Russia's Labour Market Begins to Cool: Resumes Surge as Vacancies Fall

After two years in which employers competed for almost every candidate and were ready to pay nearly any price, Russia's labour market — long considered the most overheated part of the economy — is sending its first confident signals of cooling. In January 2025, residents of the country posted or updated 30% more resumes on recruitment platforms than in the same month a year earlier, while the number of published vacancies fell by 8%. These figures, compiled by the recruitment platform hh.ru and cited by the Bank of Russia in the presentation of its review "What the Trends Say", are read by economists and hiring specialists as unambiguous: seasonality is being reinforced by structural factors that point to a reversal of a multi-year trend. The initiative is gradually passing from the job seeker to the employer.

Resumes rise, vacancies fall

The divergence between the dynamics of vacancies and the dynamics of resumes began as early as the second half of 2024, emphasises Natalya Danina, head of client efficiency and chief labour market expert at hh.ru. In a normal situation, she notes, such a divergence would mean that "not everything is very good" in the economy and that people are entering the labour market because employers are cutting staff across the board. That is precisely what happened during the most acute crises of the past decade — in 2015–2016 and in the pandemic year of 2020, when Russians were ready to lower their wage expectations and felt insecure when stepping onto the market.

The current rise in resumes is not connected with insecurity. If as of January 2024 the annual growth in the number of resumes was only 1%, by May the figure had reached 13%, by August 21%, and in November–December it stood at 28%. "People have once again pulled their periscopes out from under the water and started comparing their current conditions with what the market offers. And they discovered that there are better offers out there," Danina explains. In other words, active resumes became markedly more numerous after the market was pumped up with salaries over the previous two years: workers who received generous raises are now studying what else the market can offer and are not afraid to change jobs.

The dynamics of vacancies are a mirror image. For comparison: the difference in the number of vacancies between January 2024 and January 2023 was 33%, which remained one of the highest readings of the year. Gradually that gap began to shrink, and in December 2024 a negative value was recorded for the first time in two years — minus 1%: in that month the number of published vacancies turned out to be even smaller than in the same month of the previous year. A market that only recently was registering double-digit growth in demand for staff thus crossed into the zone of decline for the first time.

Record-low unemployment and its limits

Formally, the labour market still looks exceptionally tight. Unemployment stands at 2.3% — the lowest level in the entire history of observation, and there is essentially nowhere left for it to fall, explains Lyudmila Ivanova-Shvets, associate professor at the basic department of the Chamber of Commerce and Industry "Human Resource Management" at the Plekhanov Russian University of Economics. Under these conditions, the winners will be those employers who not only offer a competitive salary but also adapt to specific generations of workers: older employees may be interested in corporate pension programmes, younger ones in flexible schedules and interesting projects. Competition for people is not disappearing — it is changing shape, moving from a purely monetary race to a contest over conditions and meaning.

Advocates of the thesis that the personnel deficit persists point to Rosstat data. According to Vladislav Onishchenko, general director of the Agency for Transformation and Development of the Economy, at the national level there are so far no signs of an easing of the personnel deficit. The employment rate rose to 61.9% by the end of November 2024, whereas at the start of the year it was 60% and in November 2023 it was 61.1%. The number of workers required for vacant jobs, excluding small and medium-sized enterprises, reached 2.7 million by the end of the third quarter of 2024 — in other words, since the start of the year the need for workers has grown by 16.9%. "Therefore there are no substantial preconditions for an increase in the unemployment rate yet. If it does start to rise, it will be at an extremely slow pace," Onishchenko is confident.

Why the market is cooling

Part of the January decline in vacancies is explained by seasonality: towards the end of the year businesses traditionally pause active hiring, and in January they do not always manage to get up to speed in time, Danina recounts. But seasonality is not the only reason. Some companies have stopped recruiting because borrowing has become more expensive — both for themselves and for households. "For example, the decline in production volumes at metallurgists is directly proportional to the fact that mortgages have become too expensive and there are fewer orders for new construction," she offers as a characteristic example of how tight monetary policy rolls through the chain "rate — credit — demand" all the way to the labour market.

There is point-by-point evidence that the cooling in the hiring market has indeed begun, states Sofya Donets, chief economist at T-Investments. Individual large companies have, over the past several months, begun to slow down or freeze the recruitment of new employees, despite the personnel deficit persisting overall. In her assessment, this does not look like a scenario of a labour market collapse — rather, one is observing a new trend that logically ties in with everything happening in the economy. Donets compares what is going on with the big wave of niche-filling that swept Russia after the mass departure of foreign companies from the country in 2022: "This wave has more or less come to an end by the start of 2025 for the state budget, which to a significant extent sponsored new business — and it also seems like a year of saving is beginning. It is logical that we should have found this point of deceleration somewhere."

