Unemployment on the Rise in Putin’s Russia

The Moscow Times reports that Vladimir Putin’s Russia Russia is, amazing, facing both massive unemployment and staffing shortfulls at one in the same time:

Massive layoffs have not started, but companies and employees are preparing themselves for the possible consequences of the financial crisis and a slowdown in growth across most sectors. The white-collar labor market, which only a month ago faced a strong undersupply of qualified staff, making it possible for candidates to demand high salaries and compensation packages, is now turning in the other direction. As most Russian companies stop gearing for continuing growth, fewer new jobs are available, and existing jobs are becoming more valuable. “Now it’s a more favorable market for employers, and the companies that will receive the most benefits will be the Russian companies,” said Tremayne Elson, managing director at Antal, a recruitment agency. “They’ll be able to get a better selection of people, for cheaper.”

Yelena Sidorenko, a headhunter for Staffwell, said the people facing the biggest cutbacks were specialists in equity sales and research, trading and portfolio management, while staff in other sectors may be more insulated.

The banking sector has switched from a candidate-driven market to a client-driven market in the past four to six months, said Ronald Smith, chief strategist at Alfa Bank. He said rumors of trouble at several Russian investment banks likely implied future downsizing. When banks struggle, “there’s always a good chance that there’s going to be a headcount reduction,” Smith said. “For the banks that survive, I think you’re going to see a quality increase [in talent].”

Natalya Konovalova, spokeswoman for PIK Group, one of the country’s largest residential construction companies, said that while PIK itself did not expect any layoffs, other companies in the debt-based sector might. “There was a deficit of qualified and experienced personnel in construction over the last few years, and now if more specialists become available it may make the market more balanced,” she said.

Sidorenko of Staffwell predicted it would still be several months before the job market felt the repercussions of corporate downsizing. “We are not likely to see a serious round of layoffs until early 2009,” she said, and added that some sectors might escape unscathed. Among those sectors are consumer goods, where sales are booming as ordinary Russians spend.

Josef Donhauser, general manager of Puma Russia, which began operations in Russia in 1998, said that despite the crisis, his company would still increase headcount by 20 percent in 2008 and will continue expanding staff through 2009. “Our company, at least in Russia, is still at the stage of building up a strong organization,” Donhauser said. He said Puma Russia, as a middle-end consumer goods retailer, had been largely unaffected by the crisis. People are still “spending the money, I think, for food and clothes,” he said.

Like Puma Russia, DHL Solutions will also continue to increase its regional headcount through 2009, said general manager Nore Kamoun. He added that while the crisis might produce a more competitive work force in the short term, in the long term Russia will likely return to having an overheated labor market.

“Long term, we are still facing the same problem, where there is the demographic issue of a deceasing population and the demand [for talented labor] is bigger than the supply,” he said.

Elson, the recruiter, said the crisis would likely be beneficial for Russian companies, recalling the three years following the 1998 economic crisis, when Western firms largely abandoned the Russian market and local startups had greater opportunity for development.

“Immediately after the crisis until 2001 was a golden period for Russian firms to come in,” Elson said. Russian companies “saw the opportunity and took it.”

Yevroset spokeswoman Natalya Aristova also cited 1998 as an historical example. “After the 1998 crisis, CEO Yevgeny Chichvarkin could afford to hire exclusively people with a higher education,” Aristova said. “As a result of this crisis, a number of good people may end up looking for a job, and we will use this to our advantage.”

Kamoun of DHL Solutions, however, said it was impossible to compare today’s crisis with the 1998 meltdown. “Today in Russia there is a stable foundation politically and economically,” Kamoun said. “I don’t see Western companies [running] out of Russia.”

7 responses to “Unemployment on the Rise in Putin’s Russia

  1. One of the keys to a sustained economy is, accountability.

    I do not mean regulation, I mean accountability.

    Regulation is when the government runs your business for you.

    Accountability is when you have competent evaluators(which is key), correct any negative trends, deficient training or safety concerns. You give the private industry an oportunity to correct any deficiency before any judicial punishment is applied. With a follow up, you find another discrepancy, that should not be weighed untill the next evaluation.

    That is the only time that regulation should even be considered.

