SERGEY TSUKHLO: “MAIN METHOD TO COMBAT LABOR SHORTAGES IN INDUSTRY REMAINS INCREASE IN PAY”

The article of Nezavisimaya Gazeta reflects the issue of whether the staffing situation in industry will be changed by recruiting more migrants. Sergey Tsukhlo, Head of Business Services Department at the Gaidar Institute, concluded that raise in wages remains the most effective measure to combat staffing deficit.

At the end of the previous week, the Government Decree on recruitment of foreign workers for 2024 was posted on the official legal information portal. According to the document, the quota for migrant workers will be approximately 156,000. This is almost by 26% more than the quota for 2023, which was about 124,000. The Decree stated that Russia first of all requires various skilled workers for large and small industrial enterprises; workers for mining, mining and capital, construction and repair projects; operators, equipment operators, engineers and assembly fitters of stationary equipment.

However, previous surveys by the Gaidar Institute demonstrated that migrants’ labor was used only by 10% at the industrial enterprises facing understaffing. Based on industrial enterprises surveys, the Gaidar Institute experts presented their conclusions on how local industry managed to combat staff shortages throughout the year. Enterprises have resorted to several strategies, combining different measures. However, raise in wages is still the most common option. Unexpectedly, recruiting migrants turned out to be an unpopular solution for industry in the context of the staffing crisis.

The “pay lever” in solving issues related to qualified workers turned out to be the most common tool in the Russian industry in 2023. 79% of enterprises resorted to it” follows from the Gaidar Institute’s study. In this case, it means raise in pay to the employees already employed at the enterprise.

In the 2nd place in terms of popularity is the retraining of already employed workers, thus, 75% of the enterprises surveyed practiced this option. “In this case, the administration seems to be ready to take on the costs of improving the skills of time-tested staff, who have not left the enterprise amid wage growth in other sectors of the Russian economy, including in the sphere of military security”, Sergey Tsukhlo, the author of the study, explained.

The establishment of close contacts with specialized secondary educational institutions stays in the 3^rd place. This was the focus for 71% of enterprises: they tried not only to solve current issues, but also to be proactive.

It should be noted that investment in new, more productive equipment, in technological upgrading and modernization, were not included in the top 3 popular measures, they were only in the 4th place. Automation, complex mechanization, robotics and similar technologies are now relevant for 60% of enterprises. Only 42% of enterprises indicated that they were addressing the human resource crisis through the introduction of labor-saving technologies in existing production processes.

Apparently, such efforts are clearly not enough, taking into consideration that negative outcomes of the staffing crisis continue to worsen. In particular, it is proved by the fact that it is the shortage of workers that prevailed in the rating of restrictions of industrial growth in Q4 2023. This factor has “confidently bypassed on negative impact the former leader of the rating, that is the uncertainty of the current economic situation and its prospects,” noted the Gaidar Institute.

In terms of hiring new employees, more than half of industrial enterprises (57%) preferred to retrain their employees not relying solely on their skills acquired through training or previous employment. Raise in pay for new employees was reported by 43% of industrial employers.

Specific trends have also been observed in recruiting migrants, both domestic and foreign. In the first case, the staffing policy in the industry “starts to develop the territorial mobility of the workforce, which shortages were widely commented in the previous years by labor market experts. 31% of employers demonstrated practical interest towards searching qualified workers in the regions with abundant labor resources and their resettlement closer to the enterprise prepared to undertake such expenditures. However, only 14% of enterprises used rotational shiftwork.

At the same time, only 10% of industrial enterprises reported hiring migrant workers from other countries. About 7% explained that they employed migrants “from the former Central Asian republics of the USSR”, while 3% reported that they hired migrants from South-East Asia.