how industrial companies dealt with staff shortages

The Gaidar Institute’s November Industrial Survey Bulletin (IEP) documents the results of a study of how companies in the sector were coping with skills shortages in 2023. The most widespread tools are increasing wages (79% of respondents) and retraining of employees (75%) in order to retain workers “in the context of rising wages in other sectors of the Russian economy, including in the field of military security,” the IEP notes. In November, the balance of expected changes in wages, according to the institute’s respondents, reached the maximum of the entire ten-year monitoring of this indicator. The most intensive wage growth in 2023 was planned by light industry enterprises, as they are experiencing the maximum personnel shortage and are faced with the liberation of the domestic market from competing imports as a result of sanctions restrictions, the withdrawal of subsidiaries of foreign manufacturers from the market and the weakening of the ruble exchange rate (see chart).

The third most common tool was establishing close contacts with secondary specialized educational institutions – 71% of enterprises. Only in fourth place (60%) were investments in more productive equipment, and another 42% switched to labor-saving technologies in existing production processes. “As for hiring new workers for blue-collar vacancies, more than half of enterprises practiced retraining them, without relying only on the skills acquired during their studies or at a previous place of work,” analysts record. Only 43% of employers reported an increase in the salaries they were offered. Searching for qualified workers in labor-abundant regions and bearing the costs of relocating them closer to the enterprise was practiced by 31% of employers.

“Industry’s personnel policy, in the context of the personnel shortage in 2023, is beginning to develop territorial mobility of labor, the lack of which labor market experts liked to talk about in previous years,” the IEP states. Meanwhile, the classic “shift method” was used by only 14% of enterprises. Using migrants (both from the Central Asian republics and Southeast Asian countries) to fill vacancies for skilled workers has proven to be the most unpopular way to solve personnel problems.

Artem Chugunov