives for mothers and developing infrastructure facilities to help with children's upbringing and education.

We see the central objective of the government healthcare policy in establishing a system of guaranteed medical assistance and the enhancement of its effectiveness.

We expect to attain this goal by implementing cutting edge knowhow in disease prevention, diagnostics and treatment, and by increasing the effect of medical personnel training and retraining.

The principal tool for implementing all these measures is the Healthcare National Priority Project.

We have dramatically improved the quality and availability of healthcare, as well as pharmaceutical supply and disease prevention within the framework of the project in recent years.

Much remains to be done, however. High blood pressure and cholesterol, smoking and abuse of alcohol remain the leading health risk factors. The reason lies not only in the absence of conditions beneficial for fitness and healthy living but also in the passive attitude of the Russian public to personal health.

In this connection, in 2009 we launched an all-round campaign for healthy living as part of the Healthcare National Priority Project. But this initiative can only be successful if the entire nation consolidates efforts to reach this goal.

Cardiovascular diseases remain among the principal mortality factors in the Russian Federation, accounting for 56.1% of deaths. That is why measures to improve medical services to cardiovascular patients were launched in 2008 as part of the Healthcare National Priority Project.

We can now see the first results of these efforts. The cardiovascular death rate came down 4.6% in 2009.

The accident mortality rate fell by 12.7% in 2009, of which the number of fatal alcohol poisonings by 32% and fatal traffic accidents by 15.2%.

The Healthcare National Priority Project has proved its effectiveness, and the government will continue its implementation. More than 144 billion roubles have been earmarked for it this year.

In modernising healthcare, special place belongs to streamlining mandatory health insurance.

The creation and implementation of healthcare standards, medical feasibility studies and substantiation of relevant tariffs will go on in 2010.

The Occupational Health national programme will be developed to establish a system of employee healthcare and disease prevention, and minimising occupational health hazards.

The last decades' practice has convincingly shown that strategic benefits in the rapidly changing world will belong to countries that effectively develop and productively use the innovation development potential. The competitiveness of the contemporary innovation economy largely depends on the workforce quality.

In this connection, education is the next area I would like to discuss in detail.

The government has pinpointed enhancing access to quality education as a strategic goal of its education policy.

The development of general education envisages individualising it, orientation on practical skills and fundamental knowledge, and expansion of the scope of extended education.

The principal measures aimed at upgrading higher education are a shift to the system of levels in university education and the development of new educational standards based on the latest qualification standards.

One of the basic developmental prerequisites of university education is the involvement of students and faculty in fundamental and applied research, which promises not only to preserve the world-renowned Russian academic schools but also to educate a new generation of researchers adapted to the demands of the innovation knowledge economy.

This explains the logic of our decision to create new types and categories of universities, the federal and national research universities, and substantiates the government support for them. On April 2, government executive orders were signed to establish four federal universities in the Northwestern, Volga, Ural and Far Eastern federal districts on the basis of leading Russian higher educational institutions. They will join the two federal universities established in 2006 in the Siberian and Southern federal districts.

Fourteen national research universities were selected last year. Now, an additional contest for the status of national research university has been announced. Total funding of the establishment of the national research university network approached three billion roubles last year, and will be roughly ten billion roubles this year.

The government has drafted additional measures to develop the potential of university staff and innovation infrastructure, with approximately forty billion roubles earmarked for the purpose.

As for the development of primary and secondary vocational education, I want to stress that in 2009, the government allocated a total of 2.8 billion roubles for the development of innovative curricula for training high-tech workers and experts at 96 primary and secondary vocational schools. This was done within the framework of the Education National Priority Project The new curricula aim to put an end to a discrepancy between the structure, volume and quality of training certified workers and technicians and the standards of competitive companies in many economic sectors.

As far as we know, employers regard as the most effective and so the most promising from the point of further development such forms of partnership with innovative primary and secondary vocational schools as:
- assignation of practical training facilities and mentorship at industrial companies;
- retraining vocational school teachers; and
- joint programmes for lasting employment of primary and secondary vocational school graduates at industrial companies.

Apart from the modernisation of vocational training and retraining, there is another vital condition for the emergent innovation economy: enhancing the flexibility and structural balance of the labour market, and creating conditions for public occupational and territorial mobility. In these conditions, workforce redistribution from ineffective companies to profitable ones and increasing labour efficiency remains the central factor of diminishing the workforce deficit.

At present, the United States exceeds Russia by 490% in terms of added value production per employee, the G7 countries by 420% and Japan by 330%. The lag is even worse in terms of production per hour: 510% for the United States and 440% for the G7 countries.

Transition to the innovation economy and restructuring and diversifying industries will change present-day employment with cuts in redundant workplaces, redistribution of employees between industries, the expansion of the consumer service sector, and the emergence of new fields of employment. In this situation, the labour market will help to promote the creation of new efficient jobs, including flexible timetable employment, and an increase in personnel turnover.

One of government's priorities is to establish the conditions for sustained growth of incomes in balance with increasing efficiency and quality of the workforce.

It should be noted that the gap between the high and low income population groups diminished in 2009 for the first time in recent years. According to a study by the Federal State Statistics Service, in April 2009 (when the latest study of this kind was conducted), the ratio between the average wages of the 10% highest-paid employees and the 10% lowest-paid employees was 14.7:1 against 22.1:1 in April 2007. The gap was even greater before. The minimum wage increased almost 300% within that period, which had an impact on the earnings of the lowest-paid workers.

I want to note that negotiations will start soon between the government, national employer guilds and trade unions on the drawing of a new General Agreement for the upcoming period. Among the vital items on the agenda will be the discussion of minimum wage increases and their deadlines.

The transition of companies and agencies to new forms of non-profit organisations within a current reform will promote wage raises in the public sector.

I have mentioned only the basic aspects of the issue being discussed today. Its effective solution is determined by the need to perfect the government's social and economic policy.

I am confident that today's discussion will be interesting, fruitful and useful to the government and the business community alike.