Partner of InHunt World in Russia: Unity Recruitment Experts
The Russian Federation, more commonly known as Russia, is home to over 143 million people. The country is geographically one of the biggest in the world and it has 9 different time zones. Energy industry is the carrying force for Russian economy; the country is the biggest energy exporter globally. Recently, Russia has been through tough times; oil price volatility and economic sanctions due to Russia’s military aggression have resulted in years of recession.
The current tough economic situation has influenced the labour market in Russia. Temporary jobs are increasing and wages are decreasing, as people would rather get paid less than lose their jobs altogether. Young employees usually are fluent in English and many other European Countries, especially in the Moscow and St Petersburg areas. Despite this fact, it is recommendable not to assume that all Russians are fluent language experts. There are typically only very few women in senior management positions, even though a high percentage of the Russian workforce is female. Management tends to be centralised and directive.
Ease of doing business in Russia
Russia is rated to be 40th out of 190 economies in the World Bank’s Ease of Doing Business-index. Last year, Russia was ranked 36th, and a plausible reason for this drop in the ranks is the ongoing conflicts in Ukraine and the economic sanctions against Russia. On a more positive side, Russia has improved it’s rank for starting a business; in 2016 the rank was 37th and now 26th. This could be because of improvements made to reduce the number of days required to open a corporate bank account in 2016. Enforcing contracts was made more difficult by mandating pre-trial resolution before filing a claim.
Politics and the economy
The Russian economy is on the mend after a two-year recession, as the floating exchange rate has proven to be an effective shock absorber over the last two years, according to Moody’s. Standard and Poor’s upgraded Russia’s rating to BB+ with a positive outlook in March 2017. Still, Russia’s regulatory inefficiency increases the cost of doing business and has a negative effect on market competition. Continued aggression in Ukraine and Syria and the alleged interference in the US presidential election of 2016 have raised tensions. The US and European Union instituted economic sanctions against Russia in 2014 which are still in effect. Forecasts predict that stable oil prices and growth in some sectors, such as mining, energy and heavy construction will lift the Russian economy in 2017 and 2018, but with a cautious optimism.
The Russian model to cope recession is very different from other countries, where usually the unemployment rate goes up is times of economic turmoil. Instead, in Russia people often accept to be paid less to avoid losing a job completely and living on a miserable unemployment allowance, which is between 13 to 76 US dollars per month. Currently the unemployment rate is at 5.5 per cent.
What to keep an eye on
Economic sanctions. Recently, new sanctions were approved against Russia by US President Donald Trump. The sanctions were made in response to Russia’s interference in the 2016 US presidential election, human rights violations and military operations in Ukraine.
Lingering corruption. Russia was ranked 131st out of 176 countries on the Transparency International Corruption Perceptions Index, as the general prosecutor recorded over 32 000 corruption crimes. The estimated value of lost revenues due to this issue was 1.3 billion US dollars in 2016.
We recently had a chance to interview Rustam Barnokhodzhaev (Head Key Clients, Unity Recruitment Experts). We asked Rustam a few questions about the headhunting and recruiting market in Russia:
How do you see the situation at the moment?
The situation at the moment has started to improve. For the last three months, we’ve experienced increased business activity. Many businesses are recovering after a long period of stagnation. We’ve noticed that there are more clients coming to and asking our search services for qualified individuals in different areas.
Are there some industries in Russia that are growing faster than others?
Heavy industry production is growing. We conduct many new searches in this area. Companies are requiring engineers in energy, oil & gas, food processing and other sectors. The structure of searches had changed from sales and marketing to production and engineering, which I think is a good trend.
What kind of roles and talent are companies looking for?
During the stagnation period companies were concerned about surviving and were optimizing their back offices by combining several functions in one single employee. Now this is gone. Companies have started thinking about growth and they are asking us to find people who are deeply qualified in certain areas with good growth potential. This is a new trend in the recent period and is a good indicator of the recovery of the Russian economy.
Is there some kind of talent shortage in Russia?
I would say that there is always a talent shortage in all industries. Competition among people makes them grow fast. The changing business environment requires different talent at different stages of business.
As for a talent shortage in specific areas, I would say that there is a shortage for qualified engineers in modern high-tech engineering areas.
Are companies looking mostly for Russian people, or are they also interested in people from abroad?
There was a wave in the 90’s and 00’s when Western managers and specialists were in high demand. This was caused by the fast growth of Russian companies and their desire to be a part of the world economy.
Now we have a new generation of Russian managers who grew in the new business environment and who are capable of running companies of any size worldwide. Russian business has some national specifics which are hard to absorb for Western top-managers. There is no high demand for Western employees in Russia at the moment.
How do you see the development of recruiting and headhunting markets in Russia over the next couple of years?
I am sure that the recent growth of business activity indicates that the Russian economy has now adjusted to the sanctions and it has already started recovering.
In fact, these sanctions became a catalyst to push the economy forward. There is a program for import substitution and this is a good niche for new businesses. I am sure that 2018 will be a turning point.
Recruiting and headhunting are always in high demand in the growing market. I believe that those companies who enter the Russian market now will have a competitive advantage in exploring new markets, and we are here to help them with their HR needs.