Russia’s commodity-based economy is struggling as oil prices plunge 70% from record levels in July, and experts anticipate a sharp rise in unemployment early next year.
One of Russia’s oldest investment banks, Troika Dialog, was among the first in the financial sector to cut jobs. Tatyana Scherban, Human Resources Director, says they have done what they needed to do. “We had a goal of cutting about 30 percent of our operational expenses. That was our benchmark. At this point we have reached this goal.” The government pledged to boost unemployment compensation $176 a month, expecting job cuts across all sectors. Experts say the unemployment figure may double from September’s 5.3 percent by early next year. The real unemployment rate may be much higher. Many Russians are forced to quit under pressure. Others nominally keep their jobs, but get fewer hours and trimmed wages. The number of those on an unpaid leave jumped a whopping 84 percent in a week, according to Russia’s Health Ministry. But some Russian companies argue optimizing personnel-related costs was long overdue according to Anna Zaryanova, HR head, SIBUR Russian Tires. “Even if we never entered the crisis, optimizing our expenses would be one of the main factors of boosting our efficiency. We are far from cutting jobs across the board.” Russia’s economy slowed to the lowest level in three years, as the economic chaos chokes corporate cash flows. The rising unemployment in turn slashes consumption, one of the main factors of Russian economic growth.