Pavel Pikulev, co-founder of the professional network EMCR, confirms: "We saw a sharp slowdown in the opening of new vacancies in the fourth quarter of 2024. The slowdown ran counter to seasonal tendencies, since the end of the year is usually active." According to him, many companies by that time had exhausted their annual budgets for hiring new employees and retaining existing ones, and the search for people for many positions had been put on "hold". The result is a sense that the market stands at a crossroads: in some companies hiring budgets are preserved or even expanded, while in others they are, on the contrary, being cut.

• Resumes on recruitment platforms in January 2025: +30% year on year
• Published vacancies in January 2025: −8% year on year
• Unemployment: 2.3%, a record-low level
• Employment rate: 61.9% at the end of November 2024, versus 60% at the start of the year
• Workers required for vacant jobs (excluding small and medium-sized enterprises): 2.7 million, up 16.9% since the start of the year
• Business climate indicator: 3.8 in January 2025, the lowest in a year

The view from the central bank

The Bank of Russia has been watching the labour market as one of the key transmission channels of monetary policy. Overheating of the labour market — record-low unemployment and rapid wage growth — was among the main reasons the regulator kept monetary conditions tight: rising incomes feed consumer demand, and demand feeds prices. That is why the October version of the review "What the Trends Say" was devoted precisely to signs of declining tightness. The regulator's logic is straightforward: if companies begin to allow for a weakening of demand for their products and a slowing of investment activity, then pressure on wages will ease as well, and with it inflationary pressure. The cooling of the labour market is, in this sense, not a side effect of policy but its intended result.

Business sentiment confirms that this process has already begun. The business climate indicator calculated by the central bank updated its previous year's minimum in January 2025, falling to a level of 3.8. For comparison: the indicator's reading in December was 4.2, and in November it was 5.0. Three consecutive months of decline show that companies are entering 2025 in a markedly more cautious mood than they entered 2024. For the regulator this is the desired signal: caution in hiring and investment is exactly what tight monetary policy is designed to achieve. But there is a reverse side as well — if caution turns into pessimism, the economy risks losing not only inflation but also growth.

It is telling that the central bank is recording the cooling not only through recruitment platform data but also through its own business surveys. The business climate indicator, which the regulator calculates on the basis of regular enterprise surveys, has been falling for the third consecutive month, and it is precisely this indicator that is considered one of the most timely barometers of business sentiment. Its dynamics matter not only in themselves: for the central bank this is an argument that tight policy is working and that room for its gradual softening may appear earlier than sceptics expected. At the same time, the regulator emphasises that decisions on the rate will be made on the basis of the full set of data — from inflation and inflation expectations to credit activity — and the cooling of the labour market alone is not enough for a policy reversal.

Wages: the end of the race

The most important consequence of the cooling for millions of workers is the deceleration of wage growth. In many companies and industries that have exhausted their financial resources, wage growth will inevitably slow and converge with the pace of inflation, Danina believes. She does not rule out that some employers will be forced to leave the market. However, these are rather particulars against the background of the persisting demand for personnel and the activity of job seekers, which in the near future will certainly not diminish, she is sure. For workers this means a change in the rules of the game: if over the past two years it was enough simply to change jobs to secure a substantial raise, in 2025 the premium for mobility will shrink, and the value of rare competencies, experience and the ability to learn will grow.

For employers, the new reality means a redistribution of costs. Companies that used to solve personnel problems with money alone will have to look for other levers: flexible schedules, interesting projects, corporate pension programmes for older employees, development opportunities for younger ones — precisely the set of tools Ivanova-Shvets talks about. The labour market is moving from a seller's market to a more balanced one, in which the terms of the deal are determined not only by the size of the salary but by the whole package of conditions.

A crossroads, not a collapse

It is important to emphasise that what is being observed is not a crisis of the labour market but its rebalancing. The situation under current conditions is unlikely to lead to a sharp increase in unemployment, but a weakening of competition for labour resources in 2025 relative to 2024 is quite possible, Pikulev believes. He sees the reason in the tightening of monetary policy by the central bank. "It looks like the labour market is smoothly transitioning from a state of very strong overheating to a more balanced one," he suggests. The Bank of Russia itself had already signalled signs of a decline in labour market tightness — in particular, the October version of the review "What the Trends Say" was devoted to this. The cooling is a consequence of companies allowing for a weakening of demand for their products and a slowing of investment activity, the review said.

