Page 58 - RusRPTSept23

4.5 Labour and income
4.5.1 Labour market, unemployment dynamics
Employment in the second quarter was up by over 2% y/y (2Q22 saw a rise of 0.5% y/y as well). The number of people in the labour force in the second quarter was also up by nearly one and half a per from 2Q22. People starting to work came not only from unemployed persons but to a significant degree from people outside the labour force. Thus, Russia’s employment rate has risen significantly.
Russia is grappling with a severe labour shortage that has escalated into a significant economic challenge for the government. The situation has worsened since last year, with each passing month marking new record lows for unemployment.
In June, unemployment plummeted to 3.1%, a level unseen in Russia prior to the conflict, underscoring the depth of the scarcity in the labour force. The number of employed individuals reached 73.6mn in June, representing the highest figure in at least the last five years.
Industries spanning from auto services to IT are voicing concerns about the dearth of available workers. A recent survey highlighted acute staff shortages in the manufacturing sector, where 42% of firms reported inadequate staffing levels. Even vital institutions such as the Interior Ministry and the Moscow Metro are grappling with workforce insufficiencies. Tragically, a metro worker lost his life recently due to exhaustion after working three consecutive days of overtime.
The underlying causes of this crisis are apparent. The ongoing conflict in Ukraine, coupled with mobilization efforts and emigration, have compounded Russia's preexisting demographic challenges. These factors have been amplified by a surge in military expenditure, artificially boosting the economy and creating additional employment opportunities.
Recent years have seen Russia maintain employment levels by reabsorbing previously unemployed individuals into the workforce. However, the current scale of near-full employment makes this approach infeasible, according to Rostislav Kapelyushnikov, assistant director of the centre for Labor Research at Moscow's Higher School of Economics.
The repercussions of this labor shortage reverberate through Russia's economy, driving two pressing issues: surging inflation and a weakening ruble. Wages are escalating at a pace that surpasses production growth, with real disposable incomes rising by 5.3% and real salaries increasing by 13.3% in
RUSSIA Country Report September 2023 www.intellinews.com