From the office to the front: Russian companies are paying a high price for Putin’s mobilization

From the office to the front
Russian companies are paying a high price for Putin’s mobilization

By Juliane Kipper

Since the mobilization, Russian companies have been desperately looking for employees. Many can hardly compensate for the resulting lack of staff. While the labor shortage could be Russia’s undoing, another country is experiencing an economic boom.

Two months after Russian President Vladimir Putin announced the mobilization, the drafting of men to fight in Ukraine is also having an impact on the Russian job market. Russia has drafted more than 300,000 reservists, mostly men of working age. In addition, hundreds of thousands have fled the country for fear of conscription.

Several branches of industry are therefore reporting a record shortage of workers. A study by the Moscow Gaidar Institute from November, from which the finance portal “Bloomberg” quotes, comes to a fatal conclusion. According to this, a third of Russian industry has to adjust to a considerable shortage of personnel and thus the biggest bottleneck since 1993.

A third of the companies surveyed lost employees as a result of being drafted. A fifth of them stated that they could not replace them so far. In addition, according to estimates by the institute, the number of male workers will decrease by two percent. The labor shortage could be fatal for Russia. Almost half of the companies report that they will be unable to increase their production due to the lack of staff. Even if there is sufficient demand.

Demand for IT staff is skyrocketing

“Fear and insecurity have led to a significant outflow of skilled workers and capital from the country, which is hurting many sectors,” quotes “Bloomberg” Evgeny Kogan, a professor at the Higher School of Economics in Moscow. “If this enormous development potential remains outside the country, it will lead to a significant decline in the economy in the future.”

One sector in particular is already feeling the effects of emigration: the IT industry. According to Russian online recruitment agency Superjob, the number of vacancies in this field increased by 15 percent in October compared to the previous month.

As a result of the conscription, Russian citizens are pouring into countries from the former Soviet Union and Turkey in particular, according to Russia’s largest online job platform HeadHunter Group, as reported by “Bloomberg”.

The demand for IT specialists is skyrocketing accordingly. “There are currently no more than seven million people in the 20-24 age group. That’s a sharp drop from the 12 million ten years ago,” quotes the finance portal Natalia, Danina, Headhunter’s head of analytics.

Georgia benefits directly from the war in Ukraine

For Russia, the flight of hundreds of thousands before the partial mobilization amounts to an enormous “intellectual bloodletting,” according to an intelligence report published by the British Ministry of Defense at the end of September. “Among those trying to leave Russia, the better-off and well-educated are over-represented.”

The consequences could be devastating for Russia’s economy: “Together with the reservists who are being mobilized, the effects of the reduced availability of workers and the accelerated brain drain on the Russian economy are likely to become increasingly important.”

Different in Georgia. The Black Sea country benefits directly from the war in Ukraine. Here the economy is expected to grow in double digits. Even economists are surprised by this. “We had expected a lot of negative influences,” says economist Dawit Keschelawa ntv. Georgia is heavily dependent on its neighboring countries when it comes to foreign trade, tourism and money transfers.

But among the 110,000 citizens Russia has lost since the war began, many are young and well-educated from the upper class. “Quite rich people came to Georgia. They brought business ideas with them and consumption went up drastically,” says Keschelava. Their savings, now in Georgian accounts, fueled growth.

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