The long-term deficit has not gone anywhere

At the same time, the structural shortage of personnel remains the main constraint on economic growth in the medium term. The Ministry of Labour did not respond to a query from "Expert", but earlier the head of the ministry, Anton Kotyakov, stated that over the next five years the labour market needs to be supplied with 3.1 million workers. According to the ministry's data, the top regions by absolute growth in the need for personnel by 2029 will be the Rostov region (+260.9 thousand people), Moscow (+255.6 thousand) and the Stavropol territory (+152.8 thousand). These figures show that even in a cooling market the aggregate demand for labour continues to grow — what is changing is the pace and the terms on which employers are ready to pay for it.

The regional dimension

The personnel deficit is distributed across the country extremely unevenly, and this leaves its imprint on the picture of the cooling. According to the Ministry of Labour, the largest absolute growth in the need for personnel by 2029 is expected in the Rostov region, Moscow and the Stavropol territory — regions with large industry, a developed services sector and a noticeable inflow of population. This means that even with a general slowdown in hiring, competition for workers in these regions will remain acute, and employers will have to retain people not only with salaries but also with conditions. At the same time, in regions whose economies rest on a few large enterprises, the hiring freeze may be felt much more strongly: there, a reduction in vacancies more quickly turns into a reduction in real jobs. The cooling of the labour market will thus be uneven — and this is another argument in favour of the view that it is still premature to speak of a single nationwide trend.

What it means for workers and employers

For workers, the new configuration of the market means the need to revise their strategy. If during the period of overheating the main tool for raising income was changing employers, then under cooling conditions the accumulation of competencies, internal mobility and readiness to master adjacent functions come to the fore. Workers who over the past two years have grown accustomed to receiving raises simply for being present on an overheated market will find that the premium for loyalty is shrinking while the premium for qualifications is growing. For employers, on the contrary, a window of opportunity is opening: for the first time in several years they have the time to calmly plan their staffing tables, invest in training existing employees and build a retention system without fearing that every valuable specialist will tomorrow be poached by a competitor with a more generous offer.

The generational shift that experts talk about deserves separate attention. Younger workers are increasingly less likely to see a single employer as a place for decades and increasingly choose projects, flexibility and the possibility of rapid growth; the older generation, by contrast, values stability and social guarantees. Companies that learn to speak to different generations in their own language will gain an advantage even in a cooling market: the personnel deficit has not disappeared, and the fight for the best specialists will continue — it is just that its tools will become more subtle.

What it means for the economy

For the economy as a whole, the cooling of the labour market means several things at once. First, the wage spiral — the main channel through which labour market overheating fed inflation — is losing momentum, and this gives the central bank room to think about softening monetary policy without the risk of a new acceleration of prices. Second, companies will have to learn to compete for people not only with money but also with conditions, corporate culture and development opportunities — and this is a healthy evolutionary pressure on business. Third, the demographic constraints that formed the foundation of the personnel deficit are not going anywhere: the working-age population is shrinking, and no cooling of the market can cancel this trend.

The cooling of the labour market also changes the balance of risks for economic policy. As long as the market was overheated, the main risk was the wage-price spiral: employers raised wages to attract workers, workers spent more, prices rose, and employers raised wages again. Now this spiral is losing momentum — and this opens a window of opportunity for the central bank. If the deceleration of wage growth is confirmed by the data in the coming months, the regulator will gain room to gradually soften monetary policy without the risk of a new acceleration of inflation. But if the cooling turns out to be too sharp — if, for example, the wave of hiring freezes spreads from individual large companies to entire industries — the economy may face not a soft landing but a noticeable slowdown in growth accompanied by rising unemployment. The boundary between these two scenarios is precisely what will be watched most closely throughout 2025.

The labour market of 2025 thus enters the year in a state of delicate balance. On the one hand — record-low unemployment, a high employment rate and a multi-million demand for workers. On the other — the first negative readings on vacancies, frozen hiring budgets and a business climate indicator at a yearly minimum. The question of the year is not whether the market will cool — it has already begun to cool — but whether this cooling will be smooth and controlled, or whether it will turn into a painful adjustment for those sectors that have grown accustomed to living in conditions of unlimited demand for personnel. The answer to this question will depend both on the monetary policy of the central bank and on how quickly companies learn to work in a market where the candidate is no longer the only scarce resource.