Growth may be slowing, but Russia’s economy is essentially sound. That’s the message Vladimir Putin is keen to purvey; and by way of proof he cites Russia’s incredibly low unemployment rate: just 2.1%. He’s got it back to front, said Alexander Kolyandr in The Spectator.
Far from being a comfort, this figure should cause Putin huge alarm. It underscores the fact that his nation is undergoing its worst labour crisis in decades: it “has run out of workers”. The crisis has its roots in the low birth rates of the 1990s, but the war in Ukraine has “poured fuel on it”.
Woefully inefficient remedies
It certainly has, said the Luxembourg Times. Men are being sent to the front in vast numbers: the target number of contract soldiers to be signed up this year is 409,000. And the high pay they’re being offered as a lure is crippling the economy. In 2022, a contract soldier’s monthly salary was about four times the average Russian wage. It’s now closer to twice the average wage because the defence industry (employment in military production has risen by half a million since 2021), the railways and other big state sectors have all had to hike up wages in an effort to compete. As a result, companies in the civilian sector are finding it increasingly difficult to survive.
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Yet the remedies the Kremlin has pursued to tackle the crisis have been woefully insufficient, said Samuel Bendett and Maria Snegovaya in Foreign Policy. Expanding forced prison labour, a familiar Soviet strategy, is no longer an option as so many convicts have already been sent to the front lines. (The jail population has shrunk from 465,000 in 2021 to 282,000.) So too with the plan to open jobs hitherto deemed too physically taxing or dangerous to women, as their number in Russia’s labour market is remarkably high already.
Economic ‘death zone’
Such measures fail to get to grips with the sheer scale of the problem, said Mathias Brüggmann in Die Tageszeitung (Berlin). Since the Russian invasion of Ukraine, 1.4 million Russian soldiers have been killed or badly wounded. The only solution to Russia’s chronic labour shortage is increased migration.
Yet since March 2024, when Tajik terrorists killed 149 people in an attack on Moscow’s Crocus City Hall, the Kremlin has gone in the opposite direction, imposing harsh new rules on migrants, especially those from the former Soviet states in Central Asia – Russia’s largest immigrant group. Their number has fallen dramatically. Issuing 70,000 Chinese and 34,000 Indians work permits this year hasn’t been nearly enough to plug the gap.
In fact, Russia’s economy has now entered “the death zone”, said Alexandra Prokopenko in The Economist. The budget deficit is spiralling out of control; export revenues are falling. The longer the war lasts, the greater the risk of fiscal crisis, of institutional collapse, “of damage so severe no post-war policy can repair it”.
