Yandex Taxi
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The ride-sharing business is at the forefront of today’s expanding digital economy. Because of the large numbers working in the sector, it is having a substantial impact on the labour market. Numerous international organisations, such as the International Labour Organization and the World Bank, have flagged the scale of these changes and placed the topic high on their agendas.

Discussions about the impact of ride-sourcing companies often centre around Uber and the working conditions that this platform offers drivers in countries that possess a social security system, such as exists in many of the OECD nations. This paper looks at Russia and how drivers in ride-sharing platforms there perceive their working conditions in a labour market that is less employee-friendly and where a lower degree of social protection exists.

Thirteen drivers, most working with Yandex Taxi, were interviewed in Moscow. The interviews revealed similar complaints to those of drivers in OECD countries: low fares, customer behaviour, as well as a lack of support for drivers from the platform companies. However, distinctly different perceptions concerning working conditions were evident among the Moscow drivers compared to those of Uber drivers in the United States. These differences were based on the realities of the local labour market. In contrast to more employee-friendly labour markets, delayed payments and overtime without compensation were push factors inspiring people to work as drivers. For this reason, Yandex drivers were more content with their work as the felt they had more control over their time.

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Gig economy drivers

Labour conditions are important in the context of digitalisation, particularly as they relate to the emerging gig economy. A substantial amount of research has been conducted in this new field with many experts arguing that digital working results in income insecurity, low pay, unreliabile work, and poor communication with requesters for gig workers (Degryse, 2016; Berg, 2016). The fact that gig workers are contractors and not employees has also been a focus of attention because platforms such as Uber structure and distribute tasks so they appear to act like employers (Stanford and Steward, 2017; Huws, 2017).

Moreover, with regards to pay, some argue there is substantial downward pressure on income since there is an oversupply of gig workers (Graham, Lehdonvirta, Wood, Barnard, Hjorth, and Simon, 2017). Stress, anxiety, and a lack of representation of workers in trade unions are seen as issues. The lack of control or ability to appeal with regards to firing on the basis of “people analytics and digitalized profiling” are also seen as serious downsides of the gig economy (Moore, 2018b). Increasing pressure and automated performance monitoring as well as de-skilling could cause deteriorating working conditions (Krzywdzinski,  Jürgens, and Pfeiffer, 2015). Recently, racial discrimination within the platform economy has also been researched (Ge, Knittel, MacKenzie, Zoepf, 2016).

Among the benefits identified in gig work is flexibility, although platforms vary in the degree of actual flexibility they provide (Lehdonvirta, 2018). Many academics have also highlighted the potential advantages of digitalisation. Workers can have more time to concentrate on consultation work for customers, whereas time-consuming tasks would be automated (Autor, 2015, Krzywdzinski et al., 2015). In relation to Industry 4.0 and the internet of things (IoT), it has been argued that digitalisation could contribute to a deterioration of working conditions, but others have identified the potential to improve the quality of work by, for example, minimising dangerous or monotonous work (Krzywdzinski, 2018).

More recently, the debate on working conditions has gained momentum. On-demand ride-sharing services are digital platforms that connect users and drivers via an app. Usually, drivers are not employed by platforms, but are self-contractors. In some Western countries, a number of drivers have claimed that they are employees of Uber and in the United Kingdom two drivers won a recent court case on this topic (Davies, 2017). The number of people working for platforms such as Careem, Didi Chuxing Lyft, Ola, Taxify, Uber, and Yandex Taxi is higher than on any other crowd-working platform, such as Amazon’s Mechanical Turk.[1]

Most of the research on the gig economy has been conducted in Western countries, which means there is a gap in research on how platform work is perceived by workers in other economies. This article addresses this by examining changing working conditions in the digital age in Moscow, Russia. This article also aims to shed light on how institutional arrangements, like the quality of welfare systems, shape perceptions of the digital work offered by ride hailing platforms.

It is hypothesised that in countries with comprehensive labour laws, platform workers are more likely to strive for permanent, formal employment and benefits typically associated with that. In other countries, due to the persisting presence of an informal employment sector and the lack of social benefits, these benefits would not necessarily be expected. The motivations to take up such platform work are also probably different in countries without formalised labour markets and comprehensive welfare systems.

