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Labour Shortage Crisis Impacts Russian Economy: Outlook for 2024

Labour Shortage Crisis Impacts Russian Economy: Outlook for 2024

Inadequate Workforce Looms Over Russia's Economy

Persistent labour shortages present a serious problem for Russia in 2023, with a deficit projected to hit around 4.8 million workers, according to figures tracked by local media outlet Izvestia, quoting experts and evidence compiled by the Russian Academy of Science's Institute of Economics.

Shortage Overshadows Economic Growth

Elvira Nabiullina, Central Bank Governor, suggested last month that Russia's dwindling pool of workers was the root cause behind the crippling labour shortages, impeding economic growth as Russia continues to invest heavily in both its military personnel and resources.

The already tensed labour situation was aggravated by the exodus of hundreds of thousands of Russians, including skilled IT professionals following the initiation of what the official narrative describes as a unique military operation in Ukraine in early 2022. Those leaving the country were either opposed to the conflict or fled due to fears of conscription.

The manpower crisis deepened further after President Vladimir Putin, who recently lavished praise on a record-low unemployment rate of 2.9%, announced a partial military draft of roughly 300,000 recruits in September 2022. Putin maintains that, at this time, there’s no necessity for additional mobilization.

Workforce Shortage Crisis Continues To Rise

According to Nikolai Akhapkin, the researcher behind these findings, the worker deficit shot up remarkably between 2022 and 2023. Izvestia reported that occupations such as driving and retail had a particularly high need for employees.

Information sourced from official resources and published by the newspaper showed an increase in job vacancies from 5.8% to 6.8% within the overall labour market by mid-2023.

"Translating the Rosstat provided data to the entire labour market would suggest a preliminary total of 4.8 million shortfall in workers in 2023," the newspaper noted, quoting the new research.

The report also highlighted Labour Minister Anton Kotyakov's acknowledgement that sectors like manufacturing, construction and transportation were being especially hit by workforce shortages, prompting companies to hike wages in an attempt to lure more staff.

Labour Deficit Expected To Persist Into 2024

Tatyana Zakharova, a representative from Russia's G.V. Plekhanov-named University of Economics, predicted that this labour shortfall is likely to be an ongoing issue in the next year. Positions in fields such as manufacturing, engineering, healthcare, and education will prove particularly challenging to fill, she said. Factors such as a declining population and heightened levels of migration were to blame for these labour shortages, she proposed.

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