Page 55 - RusRPTOct23

4.5 Labour and income
4.5.1 Labour market, unemployment dynamics
Unemployment is a record low of 3%. Unemployment of 3% is very low for Russia. Such a minimum speaks not of an organic growth in output or labour productivity, but of a shortage of personnel, including due to mobilization,Growth in wages leads to an increase in consumer demand (retail trade grew by 10.5% yoy in July), while growth in consumption leads to higher inflation and the weakening of the ruble due to the growth of imports. There are no internal reserves of personnel (except for students and pensioners) in Russia due to the demographic gap of the 1990s, and unemployment is already at a level accelerating inflation and will remain at it at least until the end of the year, experts say. An increase in the Central Bank rate in September looks almost inevitable.
The Russian economy has not only not collapsed under the sanctions so far, but periodically gives Vladimir Putin reasons to brag. In the first week of September there was another reason - unemployment in Russia for the first time in history fell to an ultra-low level of 3%, a new post-Soviet record.
The extremely unpopular increase in the retirement age in 2018 significantly softened the impact of the war on the labour market, a RANEPA study showed (cited by Kommersant).
The government announced a gradual increase in the retirement age by five years - to 65 for men and 60 for women - in 2018, and this provoked the last truly massive wave of protests in Russia so far. But, according to the institute’s calculations, as a result, the labour market in 2018-2022 gained an additional 1.7mn, or 2.3% of the workforce—most of the pre-retirees found work.
The “reform” also achieved its immediate goal - unloading the Pension Fund: there were 2.4mn fewer old-age pensioners in 2018–2023, and their total number (34.2mn) became the minimum since 2014.
The unemployment rate among the older population has decreased at almost any age in the range from 50 to 65 years - in 2022 it was 1.9-3% instead of 3-5% in 2018, Kommersant notes. Researchers believe that the “tail” of raising the retirement age will bring approximately 2mn more pre-retirees into the market in the next five years. The effect of pre-retirement labour force exists, but most likely it is weaker than RANEPA believes.
55 RUSSIA Country Report October 2023 www.intellinews.com