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Analysis & Opinion
10.06.10 Back In Business
By Tai Adelaja

Executive recruiters and employment agencies have reported symptoms of modest improvement in the labor market in May, in the latest sign that the nation has finally crawled out of the recession. Evidence of a healthier labor market is reported by all the major staff recruitment agencies, with some predicting accelerated employment growth in the coming months. However, most recruiters warn that positive employment prospects are expected mainly in the country’s centers of commerce, such as Moscow and St. Petersburg.

The number of job postings in Moscow and the Moscow Region was up 114 percent from May 2009 to May 2010, the HeadHunter Company, a staff recruitment agency, reported. After analyzing 31,981job listings and 148,606 job applications, the agency concluded that the number of vacancies in May of 2010 was comparable to figures for September of 2008, just before the crisis struck. But while the labor market collapsed three months after September 2008, there are signs that this is stable recovery, analysts at HeadHunter said in a report titled "The labor market in May."

Other recruitment agencies, such as SuperJob.ru, AVANTA Personnel and Marksman Recruitment Solution have also reported a spike in the number of vacancies within the last few months. SuperJob.ru estimated the increase in the number of job openings in May at 150 percent.

Recent figures from the Federal Statistics Service appear to support this conclusion. The unemployment rate in April fell to 8.2 percent from 8.6 percent a month earlier, while retail sales rose for the fourth month in a row, jumping by 4.2 as companies continued hiring and domestic demand accelerated.

HeadHunter’s survey was conducted using the HeadHunter index, which calculates a shortage of professionals or the number of applicants competing for one position, thereby illustrating the level of competition new jobseekers would face in the labor market. According to the index, the most competitive areas at the beginning of June were top management positions, which garnered at least 12.4 people chasing a single vacancy. Others competitive professions are art, media and entertainment with 6.3, science and education at 6.1, and young professionals with no job experience at 5.8 candidates per position. The high level of competition among these professions is due to the fact that the supply of these specialists outstrips demand, the report said.

Top management jobs, which were badly hit by the recession, continued to show the highest vacancy/resume ratio, and some experts are predicting that there will continue to be an oversupply of candidates for top management positions for the next two years. “There are so many unemployed top managers who are expecting high, pre-crisis level paychecks,” said Yury Virovets, the president of the HeadHunter Company. “Russian companies are not [yet] ready to offer such perks, preferring instead to promote on the inside.” On the other hand, he said, sales managers, who can bring immediate revenues to companies, are in short supply. Elizaveta Komolova, a legal consultant at Morgan Hunt, a recruitment agency, agreed: “Sales representatives are in high demand now. IT companies need marketing professionals, while banks are getting back to a wide range of retail products and are hiring sales managers, credit managers and customer service managers.”

Most employment agencies attribute the shortage of job openings in the top management segment to Russian companies’ aggressive job-cuts at the height of the financial crisis. The German newspaper Handelsblatt reported in February that the largest companies in Russia initiated massive layoffs of their employees last year in efforts to increase revenue, which, as a result, shot up on average by 13.7 percent. “In no other European country were major companies able to record such wide profit margins during the crisis,” the paper said. According to a survey of European companies carried out by the paper, in 2009 the revenues of the 500 leading firms of 27 European countries fell by an average of 9.6 percent, and their net profit declined by 26 percent compared with 2008. Revenues on sales in Europe amounted to 10 percent.

By contrast, while Russia's GDP fell by 7.9 percent, twice more than in the euro zone, earnings of Gazprom, Surgutneftegaz, RusHydro and Transneft increased by about 25 percent. According to Handelsblatt, Norilsk Nickel, a mining group, was able to reduce costs by 30 percent during the year in part by laying off 4,048 of its 87,969 employees. A radical reduction in staff and lower production costs helped Russian companies to successfully overcome the biggest crisis since World War II, the newspaper wrote. HeadHunter analysts estimated that IT companies shed between 10 and 15 percent of middle managers and up to 18 percent of management staff last year, Gazeta.ru reported. In the commodity sector, most of the junior staff retained their positions while about 20 percent of top management staff was retrenched, the paper wrote.

The federal government, one of the biggest employers, failed to have a positive impact on the labor market due to its rigid and sometimes conservative employment policies, a relic of the Soviet past, experts say. “The state bureaucracy is only just beginning staff rotation through the Federal Personnel Management Reserve,” Virovets said. “The government virtually hasn’t renewed the personnel hired 20 years ago. Ninety-nine percent of all information about vacancies in the federal government services is circulated internally, and therefore the man on the street can hardly get in.”

However, the public sector may become a very attractive employer in times of crisis precisely because it can offer stability, which is what many people are looking for, Komolova said. “State-owned corporations and banks that enjoy financial support and are involved in government projects still need people,” she added. “They can now offer them compensation – especially at the management level – at the level the private sector can.” However, the private sector remains the biggest player in the labor market, she said. Companies are launching new projects and need new people.

Compared to the figures for April, the number of job openings actually dropped by three percent in May, a traditional holiday season when there is always a lull in the labor market. “The increase in the number of vacancies is a trend for sure, but we should not forget about seasonal factors,” Komolova said. “We are gradually entering a slow season in recruitment. Before [the holiday season] companies normally announce new job openings, while candidates actively consider new career opportunities they may take after the summer holidays.”

Virovets said that by all indications, the Russian business is back on its feet after the crisis, and is ready to start hiring highly qualified and highly paid specialists. “Traditionally, May is regarded as a period of slow growth because of the various holidays and activities,” Virovets said. “But by September or October, the number of vacancies is expected to rise sharply.” Komolova agreed: “Compared to other [job] markets, especially in the euro zone, Russia is doing pretty well.”
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