A new study indicates 12% of large Russian businesses anticipate staff reductions this autumn.
According to a recent study by the «Rabota.ru» portal and a major state bank, 12% of large Russian companies intend to reduce their staff this autumn. In contrast, only a quarter (25%) of businesses plan to hire new employees, a significant decrease from over 50% at the beginning of the year. The majority of companies (63%) aim to maintain their current workforce. Amidst these findings, there is active discussion about potential layoffs for even highly sought-after IT specialists, a trend attributed to both the proliferation of artificial intelligence (AI) and a decline in the quality of new IT professionals. Experts weigh in on what this means for the labor market and working Russians.
Photo: Gennady Cherkasov
Controversial Reductions
The research results confirm that 12% of large businesses are indeed planning staff reductions this autumn. While 63% of surveyed business owners plan to retain their current staff, the declining number of companies looking to hire (25% now, down from over 50% at the start of 2025) raises concerns. Discussions in social media and Telegram channels point to a potential wave of layoffs for IT specialists, who were once in high demand. This is reportedly due to two main factors: the increasing use of AI, which can take over some «junior» functions, and a perceived drop in the quality of IT education from numerous «six-month online courses» that emerged during the previous shortage.
In a climate of uncertainty, large businesses are actively seeking to cut costs, which often leads to personnel reductions. Despite these trends, Russian Prime Minister Mikhail Mishustin reported on September 10 that the unemployment rate has remained at a historic low of 2.2% for the third consecutive month. This steady low unemployment, he suggests, undermines claims by Western analysts of an impending economic recession in Russia, arguing that a decline in industrial production alone does not constitute a recession if unemployment remains stable. Instead, it indicates a «cooling down» of the economy, which financial regulators had been aiming for.
So, what does the current labor market situation truly indicate? «A 12% reduction in staff is certainly not a mass layoff, but rather a natural stabilization process in the labor market and a consequence of the imbalances that occurred over the past two to three years,» explains Lyudmila Ivanova-Shvets, Associate Professor at Plekhanov Russian University of Economics. She notes that increased demand, a general labor shortage (especially in specific sectors), and rising wages and personnel costs have pushed employers to optimize business processes and reduce staff expenses. Companies are now implementing AI, shedding non-core assets, and cutting peripheral workforce. «A 10-15% reduction is completely painless for large companies,» she adds. Those whose functions can be easily transferred to AI or streamlined through business process changes are most vulnerable to layoffs, including some IT specialists. However, Russia is unlikely to see a significant rise in unemployment. The demand for labor persists, signaling that some workers may need to adapt through reskilling, retraining, or upskilling, Ivanova-Shvets emphasized.
«In reality, most organizations do not plan to reduce staff,» commented Ekaterina Nezhnikova, Professor at RUDN University`s Faculty of Economics. She predicts that changes will primarily affect the construction sector, due to falling housing demand and high mortgage rates making new projects less attractive. Capital-intensive industries like machine-building, raw material extraction, and parts of retail may also see cuts. Businesses typically prune unprofitable departments and those not essential for their core operations. Concurrently, demand remains strong for blue-collar professions, as well as workers in agriculture, healthcare, and education.
Definitely Not a Recession
Natalia Milchakova, a leading analyst at Freedom Finance Global, believes it is too soon to speak of mass layoffs. She observes that only the largest corporations are currently reducing mid-level management. Several factors influence companies` decisions to cut staff or temporarily freeze hiring, primarily production costs, including those related to inflation and high key interest rates. Other contributing elements include the adoption of artificial intelligence and other modern technologies (such as blockchain, which reduces paperwork), a shortage of highly qualified personnel, and a «wage race.» These factors encourage some enterprises to cut low-paid employees in «routine» positions to increase salaries for truly valuable and skilled specialists.
There is no need to fear artificial intelligence, Milchakova states, as it serves as a valuable assistant for highly qualified specialists. It helps eliminate unnecessary, routine «ballast» in large companies and allows smaller firms to save on additional personnel. AI is unlikely to replace creative professionals or service providers (like hairdressers or masseurs) and is improbable to substitute surgeons, lawyers, or judges, though it can provide necessary support in their work. The primary targets for reduction will be «technical,» low-skilled employees and redundant administrative staff, but this will not lead to mass unemployment. It`s important to remember that there is still a significant shortage of workers in vocational professions, particularly in manufacturing.
«Layoffs in the IT sector are unlikely to occur in the near future, as the demand for IT specialists in Russia is very high,» Milchakova explains. «However, it is quite possible that employees released from certain roles within this sector will be retrained or offered positions in other, potentially newly created departments.» In simpler terms, she suggests there might be fewer system administrators soon, but an increase in data center personnel and specialists in training neural networks.
Milchakova does not foresee mass layoffs in Russia as long as the economy avoids a deep crisis or downturn, meaning that, on average, a maximum of 1-2% of staff will be affected in companies undergoing reductions. She predicts that the unemployment rate will remain around 2.2% by the end of 2025. Even if oil prices were to fall significantly, leading to increased costs and substantial staff cuts in large extractive enterprises, the rate might rise slightly to 2.3-2.4% of the working population, which would not drastically alter the overall picture of full employment in Russia.
Our country is not in a recession; it is merely experiencing a slowdown in economic growth rates. A recession is defined by an economic decline in year-on-year terms for two consecutive quarters, a situation not currently present in Russia, the analyst concluded.
