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Shrinking Russia: British intelligence now predicts enormous problems in Putin's empire

2023-05-08T10:45:03.679Z

Highlights: The Russian economy has not collapsed even a year after the invasion of Ukraine. Nevertheless, the skilled labour market continues to decline. A survey of 14,000 employees of the Russian central bank showed that the number of available workers had fallen to its lowest level since 1998. Russia's population has fallen much more than expected in the last three years due to the Corona pandemic anyway. With the start of the Ukraine war, another 1.3 million people left the country last year. The refugees also include a large number of young and well-educated workers.



The Russian economy and labor market have been suffering from the shortage of skilled workers since the beginning of the Ukraine war. (Archive photo) © ZUMA Wire/Imago Images

The Russian economy has not collapsed even a year after the invasion of Ukraine. Nevertheless, the skilled labour market continues to decline.

Moscow – In the Ukraine war, the Russian economy is not only struggling with European sanctions. Since military mobilization, there has been a shortage of skilled workers in the Russian labor market – a shortage of personnel that can hardly be compensated. In its daily situation report, the British secret service writes of a new record low: A survey of 14,000 employees of the Russian central bank showed that the number of available workers had fallen to its lowest level since 1998.

Partial mobilization in the Ukraine war causes shortage of skilled workers

According to the secret service, Russia's population has fallen much more than expected in the last three years due to the Corona pandemic anyway. With the start of the Ukraine war, another 1.3 million people left the country last year. The refugees also include a large number of young and well-educated workers. The Russian Ministry of Communications reported a decline of 100,000 employees in the IT sector. This would correspond to about ten percent of the entire industry.

Russia's government has worn down its own economy. With the partial mobilization ordered by President Vladimir Putin, around 300,000 reservists were called up – mainly men of working age. The fear of an even more radical mobilization fueled the exodus of the population. Even then, experts predicted severe consequences for the Russian economic system.

Since then, companies in Russia have been complaining about dwindling workers. A study by the Moscow-based Gaidar Institute, published on bloomberg.com, revealed the fatal economic consequences of Russia's partial mobilization as early as November 2022. Even then, the investigations predicted that a third of Russian industry would have to prepare for a significant shortage of people. A prognosis that now seems to be becoming reality.

"Brain drain" in Russia plunges country into economic crisis

Experts refer to the exodus of skilled workers in Russia as a "brain drain", i.e. the loss of highly qualified workers abroad, which means that the country of emigration loses economic power. "Among those trying to leave Russia, the better-off and well-educated are overrepresented," British intelligence wrote in a situation report in September 2022.

The current shrinking and ageing population poses an economic problem for Russia: "This is likely to lead to a reduction in the potential growth of the Russian economy and risks fuelling inflation," according to the latest situation report from London.

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Even though Moscow itself predicts economic growth, experts do not see an economic upswing for Russia in the long term. "There are no indications for 2023 that Russia will record additional revenues from its oil, as it did last year," says Alexandra Prokopenko, an ex-employee of the Central Bank of Russia. Nevertheless, the expert considers the Ukraine war to be financially viable for the time being. It is estimated that the Kremlin's "war effort" is still viable for three to four years, says Prokpenko. (aa/afp)

Source: merkur

All news articles on 2023-05-08

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