Russia's State Pension Fund Plans to Deploy Blockchain Technology

Russia’s State Pension Fund aims to use blockchain and smart contracts for labor agreements to fight ongoing abuses in the labor market.

Surprisingly, the most recent institution in Russia to join the growing crypto community turned out to be the State Pension Fund (PFR), the largest public social services provider in the country. The fund intends to apply innovative blockchain technology to the labor industry and labor relations to manage and monitor all employment contract data, local daily newspaper Izvestia reported.

The news outlet cites the PFR's press center reporting that the pension fund aims to implement and use smart contracts as labor agreements between employers and employees. Such contracts will be signed with an electronic signature which citizens can get from any local Multifunctional Center providing state and municipal services.

Currently, PFR gathers and stores employers' data on insurance premiums and taxation on its centralized servers. However, with the implementation of blockchain technology, all PFR information systems will be integrated into a single blockchain-based platform, and all employment contracts will be recorded on the distributed ledger. According to Izvestia, the fund plans to prepare expert proposals on this matter by the end of the year.

The new technology will ensure high transparency, fast processing speed, and data security and integrity, all of which might help address a number of pressing issues. First, smart contracts can help to get rid of excessive and counterproductive paperwork. Next, blockchain technology can significantly reduce costs of storing and processing massive databases.

Last but not the least, all labor agreements registered on the blockchain will be protected from any unauthorized access or post-factum amendments. This, as the fund's officials emphasize, should safeguard employees from any possible fraud or abuse by shady employers who often tend to conclude employment contracts violating the law.

According to experts, nowadays in Russia, such rights violation is a very sensitive issue in the market for small- and medium-sized business, and it needs to be monitored closely. In this respect, Izvestia quotes data from the Federal Labor and Employment Service showing that in 2017, about 465,000 Russians claimed their labor rights were violated.

It's worth mentioning that the Russian government is currently deeply involved in labor market adjustments, including a harsh pension reform introduced this summer and demands to raise dramatically the minimum retirement age, which has already led to mass protests in the country.

Luckily, the news from PFR is not like this. The fund's decision to utilize innovative digital technology should prove to be beneficial for both employers and employees providing them with more transparency and security. In the longer term, the pension fund aims to enhance its digital platform by developing it into a sort of aggregator, offering a wide range of various social services.

Meanwhile other Russian state authorities have already embraced the new technology to solve critical tasks. Thus, "the defence ministry of the Russian Federation wants to use blockchain to enhance cybersecurity and prevent hack attacks."