Medvedev proposes ‘innovation’ to tackle Russian labour shortage

Russian President Dmitry Medvedev has said that in order to counter the Russian labour deficit, the country needs to be innovative in its measures to boost both the efficiency and productivity of its existing workforce. Talking to business leaders, President Medvedev said, “The problem of the labour famine can only be solved by the government and business working together.”

Local press reports claim that there is increasing concern that Russia will suffer an acute shortage of labour in the coming years as the country embarks on numerous and large scale projects including the development of Sochi for the winter Olympics and the recently announced US$ 570 billion (€366 billion) transport infrastructure programme. Sochi alone will require an estimated 186,000 workers to complete on time.

The Moscow Times newspaper quoted Yuzhno Sakhalinsk, the deputy head of innovation for Sakhalin railways, as saying, “So far we are OK for labour, but when we start on the bigger infrastructure projects then it’s possible that it will be much more difficult to get enough workers.”

Forecasts by Russian demographers for an UN-sponsored report estimate that the country’s workforce will fall by 8 million over the next seven years and by up to 19 million by 2025. Local press reports suggested that Labour shortages are perhaps the fundamental threat to Russia’s continuing economic growth and could ultimately be the brake that slows the whole economic boom.

Whilst the Federation Tower in the Mockva city development is set to become Europe’s tallest building and a symbol of Russia’s economic growth, it also symbolises Russia’s reliance on cheap, imported labour. With migrant labour coming from China, Turkey, Ukraine and the Central Asian and Caucasus republics, 40% of migrant labourers work in construction. A spokesperson for the Federal Migration service said that there are 2 million legal workers and possibly up to 8 million illegal workers.

Given the huge potential profits for developers and a recent history of corruption amongst officials, fines of between RUR 2000 (€ 55) and RUR 8000 (€220) for each illegal migrant do little to deter construction firms from hiring illegal workers.

Whilst the issues of labour shortages and illegal workers perplex many in Russia, the Governor of Yuzhno-Sakhalinsk city was somewhat more relaxed about the problems, “Throw money at it. Whatever people tell you, it’s all about money in the end. And with money, we can solve even this.”