Essay: Russia's labor shortage

During his annual phone-in with the public in 2019, President Vladimir Putin described low productivity as “one of the most acute and important” problems facing Russia.

The Center for European Policy Analysis reported on March 9, 2024:

“

Towards the end of last year, experts from the Institute of Economics of the Russian Academy of Sciences estimated that Russia faced a shortfall of nearly 5 million workers in 2023, which is already impeding economic growth. The total workforce is a little under 74 million. With perhaps a million Russians, including many working-age men, having fled the country, with more than 300,000 dead or wounded in Ukraine, with more than a million men in the military, and a fertility rate of 1.5 — far below the so-called replacement rate of 2.1 — the country simply cannot meet its needs. The head of the Central Bank is among those describing it as the country’s most serious problem, hardly surprising when unemployment is just 2.9% and the vacancy rate is 6.8%. This scarcity is particularly pronounced in the manufacturing, construction, and transportation sectors. According to recruitment agencies and company management, the workforce deficit will worsen in 2024. Beyond skilled professionals, Russia struggles to meet even basic labor demands, including those for military purposes. Increasingly, schoolchildren and students are being enlisted for war-related tasks. Just last week, a major investigation revealed how minors as young as 14 are involved in activities for the “Mayor’s Labor Unit” in Krasnoyarsk, weaving camouflage nets and preparing parcels for frontline needs.

”

Vladimir Putin wants to crack down on immigration after the Moscow attack. That would make the nation's labor shortage even worse

• Vladimir Putin wants to crack down on immigration after the Moscow attack. That would make the nation's labor shortage even worse., Business Insider, Apr 1, 2024

2023: In Russia, the shortage of personnel in the oil and gas industry was assessed

The Russian economy is too dependent on oil/gas.

Countries and economies that are more diversified in revenue sources are more resilient, stable and sustainable.

See also: Low labor productivity is one of the most acute and important problems facing Russia and Russia is dying out. The war in Ukraine is making Russia's demographic crisis even worse

The Oreanda-News agency was founded in August 1994 in Moscow, becoming one of the first independent news agencies in contemporary Russia. Since 2007, it has been based in Saint Petersburg, Russia.

In 2023, Oreana-News reported in an article entitled In Russia, the shortage of personnel in the oil and gas industry was assessed:

“

Currently, the Russian oil and gas industry lacks 25 thousand employees. Elena Kuznetsova, partner of Yakov and Partners, told RIA Novosti about the shortage of staff. She noted that the need for personnel in the sphere is 90 percent higher than at the beginning of 2021. Companies are particularly in need of welders, locksmiths, machinists, engineers and drillers. Moreover, problems with the lack of workers are fixed not only in the energy sector. In particular, companies are actively looking for sales specialists, IT specialists, builders and managers. Kuznetsova emphasizes that it is most difficult for employers to find medium- and highly qualified personnel, since they cannot be replaced quickly. Experts attribute the shortage of labor to the relocation of specialists, the low attractiveness of work in remote regions, as well as the aging of existing personnel and low motivation of young people. Earlier, the head of the Central Bank, Elvira Nabiullina, said that the shortage of personnel is the main problem of the Russian economy. According to the representative of the Bank of Russia, for further economic growth, it is necessary to ensure not the availability of money and loans, but to increase labor productivity.

”

Military recruitment in Russia aggravates Russia's labor shortages in oil industry. Russian backlash due to terrorist attack in Moscow causes many migrants to return home

On April 5, 2024, Reuters reported:

“

Russian oil producer Lukoil (LKOH.MM), opens new tab has signed a deal with Uzbekistan to hire workers from the Central Asian state on temporary contracts, in a sign of how labour shortages are forcing Russian firms to recruit staff from abroad. The deal, announced by Uzbekistan's ministry of poverty alleviation and employment, comes as Central Asians living in Russia face heightened suspicion and hostility after a mass shooting at a Moscow concert hall last month in which at least 144 people were killed... Russia's labour shortages have been aggravated by military recruitment for the war in Ukraine and the fact that hundreds of thousands of people have left the country since it started in February 2022. The jobless rate fell to a record low of 2.8% in February. The working-age population has particularly been decreasing in Russia's Arctic and far east regions, where much of its oil and gas production is concentrated. Russia's workforce includes several million immigrants from Muslim countries of Central Asia which used to be part of the Soviet Union. Last week, however, Tajikistan said there had been a surge in the numbers of migrant workers returning home, some saying they were afraid amid signs of a backlash following the concert shooting. Kyrgyzstan, another Central Asian state, urged its citizens last week to put off unnecessary travel to Russia.

