Russia’s Pension Fund Eyes Blockchain to Prevent Labor Abuse


Russia’s FIU pension fund will use blockchain technology to integrate all of its information into a distributed registry and will prepare proposals to integrate all systems into a single platform, according to Izvestia. The fund believes it will cut costs for servicing and storing significant amounts of data.

The technology will also provide more transparency to labor relations agreements and help protect workers from having their rights violated by negligent employers, which experts have cited as a pervasive problem.

Data to Move to Distributed Databases

The FIU currently houses employers’ data about insurance premiums and tax deductions on centralized servers. Once the distributed ledger technology is in place, all information will be stored on distributed databases.

Users will be able to record all agreements on the distributed ledger, and it will not be possible to edit the information retroactively.

Dmitry Medvedev, a government chairman, said in June that the digital labor books will consolidate labor relations work electronically from 2020.

Improved Labor Contracts

FIU said the use of smart contracts in labor relations will prevent compulsory exclusion in paper form.

Blockchain technology, the FIU noted, will enable information to be distributed concerning employment contracts between employers and certifying centers. This will protect citizens from illegal employment contracts as well as save the cost of servicing and storing large amounts of data.

Alexander Shcherbakov, a professor in the Russian Academy of Science and Technology’s Institute for Public Administration and Management’s department of labor and social policy, said labor violations are widespread among small- and medium-sized enterprises in Russia. New technology will enable such situations to be monitored.

Employers often violate employee rights as soon as employees apply for a job, through to when they are dismissed, Shcherbakov said.

More than 465,000 appeals were filed in the past year from citizens concerning labor violations, according to Rostrud.

Experts have noted that smart contracts will change the relationship between legal entities and individuals. The contracts will be more transparent and help free people whose activities are impacted by the termination of agreements.

Also read: The Russian military is building blockchain research lab to combat hacks

Digital Economy Emerges

The transition to the digital economy is increasing, the FIU noted, encompassing more services, including tourism, transportation logistics and network trade. The pension fund, for example, has included Airbnb, Saloodo, Alibaba, Amazon and others.

The FIU’s digital platform should reduce the fund’s transaction costs and provide for the proactive digitalization of the country’s economy.

Featured Image from Shutterstock

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