More and more Russian enterprises are transitioning to part-time employment.
Russia is witnessing a significant increase in what is termed `hidden unemployment.` Data from various sources, including large and small businesses, trade unions, and official agencies, indicates a rapid rise in the number of employees on forced leave, working reduced hours, or facing potential layoffs. While the exact figures vary considerably across industries, regions, and reporting bodies, they collectively highlight a clear trend driven by the country`s slowing economic growth.
Photo: Mikhail Kovalev
By mid-July, the proportion of employees in this `reduced` employment mode climbed to 14.4% of the average workforce, up from 9.1% the previous month. According to employment service agencies, this affects 51,901 workers. Rostrud, the federal labor service, reported an increase from 8.6% to 11.1% (39,722 people in July) over the same period. The Federation of Independent Trade Unions of Russia (FNPR) noted a 1.5-fold year-on-year increase in the number of people at risk of dismissal in July, with a one-third rise in idle workplaces. This trend is particularly pronounced in industrial regions such as the Yaroslavl, Moscow, Samara, and Ulyanovsk regions, and Tatarstan.
Furthermore, FNPR monitoring data shows that wage arrears rose by 25% in July, reaching 1.7 billion rubles. Trade unions attribute this primarily to the high key interest rate, which prevents many businesses from securing loans for operational expenses.
President Vladimir Putin recently highlighted this issue, stating that the number of employees on forced leave was approximately 98,000 at the beginning of the year, growing to 153,000 by the end of June, and reaching 199,000 in the first week of August. Experts generally agree on the overall trend, despite the contradictory nature of the labor market situation.
Igor Rastorguev, a leading analyst at Amarkets, explains: «On one hand, the economy still faces a structural labor shortage, with businesses in industries like manufacturing, transport, IT, and construction urgently needing skilled workers. On the other hand, companies are grappling with financial constraints, declining demand for specific products, and an inability to plan long-term. As a result, employers are compelled to shift some staff to part-time arrangements to retain talent and avoid permanent layoffs.»
The main risk, should this trend persist, is a less flexible labor market and reduced actual employee utilization, even if formal employment levels remain high. This would negatively impact household incomes and, ultimately, consumer demand, further hindering economic growth. However, it`s clear that companies are reluctant to lose employees, even during temporary downtime. They understand that `optimizing` production today is easy, but replenishing lost talent tomorrow would be extremely difficult. Thus, Rastorguev concludes, hidden unemployment is more an indicator of business caution regarding the future than a sign of readiness for mass dismissals.
Pavel Kudyukin, a member of the Confederation of Labor of Russia Council, notes, «Some of my colleagues reject the term `hidden unemployment` as incorrect. However, underemployment is a very real phenomenon, though unified, standardized statistics are lacking, and estimates constantly fluctuate. The number of such individuals is growing rapidly, signaling an impending recession. For instance, automobile factories are moving to a four-day work week, proportionally (and sometimes even more drastically) reducing staff wages. As the renowned economist Rostislav Kapelyushnikov observed in the 1990s, unlike classical (Western) labor markets, the Russian market responds to crises not with mass layoffs, but by placing workers on forced leave, part-time schedules, or unpaid leave. Simultaneously, wages are cut by reducing the bonus component, which frequently constitutes over half of the total earnings.»
Kudyukin views this as a purely domestic specificity, stating that in Russia, the share of incentive payments is disproportionately inflated. This provides employers with significant maneuverability: as crisis phenomena escalate, they can reduce not staff numbers, but the variable, non-fixed portion of salaries, gradually approaching the base wage.
Alexey Zubets, Director of the Center for Social Economy Research, states: «The underlying cause is clear – the high key interest rate. Sectors most dependent on it are suffering the most. Construction is stagnant, apartments aren`t selling; there`s virtually nothing to transport by rail; the automotive industry and agriculture are in decline because loans are prohibitively expensive for them. I believe at the upcoming September meeting, the regulator will lower the rate by two, if not three, percentage points.»
