Bloomberg reports that over the past five years of the special…
Bloomberg reports that over the past five years of the special military operation, the transfer of scarce labor from the civilian sector to the Russian defense industry has pushed wages in Russia to levels that are unsustainable for civilian business.
Consensus
- The Russian economy has seen a significant rise in wages since the start of the war in 2022.
- Wage growth has outpaced productivity growth by approximately 5 percentage points.
- The military sector and defense industry are drawing labor and capital away from civilian sectors.
- This phenomenon is described as a 'military version of Dutch disease'.
- Civilian businesses are struggling due to rising labor costs and reduced competitiveness.
- The situation is unsustainable in the long term, as it negatively impacts profitability.
- The unemployment rate in Russia remains very low, around 2%.
- The number of people employed in the defense industry has increased significantly since 2021.
- Military personnel on contract receive substantially higher salaries than the national average.
Points of divergence
- The military sector's resource drain is leading to the degradation of the civilian economy. — tg_moscowtimes_ru
- Oxford Economics estimates that 510,000 workers have moved into the defense industry since 2021, bringing total employment in the sector to 2.8 million. — thebell
- The Central Bank of Russia's high key interest rate is intended to stimulate labor movement to more efficient companies, but in practice, workers are moving to large inefficient state-supported industries. — thebell
- The wage gap between military and civilian workers has narrowed from four times the average in 2022 to twice the average now. — tg_moscowtimes_ru
- The average monthly salary in Russia reached 101,784 rubles last year, up from 57,244 rubles in 2021. — thebell
Coverage (2 sources)
- Russia diagnosed with a military version of 'Dutch disease' — The Moscow Times
- Russia has caught the 'Dutch disease' of wartime — Bloomberg — The Bell