A recent study from India showed that in the face of an overwhelmingly informal labour market with virtually no workers’ rights and irregular or non-payments, disruptive companies like Ola and Uber are perceived differently compared to in Western countries. Surie and Koduganti (2016) note that, “This study finds that the self-employment model and short-term work and medium-term planning are not creating forms of wholly insecure work. The temporality of this perception of security deviates drastically from Eurocentric definitions of security arising out of formal jobs and access to social security provided by a welfare state.”

Yandex Taxi in Moscow

A qualitative approach was chosen for this study to attain in-depth knowledge on drivers’ perception of working on platforms. Thirteen drivers from ride-sharing companies were engaged for in-depth, semi-structured interviews. Moscow was chosen for these interviews as it is largest ride-sharing market in Russia in the former USSR.

Yandex Taxi is a home-grown Russian taxi platform with 60% of the local taxi market (Temperton, 2017). This survey interviewed people who work for ride-sharing companies on a part-time and full-time basis. Interviews were conducted in the Russian language. No restrictions were placed on gender or age group. Drivers were booked via the Yandex Taxi app and the interviewer took a ride with them to different locations in Moscow and conducted interviews during the ride. Interviewees gave their formal consent and the outcome of the interviews were anonymised.

While the results are insightful, the small number of drivers interviewed means the study cannot be considered representative, so the outcome cannot be generalised for the whole ride-sharing sector.

Background of the drivers

Most of the interviewees had started working as taxi drivers with Yandex Taxi (or in one case with Gett) within the past year. Only one driver had been working in this sector for as much as five years. All interviewees were men, ranging from 21 to 52 years. Half of the drivers were of Slavic ethnicity, and the others were of other non-Slavic ethnicities from countries that formed part of the former Soviet Union.

Source: Interviews undertaken in Moscow in August 2018.

Most of the drivers worked 10-12 hours a day with an average of one day off per week. Typically, they earn (or plan to earn) 50,000 to 60,000 roubles ($760-$910) a month after deducting costs. One driver who owns his own car makes considerably more (100,000 roubles). In contrast, another driver, who rents a minivan for a high fee, makes only 35,000 roubles and there are days where he doesn’t earn enough to cover his car rental. Two drivers state that they earn less than in previous employment. The medium income for all 13 drivers is 57,000 roubles.

To understand the social context, in 2017, the average monthly income in Moscow was 68,000 roubles ($1030) before taxes and 57,000 roubles after taxes. At the same time, the minimum wage in Moscow is 17,600 roubles (VisaSam, 2017). The average wage in the rest of Russia is substantially lower and amounts to only 40,000 roubles. As most of the interviewed drivers don’t pay income tax, their average salary is well in line with the average income in Moscow and approximately three times higher than the minimum income in Moscow. However, it should be mentioned that the minimum wage is barely enough to make a living in Moscow.

The majority (ten out of thirteen) of the interviewees derive their main income from work as taxi drivers. However, three drive to obtain additional income.

Reasons for starting work with a ride-sharing platform

Source: Interviews undertaken in Moscow in August 2018.

In order to assess the impact of digital work on working conditions, it is crucial to understand the motivations of drivers to work for platform companies. The outstanding motivation, as expressed by the drivers, is to have control over the hours and days that they work. One other important reason for many was to earn a higher salary.

In comparison to previous permanent positions, three people (two of whom previously worked as chauffeurs) expressed discontent with the inability to plan their spare time in their previous employment as they were subject to the ever-changing schedules of their bosses. Curiosity to change jobs and the desire to start something new, as well as enjoying driving, were other motivations cited by the drivers. One respondent referred to delayed payments in his previous permanent job and another complained about delayed payments from Uber, explaining why he changed to Yandex.

Notably, none of the interviewees had a background as a regular taxi driver.

Driver complaints

Most drivers said that the main stress factor in their work was the hectic traffic on the streets of Moscow and the responsibility for their passengers’ safety. An equally important factor concerned the behaviour of customers. The drivers believe that roughly 90% of passengers behave properly, while 10% do not. One driver felt stressed in situations where he feels he is only paid a small fare for driving out to a suburb and feels that his job is not rewarding.

