Russia is the largest country in the world, with over 120 ethnic groups speaking different languages and following unique religious and cultural traditions. Moscow and St. Petersburg are the two most important cultural and financial centres in Russia, and labour trends there impact the entire country and the global market as a whole. This time in the The Big Gig series, we will be looking at various forms of labour hiring practised in Russia and how they affect the quickly growing gig economy.
The Federal State Statistic's report states that the unemployment rate in Russia reached an all-time high of 14.6% in Feb 1999 and a record low of 4.31% in August 2019.
Since the collapse of communism, Russia adopted several new labour codes, and labour relations have been a constant flux. In 1991, the country experienced a severe recession and a series of economic shocks, resulting in large hits to output. Unorthodox modes of adjustment were put in place, keeping unemployment low in spite of devastating forecasts for Russia's labour force participation. These models became a salient feature of the Russian labour market. According to the Russian Labour Market report done by the Center of Strategic Research, even during the economic recession, the unemployment rate in Russia showed no sign of a catastrophic increase. Conversely, the unemployment rate hardly decreases, even during periods of strong economic growth.
Forms of temporary staffing to date
Russia has coined various Russian terms referring to temporary staffing. One is Zayomnyi Trud, meaning loaned labour ("Contingent Labour" or "Temporary Employment"). When employees are temporarily unavailable, firms can loan or lease workers. This is a common practice in courier services, security, office cleaning work, and more. According to findings by RANEPA, regional labour markets are developing on the model of part-time employment. Firms prefer these arrangements to reduce personnel costs, fill the temporary unavailability of Russian citizens for certain positions, and increase the number of foreign employees in order to meet quotas.
Temp staffing agencies flourish
The first employment agency appeared in Russia during the early 90s. Their first clients and providers were rep offices of foreign companies. Soon, more businesses were using temp staffing services, such as organizations with 100% foreign interest, wholesale distributors, and manufacturing companies. By the end of the 90s, the number of Russian employment agencies greatly exceeded the number of Western agencies.
The Russian outsourcing industry had a turnover of 51.09 billion Russian Roubles in 2018, marking the largest market share among recruitment services.
Much like in America, companies can lease employees for a definite or indefinite period in Russia. Companies prefer this arrangement when they need to fill in a temporary position, say for seasonal work. As there is no direct contract involved, companies are free to hire and fire as needed. By implementing more part-time jobs, the Russian labour market observed a growth of 18% in 2016. It's especially cost-effective for small businesses.
A software solution
For a progressive labour market, labour resources need to be used efficiently. To keep up the game, agencies should consider a cloud solution to manage and empower their temporary workforce. By integrating technology, a temporary staffing agency can manage their vast database of clients and workers and benefit from an accurate time tracking system, a built-in payment processor, and much more.
The number of part-time/temporary workers surpassed 273,000 in Russia by the end of 2016, leaving the door open for a potential gig economy to flourish. However, this is not that much for such a large country.
The Russian labour market was able to meet the challenges of economic crisis using an unorthodox temp hiring model, and this model has remained in place to this day. To meet the speed and complexity of the growing gig economy in Russia, a software solution is essential.
Are you a temporary staffing agency looking for a software solution? We’ve got you.
Following Japan's labour market last week, this article focuses on Russia is the third of “The Big Gig” series. In our next week special, we will be discussing India’s experience with the gig economy. To help international recruiting agencies prepare for the evolving labour market, our next series of posts will shed light on the gig economy trend, its gaining momentum, and what temporary staffing agencies can expect in 2020.