  2. Most people do not know what they need to correct until a more experienced person points it out to them.

    In the spirit of Lenin, If any garbageman could run the government, why didn’t he? and most importantly, why wasn’t he. Oh yeah, why would Lenin give up that power to a simple back water garbageman?

    If he held true to his beliefs, he would have. Instead power was ceded to someone even more unqualified. I guess you could call him The Garbage Man.

  3. A few points
    1)”Massive layoffs have NOT started,but companies and employees are PREPARING themselves for the POSSIBLE consequences of the financial crisis and a slowdown in growth across most sectors.”
    2)”the crisis would likely be BENEFICIAL for Russian companies”
    3)”that while PIK itself did not expect any layoffs, other companies in the debt-based sector MIGHT”.
    4)”it may make the market more BALANCED”
    5)”He added that while the crisis might produce a more competitive work force in the short term, in the long term Russia will likely RETURN to having an overheated labor market”
    6)“For the banks that survive, I think you’re going to see a quality increase [in talent].” Pray tell me how many banks exactly are in danger? (numbers)
    7)3 companies that will continue to expand (Puma, DHL Solutions, PIK Group)

    Wow signs of a (long lasting) crisis indeed!


    The Russian stock market has lost 75% of its value, the Russian government has spent a huge chunk of the national savings in a desperate attempt to keep it from going the rest of the way to zero, inflation is double-digit, wages are $4/hour, and you say there is no long-lasting crisis! You sound EXACTLY like the Politburo, dooming Russians to decades more horrific suffering under venal incompetent government.

    Why do you hate Russians so much as to wish that fate on them?

  4. LR, I’m picking up some parts of the article that YOU posted that undermine th view that Russia will face a crisis and from the looks of it it’s pretty much the whole text. Essentially it’s not me saying there’s no crisis but the very article you posted. Which means two things: either you didn’t read the article or you’re running low on convincing material.

    “Major emerging economies look to RESIST recession”
    Now, if the major emerging economies (the article includes Russia, you know) seem to avoid a recession then logically there will be no crisis. And if as you claim Russia does face a crisis (without there being a recession) what will the (e.g.)USA face?

    “the Russian government has spent a huge chunk of the national savings”
    should I assume you don’t know the exact figures of this “huge chunk” or are you simply not saying?


    Hmm, so let’s see if we understand. Unless we publish only material that is 100% negative for Russia, then the fact that there is even 0.1% positive content proves Russia is a paradise, right?


    But dear, if we did post THAT kind of content, wouldn’t you attack us for being biased?

    Gosh, guess we can’t win no matter WHAT we do, can we? Guess we’d better just hand over our blog to YOU, the only one who “understands” the “real” truth about Russia, right?


    And meanwhile, it’s perfectly fine for YOU to ignore all the negative content and focus on the positive, that makes YOU a genius, but if WE do the opposite then we’re nuts, right?

    And it never even occurred to you to praise us for our objectivity and accuracy, not for a second. Instead, you accuse us of not even reading our own content! Is that how you show how to be a rasonable, thoughtful person where Russia is concerned? Thanks for the example!

    You sure are good for some quick entertainment, you witless dolt. A PERFECT encapsulation of the neo-Soviet freaks that are running Russia right into the ground, just as they did the USSR.

  5. Cathy, in order to explain LR’s thoughts, Russia will boom or bust based on the price of oil.

    There is a saying, don’t put all of your eggs in one basket.

    If that doesn’t explain it for you, you are hopeless.

  6. Tower Bolshevik

    Unemployment on the rise in Russia? I knew they had a few things in common with the USA. Where I live it seems like almost every week you see a company going out of business. And this is California, the richest state in the Union.

  7. TB, I’m not sure if I should laugh or cry.

    Your state economy is dropping faster than a brick.

    Terminal velocity is normally achieved by american soldiers in HALO school, but California has been chasing bussiness out of state faster than light.

    These companies can still service California, but they have a fraction of the taxes. Wouldn’t you do the same?

    I only wish the world could see what a disaster California is, even though it was given everything it has.

    Bail yourselves out, you pompous mfs.

    The rest of the world has to deal with what they have.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s