Source: Interviews undertaken in Moscow in August 2018.

A majority of the drivers complained about drunken, unsatisfied, or non-paying passengers. Criticism of the low rates was also an often-expressed complaint. Two drivers that had worked for Uber for longer than two years also complained that fare prices have been dropping in recent years and that their income had decreased. Another intriguing category of complaints concerns Yandex Taxi. Part of the issue relates to technical problems, like poor navigation and incomprehensible tariffs, which are mainly associated with the teething troubles of unfolding new technologies. Other problems though, such as poor treatment of drivers, a lack of support, and bonuses not being paid are more likely pointers to an emerging ‘platform business model’ that diminishes the rights of service providers.

One driver reported that he received a booking to deliver a package. It took him substantial time to get to the drop-off point, but nobody came to pick up the package. He called Yandex support, but they didn’t assist. After the usual waiting time had expired and having tried to call the passenger, he drove home and got stuck in rush-hour traffic for several hours. Finally, arriving home, the recipient of the package contacted him and threated to call the police and report him as a thief if he did not deliver the package. The driver returned to the drop-off point to deliver the package and then returned home. He only received payment for one-trip and Yandex support failed to assist him to claim money for two trips.

Social benefits and taxi aggregators

Source: Interviews undertaken in Moscow in August 2018.

It is intriguing to look at the benefits that the drivers could have mentioned as missing but did not. Benefits often connected to permanent employment in countries with a high level of social protection were not mentioned during the interviews in Moscow. For example, not a single driver mentioned the lack of sick leave or complained about not having a permanent contract with Yandex. Only one driver mentioned a steady income as one advantage of his previous job as a chauffeur (although he preferred his present employment to his previous job).

The benefits and drawbacks of being informal

Although this survey is by no means representative, it provides valuable insights into working conditions in an under-researched world metropolis and involving an equally under-researched ride-sharing platform.

Similar to the case of Uber in the UK (Ghosh, 2017),  where a majority of drivers have a migrant background, half of the drivers interviewed have a non-Slavic background. Some of these drivers have lived in Moscow for many years (some since the times of the Soviet Union), while others are newly arrived. The most important reason why so many migrants are drivers is probably explained by the low barriers to entry to work as a driver with the Citimobile, Gett, or Yandex apps. Russian citizenship is not required and most drivers need only attend a two-hour instruction course before starting work. It seems that, similarly to other countries, the ride-sharing platform Yandex is a handy tool for migrants to gain a foothold in the Russian labour market.

Most of the interviewed drivers had been working as platform drivers for a short time. Many stated that they did not know how long they would work with Yandex. This could indicate that Yandex has a high turnover of drivers. This phenomenon is well documented in relation to Uber, where many drivers leave during their first year and the retention rate has actually dropped to 4% (McGee, 2018). High-turnover rates may imply that drivers don’t see Yandex as a long-term opportunity, which could put the sustainability of this business model in question.

On average, the interviewed drivers earned 57,000 roubles after tax. This reflects the average wage in Moscow, according to available macro data. The initial discussion that workers are only making supplementary income via crowd work has changed with indications that such gigs are increasingly becoming the main income of individuals and families. This survey supports these findings with the majority (ten out of thirteen) of the interviewees deriving their main income from platform work.

The hope for a higher salary is expressed by four drivers. Here the Russian labour market context plays an important role. A migrant from Uzbekistan, have lived two years in Moscow, earned 35,000 roubles per month at his previous job at a Moscow bread factory, while an ethnic Slav from a town 200 kilometres from Moscow earned 20,000 roubles at a food factory. When the working hours and the other benefits of permanent employment (paid sick leave, etc.) are not considered, working on a taxi platform can seem more rewarding than working in a factory.

The low level of salaries in some sectors of the Russian economy seems to be a push factor for many to start as platform drivers. This is an important observation because it is often argued that income from platform work after cost deductions is sometimes below the minimum wage. In the Russian context, this seems generally untrue as most of the interviewed drivers earn more than many blue-collar professionals and well above the minimum wage. However, it must be mentioned that one young driver on some days does not earn enough money to cover the cost of his car rental.[2]

One reason people wanted to work as platform drivers was timely payment. In advanced economies, delayed salary payment is unusual. In Russia, delayed salary payment is not a common phenomenon, but it happens and it puts people into difficult situations when they have no financial buffer to buy food or pay rent.

