Russian companies are struggling to find workers due to a labour shortage that is threatening to cripple the economy. The Kremlin has placed the country’s economy on a war footing, pouring billions of pounds into defence.<\/p>\n
This huge increase in state spending has helped fuel economic growth over the past two years, by 3.6% in 2023 and 4.10% in 2024, although it is forecast to dramatically contract this year. It has also led to inflationary pressures, which forced Russia<\/a>‘s Central Bank to hike interest rates<\/a> initially to 21% before cutting them back to 20% at the beginning of June.<\/p>\n The exorbitant rates threaten to bankrupt many companies with large debt exposure and prevent firms from raising capital for investment.<\/p>\n Russian businesses are also facing a chronic shortage of labour, as a direct consequence of the war in Ukraine<\/a>.<\/p>\n The country lacked around 2.6 million workers at the end of 2024, according to Russia<\/a>‘s Higher School of Economics.<\/p>\n This is largely due to workers being drafted into the army, as well as an exodus of people fleeing conscription.<\/p>\n By the end of 2022, it is estimated that almost a million Russians had fled the country to avoid being forced to join the army and fight in Ukraine<\/a>.<\/p>\n The scarcity of workers has pushed up wages, which in turn has helped to drive inflation upwards.<\/p>\n Russian economic growth, fuelled by huge defence spending, appears to be coming to an end.<\/p>\n Financial analysts predict the country’s economy will slow to just 1.5% in 2025 from 4.3% last year.<\/p>\n Compounding the sense of gloom, economy minister Maxim Reshetnikov told investors at last week’s International Economic Forum in Saint Petersburg that the country was “on the brink of going into a recession” after a period of “overheating”.<\/p>\n