Russia can Increase Military Production Only at Risk of Inflation, Consumer Goods Shortages or Loss of a Free Labor Market, Shelin Says

Paul Goble

            Staunton, Dec. 7 – Since the start of Putin’s war in Ukraine, the increased size of the military, the flight of many Russians to avoid mobilization, and a shift of employees away from the civilian to the military sector of the economy. But any further increase in military production is fraught with dangers, Sergey Shelin says.

            Unemployment has fallen so far that defense industries can attract new employees only by paying higher wages to attract workers from the civilian sector, an action that threatens to spark high inflation or a significant decline in the availability of consumer goods, the Moscow commentator says (moscowtimes.ru/2023/12/07/voina-uprazdnila-rossiiskuyu-bezrabotitsu-i-mozhet-uprazdnit-svobodu-truda-a115581).

            Moscow could deal with this danger by increasing productivity or cutting back in the amount of military goods it wants to produce, but neither is likely. Instead, Shelin says, the Kremlin seems set to “begin the step-by-step elimination of freedom” of Russians to choose where they work on the basis of wages and benefits, “one of the few freedoms Russians have left.”

            And that in turn, while perhaps less dangerous than uncontrolled inflation, could spark protests by Russians who have grown accustomed to have the ability to make such choices.

            The current situation has already had serious consequences in regional terms. Because defense industries are mostly outside the capitals, unemployment in the small cities is lower than in Moscow and St. Petersburg and wage increases higher, a situation that any government intervention in the labor marketplace could upset as well.