Shrinking labor force in Russia

1.

Shrinking labor
force in Russia
Created by Ilya Kazarin

Main problem after Covid-19
Businesses in the developed world are struggling
to find workers as economies recover from the
worst of the Covid-19 crisis. This has been less of a
challenge for those in big emerging markets,
which have larger pools of labor, with one notable
exception: Russia. Millions of migrant workers fled
the country when it sealed its borders last year,
and it’s shown little success in corralling the virus
within its own population, creating a labor
shortage that’s dragging down the recovery.

3.

How companies are struggling with a shortage of employees
“In some regions we haven’t been able to
hire enough workers for a year already,”
says Maxim Basov, chief executive officer of
Ros Agro Plc, one of Russia’s largest
agricultural companies. Ros Agro has had to
increase wages as much as 10% and is
investing in harvesting machines for use in
areas where it can’t get enough workers.
Other desperate employers are recruiting
soldiers, students, and even convicts to help
fill the gaps.

4.

The number of migrants
Russia ranked No. 4 among
destinations
for
international
migrants in 2019, according to
statistics compiled by the United
Nations. But the number of foreignborn workers—mostly from Central
Asia—has dwindled to about 3
million, from a pre-pandemic 4.5
million, according to the Russian
Presidential Academy of National
Economy and Public Administration.
Although border restrictions have
been eased, many are reluctant to
return for fear of getting stranded
in a new round of lockdowns.

5.

The mortality rate
With only about 40% of the
population fully vaccinated,
Russia has recorded almost
half a million Covid deaths
since the start of the
pandemic, according to the
federal statistics agency,
contributing to the biggest
spike in mortality since World
War II. By a metric that
compares overall deaths with
historical trends, only the
U.S. and Brazil look worse.

6.

Unemployment rate in Russia
Unemployment is at a record
low of 3%. Median wages
across the economy are up
9%, according to Sberbank
data, with jobs in IT, finance,
trade,
hospitality,
and
construction paying about
13% more than before the
pandemic. That’s feeding into
inflation, which reached 3.7%
(since the beginning of
2023).

7.

Alexei Zakharov, president of
SuperJob, a jobs listing website,
says the Covid crisis has fueled
demand for unskilled labor, pushing
up pay in some parts of the gig
economy. “There’s a real war on for
taxi drivers,” he says. SuperJob also
recorded an almost 900% increase
in vacancies for delivery couriers
this year.

8.

State actions
There have been efforts by authorities to lure migrants
back, such as offering amnesty to those whose working
papers aren’t in order and helping facilitate travel, but
also calls for industries to curtail their use of immigrant
labor, with foreigners being blamed for an increase in
crime.

9.

What will happen next?
The challenges will get worse with time, says
Madina Khrustaleva, an analyst at TS
Lombard, a London-based research and
consulting firm. “In Russia in the future there
will be two problems,” she says. “They
already have a declining labor force, but also
a structural problem with the decline of
workers aged under 40. Between 30 and 40
years old, Russians reach maximum
productivity, and the share of this strata will
shrink by 25% by 2030.” —With Zoya Shilova

Shrinking labor force in Russia

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