Russia's War Economy Depletes Vital Oil Sector of Essential Workforce

• Military and arms manufacturers vie with energy firms for workers
• Conflict exacerbates existing demographic challenges

Russia's oil and gas sector, pivotal in financing the ongoing invasion of Ukraine, provides essential funding for the Kremlin to continue the conflict into its third year. However, the industry is now grappling with a labor shortage as Russia's total war mobilization intensifies an existing demographic shortfall.

In a country where Gazprom PJSC’s “Dreams Come True” motto historically reflected many people's career goals, lucrative energy firms are increasingly competing for labor with the Russian military and arms producers, note industry analysts and recruiters. The initial enlistment bonus for soldiers in Ukraine might match almost a full year's earnings for typical oil and gas workers.

This shortage isn’t a new issue—Russia has been dealing with a dwindling working-age population for nearly two decades, primarily due to a drop in birth rates during the 1990s, with the Covid pandemic further complicating matters. The Ukrainian conflict has sharply exacerbated these demographic problems.

The scarcity of workers is affecting sectors throughout the economy, as per recent analyses by Russia’s central bank. Although the oil and gas industry continues to operate effectively, potential long-term effects are looming.

“Even affluent sectors are experiencing staffing shortages,” stated Alexei Zakharov, president of the job site Superjob.ru. “While the oil and gas industries might lure workers with higher wages, the government attracts them with military contracts.”

Russia's Oil and Gas Sector Seeks More Workers

Employee demand has more than tripled over the past seven years

This year, the oil and gas industry is short approximately 40,000 workers, reports Kasatkin Consulting in Moscow, which includes former Deloitte researchers. The number of job postings online increased by 24% in the first quarter compared to last year, as the industry searches for both skilled and unskilled labor, according to data from leading Russian job portal hh.ru.

“Current vacancies in this sector include positions for electricians, drivers, mechanics, welders, machinists, laborers, sales managers, design engineers, and sales representatives,” shared Anna Osipova, head of regional external communications at hh.ru.

Source: Bloomberg