Sanctions Regime Seen Generating Far More Turbulence in Russian Labor Market than Pandemic Did

Paul Goble

            Staunton, Mar. 27 – The impact of Western sanctions on Russia’s labor market will be far more profound than was that of the pandemic, Russian academic and government experts say. Instead of simply preserving existing jobs, government must take on the far more difficult challenge of helping displaced workers find new jobs in new industries.

            Experts at the All-Russian Scientific Research Institute of the Ministry of Labor say that so far, sanctions have not caused much in the way of job losses but that in the future, many old jobs will be lost as existing companies adapt to the new situation but new ones will be created elsewhere (ng.ru/economics/2022-03-27/4_8401_economics1.html).

            Businesses, experts at the Institute say, view the sanctions regime very differently than they did the pandemic. They viewed the latter as something everyone was suffering from and also as something that would soon end. That made them willing to hold onto workers in the expectations that everything would come back to where it was.

            Now, businesses recognize that only Russia is suffering from sanctions but they have no sense that these limitations will end soon. They are thus more willing to let employees go in order to save money. Thus, unemployment will rise unless and until new jobs in new replacement industries emerge, something the government must promote.

            “In the crisis which was produced by the pandemic, the existing structure of the economy was preserved,” Vitaly Fedin of the Business Russia experts center says. And at the same time, “new forms of employment, including distance and hybrid employment emerged” to help keep people in the jobs they had had.

            “The crisis generated by sanctions on the Russian economy,” he continues, will have a completely different impact.” Many companies will not be able to recover, and there will be a gap between their demise and the emergence of new industries. In that period, unemployment will rise; and the government must be ready to assist.

            Managing labor mobility will be the only way to keep unemployment relatively low, he says; trying to insist the existing firms keep all their existing employees as the government did during the pandemic simply is not going to work. Indeed, if the government promotes that approach, more firms will go bankrupt and the situation will grow worse.