One of the main topics in Russia in recent months has been an acute shortage of personnel. At the same time, observers talk about the “fantastic” adaptation of the Russian economy to sanctions and military challenges. How do these two theses fit together, and how acute can the situation in the Russian labor market be called?
Let me start from afar. For 30 years, officials and politicians in Russia have viewed unemployment as one of the key problems and have struggled with it. At the same time, the crises experienced by the country did not, as a rule, lead to a serious reduction in employment. Unemployment was growing, but not by much, which surprised everyone. And so it went from crisis to crisis. Each time, negative expectations were higher than reality. This is explained by the fact that in Russia, due to a number of circumstances (and they were formed in the late Gorbachev years), a market model, which dampens high unemployment, has developed. This is due to the fact that it is quite easy to lower wages, which makes it possible to adapt to increased costs. But the costs of layoffs, the costs associated with the optimization of the number of employees, are high. This is enshrined in the Labor Code, which provides for high severance payments. And officials interfere when they see the risk of layoffs. That is why companies, if they can reduce their number of employees, do not reduce it quickly, but gradually squeeze people out one by one.
Mass layoffs, which are characteristic of, say, the American economy, are virtually impossible in Russia. This is compensated for by a very low minimum wage and, accordingly, tiny unemployment benefits. In addition, there was a huge segment of semi-formal employment, which like a sponge absorbed those who lost their jobs in the corporate sector. It was impossible to get by on welfare — you had to go into that sector.
This model turned out to be quite effective. This is not to say that it is unique to Russia. This model is typical of a number of Latin American countries. And the point is that if you have weak unemployment benefits and social protection, there can be no high unemployment, but the gray sector can be a source of income.
Now things have started to change, and the reason is the demographic situation. The total number of employees in the labor force has not fallen much so far, but their age composition is changing. There are fewer and fewer young people — and they are the most productive. Productivity goes up until the age of 40 to 45, after which it hardly grows at all. According to our projections that we made before the war, the number of employed people between the ages of 20 and 40 should be down by about a quarter by 2030 compared to 2020. That in itself is a huge shock. And then, in addition to demographics, there is emigration, mobilization, and the need to increase employment in industries that are engaged in import substitution or work in the military-industrial sector. It turns out that, on the one hand, the supply of the most productive segment in the labor market is falling, and on the other hand, it is necessary to provide a reallocation maneuver.
This model, which has been extremely effective for fighting unemployment, is proving to be a big brake on quick maneuvering. And this problem is very difficult to solve. In order to solve the problem of the labor shortfall in the relevant militarily-relevant industries under the current demographic and other circumstances, we need to free up this workforce somewhere else. And this is not easy, because the very institutions that help to reduce unemployment do not allow this to happen.
The problem is also that it is not enough just to free up workers. People need to be supported for as long as they are unemployed. That is, we need benefits and a system of social protection, which in fact does not exist. We need an effective system of retraining, which is also virtually nonexistent. And often those [who need to be attracted to the military-industrial sector, etc.] need to be paid higher wages than they were getting — otherwise they will resist. And that’s not so easy either.
The industries that need labor are often tied to government contracts. This also implies fixed prices and, consequently, limits on wage increases. The marginal cost of hiring new workers at higher wages is much higher than just the cost of hiring an additional worker. When we deal with mass professions, hiring someone with a higher wage means everyone else has to raise it as well: it is very difficult to pay for the same thing differently within the same organization. Everything instantly becomes known and leads to unnecessary conflicts. So even if it is possible to pay a new employee a little more in theory, the company cannot actually do it in practice.
All of this suggests that