Natalia Klyueva began her search for a new job in Moscow in February — just before Russia’s invasion of Ukraine and the wave of sanctions from Western countries in retaliation. Three months later, Klyueva, 46, is discovering that her 20 years of top-notch sales experience mean little in a corporate world transformed by war.
“There’s no demand. To be honest, I’m horrified,” Klyueva said, describing business in Russia as “frozen” while Western companies “dribbled” out of the country. “I’ve got two kids, I have loans to pay off, unfinished work… and I’m sitting at home cooking borscht like an idiot.”
His experience of the changing labor market is an indicator of the way sanctions and embargoes by Western companies are slowly seeping into the Russian economy — producing store closures and disruption of supply chains — despite President Vladimir’s efforts. Putin to protect the country from the effects of the war in Ukraine.
In a country where a large proportion of workers are employed by the state and with the recent passage of increases in pensions and the minimum wage, most Russians have not experienced drastic changes in everyday life. Fluctuating revenues from oil and gas exports have also given the Kremlin the means to offer incentives to the private sector to license rather than lay off workers. Unemployment remained at around 4%, avoiding the spikes seen earlier in the pandemic. And inflation, which hit a two-decade high of 17.8% in April, has begun to slow.
“Grocery prices have gone up, yes, but in general not much has changed,” said Tatiana Mikhailova, an economist and academic who lives in the capital. If you don’t turn on the television news, “you can easily get the impression that nothing is happening,” she said, adding that it makes the situation seem “absurd.”
Still, a series of indicators offer a thermometer of the changes that are beginning to emerge.
One of them is the job vacancies offered. While unemployment numbers have remained broadly flat, online recruiting platform HeadHunter found that the number of advertised jobs dropped 28% in April compared to the pre-war month of February. Job postings in marketing, public relations, human resources, business management and banking are down between 40% and 55%.
“There are a lot of highly qualified people on the market right now. Competition for a job is skyrocketing,” Klyueva said.
Economists predict a tougher race for jobs. The number of people on leave rose from 44,000 in early March to 138,000 in mid-May, according to officials, and the number of part-time workers also grew.
The change is perhaps most visible in Russia’s commercial districts and shopping malls. In Moscow, stores selling foreign brands account for about 40% of retail space in large malls, according to commercial real estate consultancy ILM. Many of these stores closed after the brands cut ties with Russia. About 15% to 20% of stores in Moscow’s malls are closed, according to Knight Frank Russia.
By the end of the year, up to 20% of all Moscow offices could also be vacant, ILM said, mainly due to the departure of Western companies.
These effects are not so apparent across the country. Mara Kanakina, a personal stylist from Volgograd, southern Russia, said she was shocked when she visited Moscow last week. “I walked down Stoleshnikov Street,” Kanakina said, referring to one of the most elegant central streets in the capital, “and almost everything was closed.”
As an independent businesswoman, Kanakina has also been affected by shortages of imported parts or supplies. She bought clothes and accessories from foreign designers and Western brands for customers across Russia, but on the day of the invasion, “the whole of Europe closed down,” she said.
Suppliers have stopped doing business with Russian customers. Visa and Mastercard credit cards left the country, meaning Kanakina could not make international card transactions. Delivery logistics fell apart. “I hit my head so hard on the wall that I blew a hole in it,” she said.
Now she relies on intermediaries in countries like Georgia and Kazakhstan to order and receive items from Western brands, calling herself the “sanctions fairy.”
“I know I can achieve anything,” she said, “but it will take time and patience” to organize the new logistics.
The lack of imported goods is changing other consumption habits. Imported wine represented 40% of the Russian market in 2021, or 370 million litres. Wine racks now look emptier, Mikhailova said.
And as smartphone market leaders Samsung and Apple cut ties with Russia, imports plummeted. On the other hand, analyst firm GS Group says that imports of old-style “brick” phones rose 43% in the first quarter.
Exactly how far imports have fallen is difficult to say, as Russian authorities have stopped publishing figures. But using data from 20 of Russia’s biggest trading partners, economists at the Institute of International Finance estimated that imports in April were down 50% compared with the same month a year ago.
Data on VAT collection on household goods show the degree of decline in consumption and economic activity. According to the Ministry of Finance, VAT receipts fell by 54% in April compared to the previous year.
“These are just the first minor changes,” Mikhailova said. Economists expect turbulent times, including a GDP contraction of up to 10% and unemployment more than doubling through the fall.
This can affect discretionary spending on things like vacations. According to data from recruitment platform SuperJob, 35% of Russians say they can’t take a week’s vacation this year, up from 30% last year.
Maria Barabanova is another one facing uncertainty in the job market. The Moscow-based marketing specialist ran the Russian sales of a German beauty technology company. But since early May, the 37-year-old has been looking for a new job – because there are no products on the market.”
There are no more imports, unfortunately,” she said. “Our exhibitions in Moscow have been cancelled… There is no equipment for us to demonstrate.”
Collaborated with Valentina Romei, in London
Translated by Luiz Roberto M. Gonçalves
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