Based on the results of this survey, it seems working as a Yandex driver does not undermine labour standards, but it also gives people certainty that they will receive their revenues on time. This potential for “formalizing” work was also mentioned in the Indian case (Surie, 2017).

When it comes to the reasons people chose to work as platform drivers, eight out of thirteen drivers stressed that they could set their own work schedule and that there was no boss telling them what to do. Moreover, having the opportunity to set one’s hours and not being forced to prolong the working day without compensation can be seen as an asset in itself. This ties in with findings from other ride-hailing platforms (for example Uber) where drivers value the opportunity to autonomously decide their work time.[3] One of the main promises when the platform companies first emerged was to “be your own boss and set your own hours”. It seems that this promise has been partly fulfilled.

However, it must be pointed out that one driver had to meet a revenue target set by his taxi stand, while another would only receive certain Yandex bonuses when he reached a daily revenue target (8,000 roubles). This and the general need to pay back daily rental was in itself a pressure to work more than some drivers may have liked, although none mentioned this explicitly as a problem.

All ride-sharing platforms were criticised for low fare prices. Rates have been a serious issue for drivers in recent years. Among the interviewed drivers, a substantial number complained about low fares. When asked for the reasons for low fares, some drivers pointed to the increasing numbers of drivers on Moscow’s streets. This ties in with the aforementioned finding that the platform economy might imply a race to the bottom in terms of revenue.

Unfortunately, there has not been a comprehensive survey of the earning possibilities of drivers in Moscow. Judging from the large differences in revenues, one can distinguish several underlying reasons. One driver mentioned that on some days he was not able to make back the rental cost of his car. The fare for a minivan is only 40% higher while the rent he paid is 80% higher than a normal car. Generally, drivers using rental cars are under higher pressure to work more hours and need more rides to turn a profit. Only two of the drivers drove their own cars.

Another crucial aspect affecting fare price related to intermediaries. Most of the drivers were attached to taxi stands from where they rented their cars and didn’t their have an own IP (registered company).[4] One driver who had previously done repair work for a taxi stand was renting a car from the taxi stand, but not paying commission fees. The most unfavourable terms were faced by a driver who rented a car and had to pay 7% in commission to the taxi stand. The average commission that went to taxi stands was around 5%. Thus, contradicting initial claims about ‘being your own boss’ in the sharing economy, it seems that intermediaries are encroaching on the livelihoods of drivers already being squeezed by the margins.

Some drivers complained about the high commission paid to Yandex. As Yandex has a flexible commission system, commissions vary during the day depending on a number of variables. Drivers stated that Yandex charges a commission between 21% and 25% of fares. Although Yandex Taxi is not yet turning a profit, the commission charged is high in relation to the slim cost structure of a technology-driven company.

In this regard, it is astonishing that one of the early promises of peer-to-peer sharing – to cut out intermediaries – has not been fulfilled. Not only is the platform company Yandex Taxi taking high fees for its services, other intermediaries are also taking a slice of the drivers’ revenues. Although several drivers noted the advantages of support from the taxi stand despatcher, Yandex’ technology should not need any intermediaries. This is similar to other parts of the gig economy. In Amazon’s Mechanical Turk, work is highly automated by AI-driven management methods and staff costs are low. Moreover, intermediaries – highly rated former crowd-workers with high ratings – are able to obtain the best paid contracts and distribute the work to lower rated crowd-workers, eating up revenues.

In line with testimonies from other ride-sharing companies, some drivers complained about incomprehensible bonus incentives, fare prices, etc. Schemes are not only incomprehensible, but at times drivers felt cheated by Yandex Taxi. Another complaint relates to technical support. Although some drivers said that they were helped by technical support from their taxi stand or Yandex, others expressed frustration about not being helped in a difficult situation with a passenger.

