Page 41 - Russia OUTLOOK 2024

Tight labour market brake on growth
The rapid growth of wages in Russia, caused by a sharp shortage of workers due to war and mobilisation, has ended, writes RBC.
Since the invasion began, the population of ‘surplus’ labour available has fallen from roughly 1.25mn to 500,000. Labour shortages are now overwhelming businesses. A new analysis from Yakov & Partners (formerly McKinsey’s Russia division) estimates the economy will broadly be short 2-4mn workers by 2030 if current trends persist. The number of job vacancies in Q3 2023 was 230% higher than Q3 2022, with the worst shortages seen in IT, logistics, manufacturing and agriculture.
These shortages are pushing up pay. Jobs paying more than RUB100,000 a month now comprise over 5% of all job vacancies, a 240% increase on 2022. According to the forecast of the Ministry of Economic Development, in 2024-2026 real wages will grow by 2.5% per year, and nominal wages by 7.7%.
Thanks to the labour shortage, companies are forced to switch from head hunting to “hunting for hands”, that is, luring workers away from other jobs by offering higher salaries without modernising production, says the National Research University Higher School of Economics.
As a result, labour productivity is stagnant but wage costs are soaring. In addition to the key rate, the resources of enterprises are being depleted by the weakening of the ruble, higher costs of logistics and the costs of parallel imports.
In December 2023 there will still have been a statistical surge in salaries due to annual bonuses, and then the growth rate will slow down in 2024.
In the longer term, the structural imbalance of the labour market will force enterprises that are losing the battle for workers to reduce production. This will be a very serious limiting factor for GDP growth in 2024, said Russia’s ACRA rating agency in a recent study.
The bottom line is that GDP will grow by only 0.5-1.3% in the next three years, because the overheated economy will hit the supply threshold, and the real sources of growth – human capital and labour productivity – are exhausted and no longer improving.
In-demand specialists will do best in the labour market – employers will still have to lure them away with their salaries. Ordinary employees changing jobs should moderate their salary expectations: more and more companies are curtailing the “plus 10% to the market” policy, writes RBC. Those who remain can expect, if not faster, then higher wages, as well as non-material incentives – for example, luxurious corporate events returning to everyday life.
41 Russia OUTLOOK 2024 www.intellinews.com