Russian demographics

Russia saw a rapid expansion in population during the Soviet era as the country was industrialised and the population moved into the cities. The population rose from circa 100mn in 1945 following WWII to 148.5mn in 1992, after which the economic chaos of that decade both depressed fertility and increased the death rates, especially amongst men. Life expectancy in particular crashed after the economy collapsed in 2009.

Now things are even worse. Compared to the peaks of the boom years in the early noughties, fertility rates in Russia have fallen by almost a third and are now even lower than in the mid-1990s, when an average of 9.3 children were born per 100,000 people.

While the death rate is growing at the same time, the natural population decline continues to accelerate: 264,300 people per quarter, or 7.3 people per 100,000 of the population – new all-time lows for the entire modern history of the country.^[4]

The Covid-19 pandemic caused life expectancy in Russia to fall by 3.3 years. It quickly began to recover in 2022, rising by 2.7 years. However, the war has disrupted this progress, and life expectancy is now impacted by war-related deaths and stress-induced substance abuse. Lower incomes and worsening access to medication, diagnostics, equipment and treatment are further reducing life expectancy.

The war may also cause a decrease in inward migration, which has previously helped offset Russia's natural population decline. From 1992-2019, the natural loss was 13.8 million people, but inward migration compensated with 9.6 million. Russia could now find itself in a situation where natural and migratory losses reinforce one another...

Shifts in the age structure of the population pose a substantial demographic risk for Russia's economy. The generations born in the 1990s and 2000s, when Russia's birth rate was at its lowest, are now entering the labor market. This will exacerbate the existing crisis due to a lack of young workers. Meanwhile, the post-war generations of the 1950s and 60s are aging and approaching retirement.^[6]

A smaller population means a country's lower economic potential, a shrinking domestic market, worsening demographic problems and an aging population, as well as a decrease in the country's geopolitical power. The population size still correlates with the weight in international relations, the ability to promote their interests on the world stage. And the declining population for the largest country in the world may cause some neighbors on the continent, especially the eastern ones, to be tempted to solve their internal growing problems by some external adventures. But will Russia find anyone and how to fight back, will there be allies?^[7]

The poll by Russia’s Yegor Gaidar Institute for Economic Policy, which surveys managers of around 1,000 industrial enterprises in the country each month, found in April that 35 percent of enterprises lacked workers. The institute said that was the highest figure since 1996.

The shortage was partly down to Russia’s “partial mobilization” of its population starting from September last year, according to the institute.

Russian outlet RBC reported Thursday that Sergey Tsukhlo, the institute’s head of business surveys, told a conference where he presented the findings that understaffing in the country represented “a deep and long-term problem” that was holding back the country’s industrial growth...

Putin admitted in April that the country “does not have enough workers,” while Russian Economic Development Minister Maxim Reshetnikov in March said issues with training and labor productivity were becoming “questions of survival” in the country.^[9]

Central Bank Governor Elvira Nabiullina said last month that Russia's depleted labour force was causing acute labour shortages and threatening economic growth as Moscow pumps fiscal and physical resources into the military. Hundreds of thousands of Russians left the country following what the Kremlin calls its special military operation in Ukraine which began in February 2022, including highly-qualified IT specialists...

The outflows intensified after President Vladimir Putin, who earlier this month lauded a historically low jobless rate of 2.9%, announced a partial military mobilisation of around 300,000 recruits in September 2022. Putin has said he sees no need for a new wave of mobilisation for now.

Izvestia, citing the author of the research, Nikolai Akhapkin, said that labour shortages had sharply increased in 2022 and 2023. It said that drivers and shop workers were in particularly high demand. According to official data, cited by the newspaper, the number of vacancies in the total workforce rose to 6.8% by the middle of 2023, up from 5.8% a year earlier. "If we extend the data presented by Rosstat (the official statistics agency) to the entire workforce, the shortage of workers in 2023 will tentatively amount to 4.8 million people," the newspaper cited the new research as saying.

It noted that Labour Minister Anton Kotyakov had said that workforce shortages were felt hard in the manufacturing, construction and transportation sectors, forcing companies to raise wages to try to attract more employees.^[10]

"I stress that, given the demographic challenges, Russia's economy will face large workforce needs and even a workforce shortage in the coming years. This is absolutely certain. We should understand that. We will live with that in the next few years," Putin said at a congress of Russia's Federation of Independent Trade Unions.

In these conditions, "it is critical to raise labor productivity, modernize industry, agriculture, the services sector and many other sectors of the economy and social sphere with the help of digital technologies and automation of production and management processes," he said.

"This, in turn, should directly lead to an improvement of specialists' work conditions and an increase in their incomes," Putin said.^[11]

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.^[15]

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.^[16]