Since the beginning of the global economic crisis, colossal changes have taken place: the job seekers’ market has turned into an employers’ market,” Manpower’s head of business development, Irina Kurganov commented.

This is a phrase often thrown around in the current climate, but what does it really imply? It means, she said, that in spite of the change in market conditions, from the recruitment agencies’ perspective there is still a lack of highly qualified specialists, but also now a shortage of vacancies.

While this might sound paradoxical, as the crisis has rumbled on, the job market has seen a more acute demand for professionals of superior level, said Sergei Salikov, general manager of Ancor. This, Salikov said, is because there is a need for “top-tier professionals with experience in optimizing both costs and the work process as a whole”. Meanwhile, the Russian market is currently awash with middle-level managers, despite a modest pick-up in demand in the second quarter. In short, Russia’s management requirements do not match the current management supply. Ancor accounted for the economizing on staff through limited company budgets and the high level of competition between candidates, affording employers a top choice of potential employees, which they had previously been denied. Russia’s, and in particular Moscow’s, employment market has until recently been characterized by only a lack of qualified personnel, so the rarity of top-flight professionals meant that companies were often forced to fight for less-qualified individuals.

Salikov said that, while in late 2008 the market saw two groups of employers emerge — namely those undergoing optimization of staff and those holding back — companies now have almost universally reduced staff headcounts. The only difference is that for the latter group of companies that made cuts only after about April 2009, the costs and measures have proven higher.

Yet data from Antal Russia released earlier in the year showed that by May 2009 at the managerial and professional level, Russia had seen a rise in the hiring of professionals and managers to 58 percent from January’s figure of 42. This ranked above all other countries surveyed by the company. Coupled with what Ancor more recently called “positive developments starting in the second quarter of 2009,” the situation does not sound so bleak.

One result of the current economic climate, Kurganov explained, is that it seems that many Russian companies currently prefer to keep their human resources work in-house for the time being. This in turn could make the situation harder for the outsider to assess.

The market situation may well be unstable, but certain sectors are thawing. One sector of particular success, said Tremayne Elson, Antal Russia’s managing director, is the pharmaceutical industry. “It’s holding up well. Experienced people seem to have no problem finding good opportunities.” The industry was seen hiring at a rate of 83 percent — almost double that of banking and finance — in May 2009. “It remains the most stable and fast developing of sectors we have been engaged in. There is still high demand for qualified and experienced employees both in big multinational and in relatively small, narrowly specialized pharmaceutical companies,” added Timur Omelchenko, head of Antal Russia’s pharmaceutical department.

Given the growth in that sector, regional expansion remains one of the pharmaceutical industry’s major challenges as an industry. Therefore, specialists have all the more opportunity to head pharmaceutical companies’ regional representative offices, explained Kurganov. The regions offer something of a ‘way out’ for people from their personal crisis, she said, as people are working for less in the larger cities, particularly Moscow, where they are less needed.

	Recruitment Patterns by Sector
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Symptoms of the crisis have spread to the regions too, although they are in what Salikov called “a lull” after the initial slump stopped. Tatarstan’s Chamber of Commerce and Industry reported that, while there had been 3.8 percent growth in the average salary, real salaries for the first half-year period were only at 94 percent of the 2008 level. Meanwhile, it said that in September unemployment in Tatarstan, where the Alabuga special economic zone is located, had risen to 56,700 as the population’s income fell. Against pre-existing projections, Tatarstan in 2010 would require an additional workforce of almost 45,000 to satisfy growth trends to date, of which over half would be foreign workers. Whether this will be met is not clear, but Elson gave some hope to that aim: “Russians would be well advised to focus on work within Russia. Most other economies have been worse hit than Russia and comparatively it is much easier to find work here.”

Indeed, prior to the economic crisis, Russia attracted an extensive number of foreign professionals and managers to its labor market, Salikov stated. But, he continued, this is now contrasted by a restriction on the number of expatriates in Russia and the CIS as a result of reduced quotas. The trend is exacerbated by the increased nationalization of leading Russian businesses, thereby increasing the necessity for employers to consider Russians for positions previously held by foreigners. “Today, when a vacancy opens, it is not a rare case to hear an employer announce that it is due to an expired contract with a foreign employee.”