”

Russia's economy is that of a shrinking, aging, and poorly qualified population

See also: Russia's economy is that of a shrinking, aging, and poorly qualified population

Russia's economy is that of a shrinking, aging, and poorly qualified population

The flag of Russia

There is currently a talent war in the world due to technology and labor productivity increasing being important in terms of the prosperity of a country. Countries’ competition for talent is forecasted to become fiercer over the next ten years as both uncertainties and international tensions continue in trade, investment and politics. And right now, the United States is competitive in this talent war and China/Russia are not which is one of the reasons why people are fleeing China/Russia (See: Top 12 reasons why people are flocking to the USA and leaving the corrupt, authoritarian countries of China and Russia and The world’s best and brightest are flocking to these countries, CNBC, 2023).

On December 15, 2023, The Insider noted:

“

The nationwide mobilization (and the resulting outflux of qualified professionals abroad) exacerbated the crisis in the Russian labor market, already profoundly affected by the demographic decline. Russia's workforce shortage will only increase, experts warn, and may reach 4 million people by 2030. Developed economies compensate for insufficient human resources by driving labor productivity (using such tools as AI, among others), but Russia is also faced with the degradation of industrial processes due to international sanctions. Igor Lipsits, Doctor of Economics, explains how Russia's government policy has caused a labor market catastrophe and why the deteriorating educational system cannot remedy the situation... As early as 15 years ago, when the 2020 Strategy was in the making, the debate was ongoing as to whether defense spending should be cut in favor of supporting education to prevent its decay. No practical steps were taken, though, and Russia currently ranks 82nd in the world by education spending... Since 2006, Russia’s working-age population has shrunk by 13 million. That is, this category is going through a rapid decline. The resulting workforce shortage will cost Russia 1-2% of its GDP each year, according to a market study by Yakov & Partners (former partners of McKinsey in Russia)... From 2018 to 2023, the number of vacancies in Russia has grown by 80%, exacerbating the shortage of human resources. By 2030, the gap will have reached 2–4 million employees. The most affected category is professionals with vocational training (1.1–2.2 million people). The shortage of specialists with a high education will vary from 700,000 to 1.4 million. Russia is not the only nation facing depopulation. Japan, which has it the hardest, has chosen to remedy the situation through robotic engineering. By contrast, Russia is among the planet's laggards in terms of production automation, with its robotic automation pace equaling one-seventieth of the global average... According to the Center for Education Quality Assessment under Russia’s Ministry of Education, around 10% of Russia's schools offer subpar tuition. That’s an optimistic assessment, considering that testing has revealed 22% of Russia's secondary school students to be low-performing. They struggle to grasp the meaning of texts and cannot objectively assess themselves. What further education path is available to such students? Sixty-six percent enter various vocational schools, 26% go to high school anyway, and 7% call it quits. They often consider joining the military as a viable option, ending up in the war with Ukraine, in which Russia is losing both its population and genetic pool. As a result, 25-28% of Russia's adult population is more of a burden to the nation, only preventing its economic development... The quality of schooling has grown even poorer, with Russian schools ranking 31st–33rd among 79 countries, according to 2018 PISA tests in several fields. In 2022, Russia didn't participate in the study due to the war. The quality of higher education, including the PhD level, has also dropped. Thus, from 2010 to 2021, the number of colleges offering postgraduate programs dropped by 3.4 times; the number of available Ph.D. positions decreased by 1.9 times; the Ph.D. graduation rate plunged by 2.4 times, and the number of Ph.D. students who graduated by defending a thesis fell even lower, by 6.4 times.

”

See also

• Russia's economy is that of a shrinking, aging, and poorly qualified population
• Low labor productivity is one of the most acute and important problems facing Russia