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26 Feb, 2010 08:18

Unemployed await jobs rebound as economy turns corner

President Medvedev says the blight of unemployment is still the biggest economic issue the country faces, despite the release of data showing annualised 5% GDP growth in January.

The GDP data came in the wake of employment figures showing that, in the same month, the number of Russians out of work had soared to its highest level since last March. Since the beginning of the year nearly 25,000 additional people have found their way onto the jobless register, bringing the total number out of work to more than two-and a quarter million people.

Moscow's employment administration says a total of 62,600 people were officially registered as jobless at the end of last week. At the same time, the city has over 168,000 vacancies. But some recruiters say many open positions are offering half the pay they were two years ago.

Unemployment benefits in the capital are the equivalent of about $80 a month. That's $200 less than the cost of living.

Finam analyst, Maksin Klyagin, doesn’t believe the problem will significantly worsen, despite the January unemployment increase, but also says that the jobs rebound last spring reflected government action to stave off larger scale industry layoffs.

“The seasonal factor is in play for the first 3 months of the year. The situation will stable out after this period. Of course macroeconomic factors are in play and influence the job market. But we don't see the conditions for any sort of collapse. It's important to point out that last spring the tendency of shrinking unemployment rates, that picked up, was due in part to government support for the country's job market.”

In the immediate wake of the global financial crisis, fiscal concerns drove some Russian companies to layoff employees. But the easing of credit access concerns, coupled with a rebound in commodity prices – particularly oil – has driven a rebound in recruitment activity amongst specialised and professional occupations, putting Russia at the forefront of European new recruitment. Luc Jones, partner at Antal Russia, sees the employment market becoming very competitive.

“Companies are realizing, okay, maybe sometimes we actually cut a little too deeply a year or so ago, and now it's time to start getting good people back in. Previously, graduates wanted silly money just because they graduated from a prestigious school. Now what we see is that it's a definite reality check. People are having to take unpaid or low-paid work within an organization in order to gain that experience.”

The economics ministry projects economic growth for 2010, but with unemployment remaining a weak link – and the government has warned the number of people out of work could jump to 2.4 million this year.