Despite the fact that the war in Ukraine has been going on for half a year and the accompanying sanctions, unemployment in Russia is officially at a record low of 3.9%.

Its largest automaker, AvtoVAZ, has not laid off any of its 42,000 employees, but has resumed production of the Lada model.

However, this is one side of Russian reality. The other side is that AvtoVAZ pays 2/3 of the wages of its employees, since they are all under a temporary suspension of their employment contract, similar to the one we experienced during the pandemic. Avtovaz recently gave them the option to leave with $3,400 in compensation, which equates to 200,000 rubles, when their salary was 45,000 rubles a month.

AvtoVAZ has suspended production of Lada models since March due to Western sanctions, shortages of key components and the departure of its partner, France’s Renault.

Most of the 3,200 employees employed at the Lada plant in the industrial city of Izhevsk have been suspended from work as the Izhevsk plant is idle, with only a few employees temporarily allowed to work reduced hours.

The company plans to focus on production at its flagship plant in Togliatti, but says it remains particularly interested in the Izhevsk plant and plans to equip it with new technology to become the first Russian electric vehicle plant to produce the Lad e-Largus model. . In an interview with Reuters, AvtoVAZ President Maxim Sokolov stressed that “in the current situation, under the pressure of sanctions and a growing number of unstable factors, we are trying to maintain employment.”

However, according to Ruben Enkipolov, an economics professor at the Russian School of Economics in Moscow, there is a “hidden unemployment” in the automotive industry, those who are not fired but on a long-term suspension of employment with a meager income. He expects unemployment to rise towards the end of the year, when it becomes clear that the sanctions will remain.

As he emphasizes, “in Russia, economic crises do not lead to mass unemployment precisely because of such practices used in the labor market as the temporary suspension of an employment contract.”

The sanctions have forced major industries to reduce production.

A few days ago, Russian Economy Minister Maxim Reshetnikov vehemently denied that the country’s unemployment had risen sharply, insisting that official figures were historically low. However, he left open the possibility of an increase in unemployment in the autumn, but added: “Let’s not dramatize, the situation is under control.”

After all, the automotive industry is not the only sector of the Russian economy that has suffered from Moscow’s confrontation with the West. Deputy Prime Minister Tatiana Golikova admitted late last month that 236,000 Russian workers are in temporary or part-time employment. And all of them are not among the 3 million officially registered unemployed in Russia. For example, about half of the air traffic controllers, about 14,000 people, have temporarily suspended their contracts or reduced their working hours. The majority of employees of foreign companies that decided to leave Russia found themselves in the same situation, from the Swedish Ikea to the Spanish Zara.

However, the automotive industry has been hardest hit, with passenger car sales in the first half of 2021 down 62% compared to the first half of 2021. International automakers Volkswagen, Nissan, Hyundai, Stellantis, Mitsubishi and Volvo left Russia. , and their mass exodus has forced more than 14,000 Russian auto workers into forced furlough, whose future could be bleak as the war drags on. It’s a sad and abrupt turn for an industry that has been a symbol of Russia’s success for decades, attracting foreign investors and foreign businesses and growing into one of the country’s biggest employers. The industry employed 400,000 people in 2020, and the number of workers indirectly dependent on the automotive industry is ten times that number.

Source: Reuters.