In the debate around the ‘Uberisation’ of work, it is often stated that platform work involves a substantial share of unpaid work. This refers to work that is needed to fulfil the task, but is not compensated for. Only one driver complained of this kind of issue: that he drove almost a whole day through town for the delivery of a package and got paid only for a single trip. However, several other drivers referred indirectly to the issue of unpaid work. These drivers mentioned that trips to far-off areas are often uneconomical for them as they often don’t have any guest on the way back. In practice, this substantially diminishes their revenue. What is more, drivers are usually only allowed to turn down three requests per day.

Moreover, it seems that a new platform business model is also taking shape in Moscow, where on one hand working time autonomy, which is a rare asset in many work places in Russia, is given to Yandex drivers. On the other hand, it seems that the evolving business model has diminished the rights of service providers as they sometimes feel a lack of support from Yandex, especially with regard to problems with clients. Moreover, highly automated and standardised management processes make it difficult, at times, for drivers to get the help they need. Also, it seems that the ever-changing algorithmic price schemes and their lack of transparency make it difficult for drivers to calculate revenues gained and hourly pay.

Sometimes, the most intriguing things are what has not been said. One interview question was ‘What are the advantages or disadvantages compared to previous jobs?’ Only one interviewee mentioned that he appreciated the steady income from his permanent job. Overall, he preferred his present platform work. Other benefits of an employee-friendly framework like sick leave, further training, permanent employment, or parental leave were not mentioned. Given the realities of the Russian labour market, drivers didn’t even think of those benefits as an option.

In countries that are not employee-friendly or that don’t possess a fully-fledged social system it seems that crowd-work is a viable alternative for many people, especially as a first step into the labour market for migrants. This analysis indicates that the narrative of the destruction of good, insurable employment doesn’t apply in the Russian context because the number of well-paying, stable jobs that observe labour law regulation is simply too low to be a meaningful point of reference. This is supported by the fact that reference to benefits like sick leave and further training is absent from the drivers’ complaints.

This is not to say that there are no problems with this form of crowd work. A collection of serious problems were mentioned by drivers in Moscow. The most pressing is the perception of low and decreasing fares, as well as incomprehensible fares. The lack of support experienced by some drivers is an issue. The huge revenue share that Yandex takes from drivers was also criticised as too high.

Yandex Taxi is, like most other platform companies, avoids any employer liability. Nevertheless, Yandex Taxi sets fare prices and commission without consultation with drivers. Moreover, drivers are extremely dependent on Yandex to obtain orders from customers and to solve problems arising with clients. Considering the amount of commission charged by Yandex, it seems only fair that Yandex increases fares for certain trips to avoid drivers making losses like spending more on fuel, maintenance, and excess time than the ride’s fare compensates for.

Also, the algorithms that calculate fare prices should be transparent to drivers so they can understand the calculations and address mistakes directly. In addition, Yandex can’t only maintain the bon mot that the ‘customer is king’ as Yandex Taxi is effectively an intermediary between the service provider and clients. In this role, Yandex Taxi has control over significant parts of the service provision. If customers are at fault, Yandex must support drivers. International and national organisations and agencies should keep a keen eye on these issues to strengthen the diminishing negotiating power of platform workers, even if they are labelled as ‘self-employed’.

 

Klemens Witte

Research Associate, Dialogue of Civilizations Research Institute

 

References

Autor, D. H. (2015). Why Are There Still So Many Jobs? The History and Future of Workplace Automation. Journal of Economic Perspectives, 29(3), pp. 3-30. doi:10.1257/jep.29.3.3

Berg, J. (2016, May 1). Income security in the on-demand economy: Findings and policy lessons from a survey of crowdworkers. Retrieved from http://www.ilo.org/travail/whatwedo/publications/WCMS_479693/lang–en/index.htm.

Davies, R. (2017, November 10). Uber loses appeal in UK employment rights case. The Guardian.

Degryse, C. (2016). Digitalisation of the Economy and its Impact on Labour Markets. SSRN Electronic Journal. doi:10.2139/ssrn.2730550

Ge, Y., Knittel, C., MacKenzie, D., & Zoepf, S. (2016). Racial and Gender Discrimination in Transportation Network Companies. NBER Working Paper22776. doi:10.3386/w22776

Ghosh, S. (2017, July 4). Uber in London has become a war between white working-class cabbies and nonwhite immigrants. Business Insider UK. Retrieved from https://www.businessinsider.de/uber-london-war-immigration-2017-7?r=UK&IR=T.

