Back to Covid 2020: Employers refuse to hire new people

“Tens of thousands of jobs just disappeared”

This summer there was a symptomatic failure in the Russian labor market: the demand for new workers decreased by 15.2%, or 300,000 people, in annual terms. The last time such dynamics was observed was about two years ago. People associated with the automotive and financial business, as well as with government agencies, turned out to be less in demand.

This is stated in the report of the Central Bank “On Monetary Policy”. From it it is clear that the demand for personnel in Russia is on a downward trajectory. This is confirmed by the recruiting agencies HeadHunter and Superjob.

In June, employers’ need for employees decreased in absolute terms (seasonally adjusted) from 2.1 million to 1.8 million people. Prior to this, a sharp decline (by 20.1%, to 1.3 million people) was recorded in May 2020, at the height of the first wave of coronavirus. According to the regulator, the unemployment rate rose slightly in June and is still close to historical lows of 4%. To date, 5% of enterprises in the country plan to switch to part-time employment. Large international companies whose activities in Russia are now on pause (or are undergoing a change of ownership) are sending employees on layoffs with only part of their wages saved.

“Firstly, we should not forget that a lot of Western companies left the market, respectively, several tens of thousands of vacancies simply disappeared,” says Pavel Utkin, a leading lawyer at Parthenon United Legal Center. “Indeed, we are talking about the automotive industry and the financial sector, first of all: virtually all foreign car brands, with the exception of Chinese ones, have left Russia, as well as financial institutions.”

As for the public sector, the trend towards staff reduction has been observed there since the beginning of the year, that is, it began even before the well-known events. A huge number of departments are optimizing staff and increasing staff turnover, since the amount of work that now falls on one person was previously performed by three. At the same time, salaries do not grow in proportion to the increase in workload, Utkin notes. In his opinion, in the next couple of months, hundreds of thousands of employees (mainly Western companies and Russian enterprises dependent on them) will enter the market, who were sent to idle for six months. And then unemployment in the country can almost double.

“It is in the summer that the labor market almost always fails,” says Aleksey Zubets, a professor at the Financial University under the Government of the Russian Federation. – According to our data, its lowest point was in July, which turned out to be the worst month in terms of both recruiting activity and the number of layoffs. The situation is largely related to the base effect: in 2021, as the economy recovered from the pandemic, employers showed increased demand for staff. I think the revival will start from September. The people are afraid of the devaluation of the ruble and inflation, so they are ready to spend money. So there is no need for businesses to shrink down and optimize the state.”