London Daily

Focus on the big picture.
Friday, Jun 20, 2025

Putin’s Hopes for Fast Recovery Threatened by Worker Deficit

Putin’s Hopes for Fast Recovery Threatened by Worker Deficit

Vladimir Putin’s hopes of getting his economy growing again quickly are likely to be dashed by Russia’s shrinking workforce.

Employers, especially in construction, are struggling to find enough people to fill jobs because coronavirus restrictions have halved the number of immigrants. Companies ranging from gold miners to builders say they’ve been forced to push up wages to attract locals.

Almost half of construction companies surveyed by the national builders union said they have increased pay. MIC Group, a Moscow-based constructor, has hiked wages by as much as 15% on average and that’s helped bring in more staff, said Andrey Ryabinskiy, head of the board of directors.

“It was hard enough to find qualified workers before the pandemic, but now we’re feeling it much more,” he said.


The Kremlin is relying on a rapid recovery from the pandemic to quell growing discontent over falling incomes and rising consumer prices. Despite the success of its Sputnik vaccine, Russia is behind on its ambition to inoculate 60% of the population by the middle of the year.

Russia has already lifted most of its coronavirus restrictions and a recent rally in oil prices should help an economic rebound kick in as soon as the second quarter, but the pace of growth could be limited without an ample supply of workers. A shrinking labor force could shave about 25 basis points off potential growth every year for the next decade, according to Bloomberg Economics.

Russia usually relies on an army of laborers from other parts of the former Soviet Union to help meet the increased demand when the economy picks up, but most borders have been closed for almost a year.

“If the shortages are not solved by March, it will be a big problem,” said Madina Khrustaleva, an analyst at TS Lombard in London. “The need for labor in agriculture will also grow due to seasonality.”


Migrant workers usually make up about 7% of Russia’s workforce and contribute about 6% of gross domestic product, according to Evgeny Vinokurov, chief economist at the Eurasian Development Bank. Developer JSC Inteco, whose contractors use migrant labor for as much as 70% of their workforce, is experiencing slowdowns in “a substantial number of projects,” according to President Alexander Nikolaev. The company has had problems finding local replacements for migrant workers with the right skills even after it pushed up wages by 30%.

“Construction sites are still noticing the shortage of workers, despite the fact that they increased wages,” said Anton Glushkov, president of Nostroi, the national builders union. “This will ultimately result in an increased cost of construction.”

Russia’s already shrinking workforce has also taken a hit from the third-highest Covid-19 death toll in the world last year. The population shrank by almost 700,000 people in 2020, the biggest annual slump in 15 years.

What Our Economists Say:

“The pandemic has increased demand for workers in key sectors, even as restrictions limit the flow of people. In the long term, the workforce is shrinking, and that will be a more structural drag on growth once the economy recovers.”

Scott Johnson, Bloomberg Economics.

Migrants are in such high demand that they made more money on average than Russians in the fourth quarter of last year, according to research by Evgeni Varshaver at the Russian Presidential Academy of National Economy and Public Administration. They earned on average 47,000 rubles ($630) a month, compared to 34,000 rubles for Russians.

Mass vaccinations and border re-openings would help smooth out the bottleneck, but neither are expected in the coming months. Meanwhile, many Central Asian nations, which are a big source of migrant labor, don’t yet have access to any vaccine.

“One of the main outcomes of the pandemic for Russia’s labor market will be a continuing decline in supply, which will keep pressure on wages,” said Sofya Donets, an economist at Renaissance Capital in Moscow.

Newsletter

Related Articles

0:00
0:00
Close
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
Senate hearing on who was 'really running' Biden White House kicks off
Iranian Military Officers Reportedly Seek Contact with Reza Pahlavi, Signal Intent to Defect
FBI and Senate Investigate Allegations of Chinese Plot to Influence the 2020 Election in Biden’s Favor Using Fake U.S. Driver’s Licenses
Vietnam Emerges as Luxury Yacht Destination for Ultra‑Rich
Plans to Sell Dutch Embassy in Bangkok Face Local Opposition
China's Iranian Oil Imports Face Disruption Amid Escalating Middle East Tensions
Trump's $5 Million 'Trump Card' Visa Program Draws Nearly 70,000 Applicants
DGCA Finds No Major Safety Concerns in Air India's Boeing 787 Fleet
Airlines Reroute Flights Amid Expanding Middle East Conflict Zones
Elon Musk's xAI Seeks $9.3 Billion in Funding Amid AI Expansion
Trump Demands Iran's Unconditional Surrender Amid Escalating Conflict
Israeli Airstrike Targets Iranian State TV in Central Tehran
President Trump is leaving the G7 summit early and has ordered the National Security Council to the Situation Room
Taiwan Imposes Export Ban on Chips to Huawei and SMIC
Israel has just announced plans to strike Tehran again, and in response, Trump has urged people to evacuate
Netanyahu Signals Potential Regime Change in Iran
Juncker Criticizes EU Inaction on Trump Tariffs
EU Proposes Ban on New Russian Gas Contracts
Analysts Warn Iran May Resort to Unconventional Warfare
Iranian Regime Faces Existential Threat Amid Conflict
Energy Infrastructure Becomes War Zone in Middle East
UK Home Secretary Apologizes Over Child Grooming Failures
Trump Organization Launches 5G Mobile Network and Golden Handset
Towcester Hosts 2025 English Greyhound Derby Amid Industry Scrutiny
Gary Oldman and David Beckham Knighted in King's Birthday Honours
Over 30,000 Lightning Strikes Recorded Across UK During Overnight Storms
Princess of Wales Returns to Public Duties at Trooping the Colour
Red Arrows Use Sustainable Fuel in Historic Trooping the Colour Flypast
Former Welsh First Minister Addresses Unionist Concerns Over Irish Language
Iran Signals Openness to Nuclear Negotiations Amid Ongoing Regional Tensions
France Bars Israeli Arms Companies from Paris Defense Expo
King Charles Leads Tribute to Air India Crash Victims at Trooping the Colour
Jack Pitchford Embarks on 200-Mile Walk to Support Stem Cell Charity
Surrey Hikers Take on Challenge of Climbing 11 Peaks in a Single Day
UK Deploys RAF Jets to Middle East Amid Israel-Iran Tensions
Two Skydivers Die in 'Tragic Accident' at Devon Airfield
Sainsbury's and Morrisons Accused of Displaying Prohibited Tobacco Ads
UK Launches National Inquiry into Grooming Gangs
Families Seek Closure After Air India Crash
Gold Emerges as Global Safe Haven Amid Uncertainty
Trump Reports $57 Million Earnings from Crypto Venture
Trump's Military Parade Sparks Concerns Over Authoritarianism
Nationwide 'No Kings' Protests Challenge Trump's Leadership
UK Deploys Jets to Middle East Amid Rising Tensions
Trump's Anti-War Stance Tested Amid Israel-Iran Conflict
Germany Holds First Veterans Celebration Since WWII
U.S. Health Secretary Dismisses CDC Vaccine Advisory Committee
Minnesota Lawmaker Melissa Hortman and Husband Killed in Targeted Attack; Senator John Hoffman and Wife Injured
Exiled Iranian Prince Reza Pahlavi Urges Overthrow of Khamenei Regime
×