Russian labor market is on the way to recovery

How the economy of the country overcomes one of the most negative crisis consequents

Taking the crises with a wave of dismissals in 2014 – 2015, the labor market is becoming stronger again. Employers are ready to offer jobs, but there are no talks about high salaries yet.

Depression in the labor market is one of the integral consequences of the economic crisis. In 2014 – 2015 dismissals, observing in the majority of economy sectors, continued at the beginning of 2016. According to the Federal state statistics service (Rosstat), maximum level of unemployment for the past 3 years was recorded in March and reached 6%, i.e. 4,6 mln of 71,6 mln people of working population.

Employers have advantages. At the same time, the situation is going to change in favor of employers: due to constant dismissals (not only in small and medium enterprises, but also in large companies and state undertakings), the pressure on the labor market increased; that allowed employers to freeze salary increments. The research has shown that only 20 – 30% of hirers planned to increase personnel expenses in 2016. Today incentive payments in the form of perks and bonuses became a general trend, indicating not only companies’ efforts to optimize labor costs, but also inefficient productivity, another serious problem of the Russian economy. All these led to decrease in salary expectations, being about 10% at average. Citizens are ready to take an extra work, willing to compensate drop in direct work income; about 30% of employees improve their finances this way. At the same time, it is quite questionably that income from additional activity is paid in term of formal contract conclusion. Much more likely that about 80% of gains are informal and accommodate black economy growth.

Not everyone will conceive positive changes. Since the second half of the current year, positive tendencies in the labor market have appeared. At the end of spring recruiters carefully spoke about increase in jobs. Today it is obvious that steady trend of the labor market growth takes place for several months. However the experts warn that positive tendencies will cover just particular branches of economy. First of all, job hunting web-sites record requests from large and prosperous companies, while office-seekers are still not hired for small and medium business. IT industry grows fast as usual; consulting sector offers even more jobs, and things also go well in transport and logistics. The number of vacancies for sales managers and beauty industry stuff is increasing too.

Demand on youth is falling. In the current situation, the continuous reduction of youth among economically active population is disturbing. On the one hand, decline in economic activity is a result of increase of education popularity. On the other hand, fall of employers’ interest to this age range should not go unnoticed. In 2011 graduates with no work experience were hired by 66% companies, and in 2016 this indicator fell to 60%. Today large business is more loyal to newcomers – 72% of companies with stuff number exceeding 1 th and only 50% of companies with less than 100 employees hire graduates. Speaking about fields, technologically developed banking sector and IT-field are ready to sign on young specialists – 78% and 73% relatively. Production and construction sectors are less interested in applicants with no work experience. Along with reduction of young employees, the hirers are disappointed with vocational training of graduates. Most of all they are dissatisfied with poor theoretical training, unreasonably high ambitions and self-importance of young professionals.

Follow up success. Being in serious times along with the economy in general, the labor market starts to demonstrate positive tendencies for the first time in two years. Following the results of September, Rosstat recorded increase in actual wages by 2,8% from year to year; unemployment figures reduced to 5,6% in the 3Q 2016. Now the possibility of being in dry dock seems to be less likely for the Russian people. Worries connected with unemployment went down to the level of January 2015. The way was opened, but we are still too far from complete recovery. Development of small and medium business, legalization of shady business, provision of high-efficiency jobs using advanced technology – here are high priority measures aimed not only at the labor market recovering, but also at arrangement of highly attractive and conform conditions for employment of youth as a key force for the economic development in long-term perspective.