Graham, M., Lehdonvirta, V., Wood, A., Barnard, H., Hjorth, I., Simon, D. P. (2017). The Risks and Rewards of Online Gig Work at The Global Margins. Oxford: Oxford Internet Institute

Huws, U., Spencer, N., Syrdal, D., & Holts, K. (2017). Work in the European gig economy: Research results from the UK, Sweden, Germany, Austria, The Netherlands, Switzerland and Italy. University of Herdfortshire.

Krzywdzinski, M., Jürgens, U., & Pfeiffer, S. (2015). Die vierte Revolution Wandel der Produktionsarbeit im Digitalisierungszeitalter (149). Retrieved from WZB-Mitteilungen website: http://www.forschungsnetzwerk.at/downloadpub/s6-9juergensua.pdf.

Krzywdzinski, M. (2018, January 25). Wie gute Arbeit in der Industrie 4.0 geschaffen werden kann. Heinrich-Böll-Stiftung. Retrieved from https://www.boell.de/de/2018/01/25/wie-gute-arbeit-der-industrie-40-geschaffen-werden-kann.

Lehdonvirta, V. (2018). Flexibility in the gig economy: managing time on three online piecework platforms. New Technology, Work and Employment33(1), pp. 13-29. doi:10.1111/ntwe.12102

Moore, P. V. (2018b). The Threat of Physical and Psychosocial Violence and Harassment in Digitalized Work. Geneva, International Labour Organization, ACTRAV.

McGee, C. (2018, June 20). Only 4 percent of Uber drivers remain on the platform a year later, says report. Retrieved from https://www.cnbc.com/2017/04/20/only-4-percent-of-uber-drivers-remain-after-a-year-says-report.html.

Rayle, L., Dai, D., Chan, N., Cervero, R., & Shaheen, S. (2016). Just a better taxi? A survey-based comparison of taxis, transit, and ridesourcing services in San Francisco. Transport Policy45, pp. 168-178. doi:10.1016/j.tranpol.2015.10.004

Stewart, A. and Stanford, J. (2017). Regulating work in the gig economy: What are the options? The Economic and Labour Relations Review28(3), pp. 420-437. doi:10.1177/1035304617722461

Surie, A., Koduganti, J. (2016). The Emerging Nature of Work in Platform Economy Companies in Bengaluru, India: The Case of Uber and Ola Cab Drivers. E-Journal of International Comparative Labour Studies, 5(3).

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Temperton, J. (2017, April 16). “Forget Google, Uber, Amazon and Spotify. In Russia, Yandex rules”. Wired.

VisaSam.ru. (2017, November 14). Средняя и минимальная зарплата в Москве по профессиям в 2018 году. Retrieved from https://visasam.ru/russia/rabotavrf/srednyaya-zarplata-v-moskve.html.

 

[1] In the mid- to long-term self-driving cars (perhaps owned by platforms) could continue this transformation.

[2] One of the reasons might be that he drives a minivan; rental is twice the price of regular rental while fares are only 40% higher.

[3] Seven in-depth interviews conducted by the author in Cape Town, South Africa, in September 2018, also point in this direction.

[4] One driver said that being connected to a taxi stand gives drivers better orders as Yandex Taxi prefers to work with big firms instead of individuals. Another driver working as a ‘driving partner’ with Yandex disagreed.

 

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Klemens Witte

Research Associate, DOC Research Institute, DE

Klemens Witte, Research Associate at the DOC, is specifically interested in economic questions, international relations, and policy-making. He holds a Masters in Political Science and Intercultural Communication (Martin-Luther-University Halle-Wittenberg), a second Masters in Baltic Sea Studies (Södertörns University College/Stockholm), and a postgraduate LL.M. in International Economic Law (Southwest-University for Political Science and Law/Chongqing and Martin-Luther-University Halle-Wittenberg). Klemens Witte has gained international experience in universities in Kazan, Moscow, Kaliningrad, Minsk, and Beijing. He has further work experience within the fields of internationalization and education as a desk officer with Swedish government ministries and as a lecturer from the Moscow State Institute of International Relations. He speaks German, English, Swedish, Russian, and Chinese.