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.

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. 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.