In most cases the sectors where expats are struggling are analogous with those in the economy overall.  Nevertheless, many are deciding to stay in Russia for various reasons: firstly, the crisis has affected Russia less so than Europe, and secondly, it is easier to develop business and increase market shares here, Christian Lepolard, a partner at Antal Russia, explained recently in an industry publication. “There is a hope that at the beginning of winter companies will again start inviting expats,” he added.

Ancor’s springtime assessment of the increase in so-called ‘repats’ — natives returning from a period of working in the West — at the beginning of the crisis was also supported by data from the first quarter of 2009. The report termed it a “consistent flow of returning talents”. Indeed, Ancor said that this return by natives to Russia is deemed a positive economic indicator.

Sectors witnessing harsher employment trends have been marketing and creative media, technical professions — especially information technology and construction — and human resources. Yulia Smirnova, commercial director of Staffwell, described how there was still no reawakening of demand for IT project managers, investment officers and directors, although as in many sectors, multilingual technicians as well as infrastructure specialists remain sought after. Such ‘infrastructure specialists’ would likely include sales managers, one of the key areas in demand across the board, said Antal in a press release in May. And despite a drop in employment demand within the IT and telecoms sectors, the company still rated the average pay for its sales employees as higher than those within the banking and investment and oil and gas sectors.

Within banking, there has been an obvious switch in emphasis since the beginning of the year in the areas required by employees, said Smirnova — to risk management, internal control and auditing, business process optimization and restructuring, for example. Salikov listed banks as one of Ancor’s more vulnerable areas of the job market, and certainly banks had the highest proportion of redundancies in Antal’s May 2009 assessment — 68 percent at managerial or professional levels.

“The darkest months for most businesses were January and February 2009. Cost cutting was resulting in formal redundancies and those unlucky to find themselves in unofficial jobs, or with non-compliant management, were just not paid or laid off illegally,” said Elson. “Bonuses were generally withheld even for pre-downturn performance. 2009 income for those in employment will be lower than 2008, and bonuses will be less or non-existent.”

But while this trend in bonuses may be the case for most industries, ironically it may not be absolute throughout the banking sector, of all places.

Renaissance Capital, a Russia-based investment bank, announced in early September that it would be increasing its executives’ bonuses to pre-crisis levels, following a similar gesture towards its ordinary employees. This latest measure is expected to cost the bank up to $15 million, while its chief executive said the bank had put the crisis behind it. Earlier, in July, Deutsche Bank raised its employees’ salaries for four distinct groups, including young professionals.

Broadly speaking, Elson confirmed, demand in the job market is still 33 percent lower than that of fall 2008. The proportion of Russian versus foreign companies, he said, remains about the same while Russian firms had tended to react slower to the crisis. There is currently a correction taking place in the market, whereby hiring freezes and global profit and loss are being greater considered by Russian firms, thus addressing the imbalance with foreign firms in Russia that reacted earlier to the crisis and maintained slimmer staff numbers.

The outlook for the remainder of 2009 is something that many commentators felt reluctant to commit to. Kurganov admitted that it is “extremely difficult” to make a forecast of the market while it remains in a depressed state. “Each segment of the market will reflect the crisis in its own way, so it is too early to say that stabilization has set in. I think that the fall will show just how long the crisis is going to last in the labor market,” she said. Indeed, said Salikov, “one cannot speak of a general recession; the situation can be described using one phrase — market reversal. It may be that the key clients of human resources companies will now change. Those who used to be leaders in hiring are not the leaders of the moment, their positions have been frozen while other companies are lifting their heads.”

Despite the difficulties of analyzing the market overall, what can be seen from the outside suggests “slow, conservative growth building”, said Elson. “Some companies, even some high profile ones will no doubt lose their battle for survival.” The overall impact that such a scenario could have on the employment market would be limited, he said, but it should be borne in mind that “many firms have established a recovery plan and will need to hire in the next 6 to 12 months — indeed more rapidly once it’s accepted that a recovery is due”.