Labour force size will constrain Russian productivity

Subject

Russian labour and demographic trends.

Significance

The onset of economic crisis in 2014 reversed the modest productivity gains achieved during the previous five years. Labour productivity declined in 2015 on the back of decreasing real wages and shrinking capital investment. There are wide disparities in productivity levels among regions and industries and even between companies within the same sector.

Impacts

• Wage growth will be concentrated in high-demand professions such as IT, marketing and finance.
• Growing employment in the shadow economy will reduce tax and pension contributions.
• Immigrants acquiring Russian citizenship will come largely from former Soviet states.
• Changing societal behaviour and declining mortality will produce an ageing population.