Outflow of Workers from Industry

Workers outflow from the Russian industry continues. The outputs of the analysis by the Gaidar Institute of regular surveys of managers of enterprises point to the fact that late in 2012 the share of enterprises experiencing labor shortages largely increased. About 30% of enterprises recognize that labor shortages may impede growth in industry.


A similar situation was observed late in 2010 and early in 2011 when industry reported the highest post-crisis growth rates of the demand and output, while the IEP Industrial Optimism Index (IOI) reached the post-crisis maximum level. It seemed then that the final exit from the crisis was not far away. At present, the situation is quite different: the IOI index is close to the post-crisis minimum.  The demand and output either do not grow, or decrease. Such a situation signals that industry is losing confidence in its ability to provide even stagnating enterprises with workers.

The other side of the problem consists in the fact that the level of wages and salaries in manufacturing has become a non-competitive one. A contribution to that situation was made by indexation of wages and salaries of public sector’s workers. Managers of enterprises have started to admit more often that the level of remuneration in their companies is not adequate to the labor market conditions.  So, for the first time since April 2009 the share of unsatisfactory assessments of the level of remuneration of workers and engineers rose by 9 p.p. from 26% to 35%.

It is evident that low wages and salaries slow down hiring of workers. It is to be noted that more problems arise in hiring of skilled workers: 37% and 32% of enterprises encounter such problems in hiring skilled workers and engineering manpower, respectively, and only 13% of enterprises, in hiring unskilled employees and managers.  

On the other side, no matter how dramatic the overall situation may be there is a positive factor in it.  With a high outflow of workers to the public sector, enterprises have to deal with the labor efficiency issue. If in the 2nd quarter of 2012 71% of managers of enterprises assessed labor efficiency as “normal”, at present that index fell to 60%.    

S.V. Tsukhlo, PhD (Economics), Head of the Business Surveys Laboratory