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7 Sep, 2010 07:53

Jobs rebound as economic growth returns

While developed economies such as the U.S. and Britain are struggling with unemployment and a weak economic pull out of recession, Russia’s job market is rebounding strongly after a horror 2009.

With concerns mounting globally that if there isn’t to be a double dip recession then there could well be a nearly jobless slow grind out of the last downturn, its thought that the Russian government’s ownership of the economy – which Finance Minister Kudrin estimated at 55% earlier this year – could be a key factor in the jobs rebound. Whereas commentators like Nouriel Roubini refer to a ‘slash and burn’ approach to employment by American companies seeking to boost profits, the need for rigid market discipline may be minimised when the owner is a government keen to reduce unemployment first.

Russia's unemployment peaked in spring 2009 with unemployment growing almost 2 million in 2 years. The crisis forced many employers to cut staff, but now they're hiring again, bringing Russia's unemployment numbers back down. Yury Virovets, President at Headhunter, sees a new trend, where small and medium sized companies are also becoming active employers along with traditional ones – the government and state companies.

“When the crisis started, the industry cut off a lot of people, but now when the growth has begun, the companies started hiring back the people they fired before crisis. The major vehicles of hiring people were huge companies, but now we see that a lot of middle and small companies also started to hire people on the open market.”

Social obligations and low labour efficiency meant that state companies use many more workers compared with Europe and the U.S. Aleksey Zakharov, President at Superjob.ru, also thinks of Russia’s state as a huge inefficient employer.

“Russia is almost the leader in terms of employment in the state related sector. The efficiency of labour at government-run companies is very low and productivity is often 2-4 times lower that in private sector.”

Jobs done by hand in Russia are often done by machines in other countries, which is a matter of economic advancement. On the upside, Russia does not yet suffer the problems of outsourcing that has stripped Europe and the U.S. of many industrial jobs.