Influence of COVID-19 on the labour market in Russia

Marina Danilina,
Senior Researcher,
VNII of Labour of Russia,
Russia

Assistant Professor,
Finance University under the Government of the Russian Federation,
Moscow, Russia

Before the onset of COVID-19, over the past 10 years, in Russia there were the following positive trends in the labor market: the unemployment rate dropped to historic lows, and wages rose, albeit at a not very high rate. But the global threat to human safety and health, COVID-19, has interrupted these trends.

The COVID-19 pandemic has affected a lot of countries in the world. In Russia, it has led to significant changes in the basic characteristics of the labor market. Some companies were forced to temporarily suspend their activities or completely close the enterprise. Moreover, the situation hit two categories the most: the most low-skilled employees and young people under 20 years old. About 40% of them were fired. More often than others, workers in the arts, sales, media and light industry were unemployed. In contrast, healthcare, science, IT and technology workers were fired less often than others.

The labor market around the world is going through tough times, with entire industries such as tourism and air travel shut down. In the beginning of COVID-19 the group of the most affected industries in Russia included tourism, sports, auto and other vehicles, household appliances, furniture, jewelry, sporting goods and leather goods. The pandemic affected up to 67% of small, medium and large enterprises, as well as individual entrepreneurs in Russia. However, only a third of the companies recognized as affected were able to benefit from government support. Totally the list of industries, the most affected by COVID-19 in Russia, includes: air transportation, airport activities, road transportation; culture, organization of leisure and entertainment; physical culture and recreation activities and sports; activities of travel agencies and other organizations providing services in the field of tourism; hotel business; catering; activities of organizations of additional education, non-state educational institutions; organization of conferences and exhibitions; activities for the provision of household services to the population – repair, laundry, dry cleaning, services of hairdressers and beauty salons.

Negative changes have also taken place in the field of education. In March 2020, the Government of Russia had to close educational institutions and switch to distance learning. This transition showed a number of problems. The education system turned out to be ill-prepared for the remote format. The teachers lacked the skills to work with the help of IT technologies, not all students had access to the Internet and could effectively continue their studies. The gap between students from rich and poor families has widened. The quality of education of less well-off children suffered more. There was a need to improve technical literacy for both teachers and students, as well as ensure equal access to online classes for all.

After the pandemic, we should expect a decrease in demand for mass events, international travel, offline services, and retail. The pandemic has accelerated digitalization, the transition to new forms of work and also accelerated the rise in unemployment. As a result of the transition of the economy to digital technologies, some workers will lack competencies, and they risk being left unclaimed in the global labor market. This year, the consequences of the pandemic have been hit hardest: youth, this year’s graduates, the self-employed, informal workers and the service sector. However, in the next 5-10 years, the negative consequences of the pandemic, changes in demand in the labor market may affect office workers, middle managers, lawyers, dispatchers, drivers, security guards, and owners of office centers.

Despite the possible increase in unemployment due to global automation and digitalization, at the same time, the demand for certain competencies will also increase. First of all, the demand for IT workers will increase – programmers, analysts, etc. – workers who will serve new digital technologies. In addition, there will be demand for marketers, communications specialists, business analysts, online education specialists, and doctors. Great demand is expected for creative professionals with developed soft skills.

The development of the pandemic introduced a new trend in the labor market: more and more companies began to introduce a remote work format. Such enterprises that actively use digital technologies in their work and those who managed to restructure their business processes into an online format in a short time managed to continue their functioning. Now the labor market will never be the same again.

The pandemic has completely changed the structure and nature of the labor market. Even after the end of the pandemic, the role and share of remote work and online work will increase. So, among the new trends in the labor market are the transfer of work processes to automatic mode, the transition to remote work, registration of the status of self-employed. Many innovations introduced now in the labour market in Russia will remain: automation, digitalization, remote work. It is possible that in some places mixed forms will be fixed, when employees spend part of their working time in the office, and part of the work is done from home. Remote work will significantly reduce the cost of renting premises for employees.

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