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6 Oct, 2008 14:24

Fears of downturn see credit crunch eat into jobs

The credit crisis has meant thousands of people around the world have lost their jobs. So far, Russia has escaped the worst – but it might not be that way for much longer.

Companies around the world experiencing problems due to the global financial crisis are taking drastic measures to cut costs. US employers cut almost 160 thousand jobs in September, the biggest amount in more than five years according to the Department of Labor.

The majority of enterprises in Russia are looking to cut expenditure, including reducing staff, according to a survey done in Russia. First in the firing line are the financial, investment and insurance companies according to Mariya Yankovskaya, Senior Consultant at Ward Howell.
“The most risky areas are retail investment banking, mutual funds, both product and sales, and asset management. Both investment companies, Renaissance and Troika continue to hire but have stopped expanding the sales force – the most expensive thing.”

However other departments might even increase their staff – with areas like risk management and M&A Departments needed to restructure businesses during the crisis.  Private equity is also seen as a safe place to be.

Financial institutions are the first, but not the only victim of the crisis. Olga Voroshilova, Head of the Real Estate Department at Cornerstone says many real estate companies and developers are cutting up to 30% of their work force.

“Companies are considering cutting their staff, now, as a preventive measure. Cut the staff now, pay the 3 months redundancy wages according to Russian legislation and keep good relations with the worker, rather than keep him another half a year and sacking him later. Some companies are even asking us to find those people new jobs.”

Headhunter agencies admit the recruitment market is slack – the number of people companies are looking to hire has fallen significantly.