08.02.09

Salaries for new employees have already decreased, on average, by 19% and the number of employers who lowering wages will rise to 25% in the near future, according to recruitment agencies. Personnel officers are sure that growing competition for jobs and increasing unemployment rates force employees to value employment, as well as increase their productivity and readiness to make concessions to employers.

The recruitment agency Avanta Personnel has analyzed the personnel strategies of 230 companies from nine cities in Russia. The conclusion is that employers have scrapped plans to increase employees’ salaries for 2009. Many are planning to lower salaries. While in October of 2008, 70% of employers planned to increase employee salaries by an average of 12%, in December, 17% had already cancelled those plans. 40% of them have decided to wait to increase salaries, cutting bonuses by an average of half and some paying only 7-9% percent. The average wage decrease is rather high - 16-19%.

The company Profi Online Research is sure that the wide selection of employees allows companies to set lower salaries due to the new market conditions. According to the company, 20% of employers have already reduced salaries by 10%; 5% have cut them by 20-30%. A decrease in salaries had already been indicated by recently released government statistics from Rosstat. These stats showed that real salary growth for 2008 was 9.9%, as opposed to 17.2% in 2007. Russia's Ministry of Economics predicts a 2.7% decrease in average real salary in 2009.

However, employees also understand that to apply for high salaries now is senseless and they are ready to make concessions to get a job. According to data gathered by Profi Online Research, 46% are willing to accept a smaller salary for the sake of a job offer. The overwhelming majority (76%) are ready to forego many perks. About 27% would agree to be demoted. Only 7% of personnel are so confident that they would not make concessions, even if it meant losing their jobs.

During a crisis, employers are in a more advantageous position when hiring employees. Under present conditions, employees begin to carry out duties more effectively. HR personnel seem to agree this means that labor productivity will also grow. The general reduction in salary levels is caused by the large number of specialists released onto the market and the increased competition for vacancies. According to a statement made by Russia's Ministry of Health and Human Services on January 21, 2009, from the beginning of October 2008, 113,900,000 persons had been discharged (on January 14 – 96,500 people, an 18% increase from the previous week). From January 14 to January 21, 2009, the unemployment grew by 1,548,000. The amount of employees who were given part-time work or "vacation time" grew by 22% from January 14 to January 21, to 548,800.

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Source: "КоммерсантЪ"