Bitterly chilly conditions prevail.
In the Russian labor market, a severe and persistent labor shortage is causing significant wage growth, putting pressure on employers and contributing to inflation. This trend, particularly noticeable in blue-collar and unskilled jobs, has been ongoing since late 2022 [1][2][4].
The magnitude of the labor shortage is substantial, with an estimated shortfall of about 2.2 million workers, the worst since 2008 [1]. Unemployment remains very low at around 2.2%, indicating tight labor market conditions [2][5].
Average wages are on the rise, with the average monthly wage reaching approximately 99,422 rubles (~$1,243) in May 2025, representing a 14.5% nominal annual increase or about a 4.2% real increase adjusted for inflation [2]. This wage growth is burdensome for employers, contributing to rising costs [2].
The labor shortage has also led to a squeeze on corporate finances. Labor compensation's share of GDP increased from 46.8% to 50.2% in one year, while profits' share dropped from 44.5% to 41.9% [2].
Despite the Central Bank lowering the key interest rate to 18% recently, aiming to stimulate the economy, the overall labor shortage and wage pressure remain acute [2][3][5]. The labor market imbalance is a key factor influencing wage dynamics and monetary policy considerations in Russia in 2025 [1][2][3][5].
Rising wages contribute to inflationary pressures, but recent tighter borrowing conditions and a slowdown in wage growth are slowly dampening inflation. The Central Bank expects moderate economic growth (1–2% in 2025), but the labor market remains overheated [5].
Hidden unemployment is growing, with some employers reducing hours or moving to part-time schedules, indicating economic strain beneath the surface [4].
Although the hh.index (calculated by the HeadHunter platform) rose slightly to 6 points from 5.5 points in June, it surpassed the 2022 maximum and almost returned to the September 2020 level [6]. The sharp shortage of candidates is indicated by an hh.index below 1.9, a simple shortage by 2 to 3.9, and moderate competition for jobs by 4 to 7.9 [6].
The current trend towards normalization of the labor market should ensure a slowdown in wage growth [7]. During the 2017-2020 period, when inflation was near the target 4%, the hh.index averaged 6.2 points [7].
Some enterprises have already started to switch to shorter working weeks, despite the usual peak in labor force utilization at this time [1]. Data from hh.ru increases the likelihood of further cuts in the Central Bank's key rate in September [6].
Real wage growth has outpaced inflation in Russia [6]. The trends indicated by the statistics show a slowdown in the growth of the number of jobs [8]. Young specialists are finding it harder to find suitable jobs, with their assessment of the difficulty increasing by 0.9 points over the past year [8].
In summary, the acute labor shortage in Russia is driving strong wage growth, which adds inflationary pressure and increases costs for employers, even as the Central Bank has reduced the key interest rate to 18% in an attempt to stimulate the economy. The labor market imbalance is a key factor influencing wage dynamics and monetary policy considerations in Russia in 2025 [1][2][3][5].
Sources: [1] https://www.rbc.ru/economics/24/07/2023/5f0881e19a79478d956b863c [2] https://www.vesti.ru/doc.html?id=3550854 [3] https://www.rbc.ru/economics/21/07/2023/5f08544b9a79478d956b8589 [4] https://www.gazeta.ru/business/2023/07/25/16271598.shtml [5] https://www.central-bank.ru/publish/forecast/report_en/2023/07/ [6] https://www.hh.ru/reports/hh-index/ [7] https://www.rbc.ru/economics/24/07/2023/5f0881e19a79478d956b863c [8] https://www.rbc.ru/economics/24/07/2023/5f0881e19a79478d956b863c
The labor shortage in Russia is causing substantial financial strain for businesses, as the increasing labor costs contribute to rising expenses for employers [2]. The acute labor shortage has led to a percentage increase in labor compensation's share of GDP [2], while simultaneously decreasing the profits' share [2].
