Diminishing returns

In recent months, the State Duma, the lower house of Russia’s parliament, has adopted several laws that dramatically complicate the lives of the country’s migrant workers. The authorities have simplified and accelerated the process of deportation by the police, who are no longer required to seek a court order before repatriating foreign citizens. They also plan to introduce a special register next year of those found to have expired or otherwise invalid papers, preventing them from returning to Russia in the future.

The register is to list any foreign citizens who have committed criminal offences and are therefore subject to expulsion. Anyone on the list will effectively become an outcast: unable to obtain a driving licence, use banks, register property, marry, divorce, or enrol their children at kindergartens and schools.

But this is just the tip of the iceberg, and the authorities have far more far-reaching plans. The State Duma is to prioritise considering a raft of bills on combating illegal migration during its autumn sitting, while Russia’s Investigative Committee has also proposed expanding the grounds for stripping someone of their acquired Russian citizenship, and subjecting all foreigners living and working in Russia to fingerprinting, genomic registration and the recording and storage of their biometric data.

The Federal Taxation Service has proposed increasing the cost of trading licences for foreigners several times over, while State Duma Deputy Speaker Irina Yarovaya has called for fewer medical centres to offer their services to migrants.

Furthermore, almost two dozen Russian regions have banned or intend to ban migrants from working in certain industries. For example, in the Samara region, foreigners can no longer work in retail or transport, while in the Moscow region, work permit holders will have to leave their posts in schools, hospitals and sports complexes from 2025, while over 10 regions have now made it illegal for foreign citizens to drive taxis.

Migrants in decline

Making the lives of foreign workers more difficult appears to be a populist move by the government designed to show the average Russian that it is serious about protecting the population from the menace of migration and “migrant worker criminality” in particular.

Yet foreigners commit just over 4% of all recorded crime in the country, according to the Russian Interior Ministry, a significant share of which is made up of non-violent crimes such as forging documents and entering Russia illegally, and even those are on a downward trend.

Nevertheless, the results of a survey published in May by the Levada Centre, Russia’s only remaining independent polling organisation, showed that an extraordinary 56% of respondents said that they believed migrant workers from Central Asia should only be allowed to enter Russia temporarily or that the border should be closed to them altogether.

The introduction of tighter migration controls would only make an already desperate situation on the Russian labour market even worse, however. Demographers estimate that the number of migrant workers needs to be approximately twice as high as it is now if the country is to avoid a labour shortage crisis.

According to a study by demographer Yulia Florinskaya, there were between 3 million and 3.5 million foreign workers in Russia in 2022–2023, numbers deemed “insufficient” by demographer Alexey Raksha, who said that Russia in fact required “more than ever before”.

Migrant numbers peaked in 2012–2014 with between 6 million and 7 million foreigners working both legally and illegally in the country, according to estimates by Yelena Varshavskaya and Mikhail Denisenko at Moscow’s Higher School of Economics (HSE), as well as to data collected by Sergey Ryazantsev, a professor at the Russian Academy of Sciences.

Ivan Nikiforov*, the head of a Russian demographic research centre, concurred with Raksha’s assessment and said that Russia was currently in need of between 3 million and 3.5 million new workers.

The percentage of foreigners on the labour market has also fallen by more than half: in 2022–2023, they accounted for between 4% and 4.5% of people employed in Russia, whereas between 2012 and 2014, migrant workers made up anywhere from 8.4% to 10% of those working in the country, at least double the recent figures.

Migrant labour numbers have never recovered to levels seen before Russia’s illegal annexation of Crimea in 2014, and their numbers have continued to fall as Russia tackled crisis after crisis since then, from the devaluation of the ruble and the slowdown in the economy in the second half of the 2010s to the Covid-19 pandemic.

When Covid-19 restrictions were finally lifted, researchers expected to see a recovery in migrant labour numbers. Indeed, demographers Mikhail Denisenko of HSE and Vladimir Mukomel of the Russian Academy of Sciences’ Institute of Sociology predicted that Russia’s post-Covid economy would require just as many migrant workers as it did prior to the pandemic.

Indeed, by the beginning of 2022, the number of migrants arriving in Russia had gradually begun to grow again. But that growth stopped almost as soon as it had started after Russia launched its full-scale invasion of Ukraine in February 2022, since when even fewer migrants have moved to the country in search of work.

So rather than recovering to pre-pandemic levels of between 4.5 million and 5 million migrant worker arrivals annually, there was actually a decrease to between 3 million and 3.5 million in 2022–2023, meaning the war was effectively responsible for the removal of between 1.5 million and 2 million foreign workers from Russia’s labour market, and that there are now approximately 30% fewer migrant workers in the country than there were before Covid-19.

“Economic sanctions, another devaluation of the ruble and difficulty in taking money earned in Russia out of the country stopped any expected growth,” Florinskaya said in her study. Dmitry Sokolov*, a Russian academic researching demographics and economics, attributed the falloff to the drop in the amount migrant workers could hope to earn in Russia.

The ruble has now lost 20% of its pre-war value, making the prospect of working in Russia far less appealing for Gastarbeiter hoping to repatriate their earnings. Nikiforov noted that the flow of manpower from Ukraine, the largest source of migrant workers for the Russian labour market between 2015–2020, had dried up entirely, as had that from Moldova, which at one point supplied 4% of those migrating to Russia for work.

The road to stagflation

According to data from Rosstat, Russia’s state statistics agency, employers in Russia experienced a record shortfall of 2.7 million workers during the second quarter of 2024. Other studies showed shortfalls as high as 5 million people.

Meanwhile, the consequences of Russia’s war in Ukraine continue to cause the economy more and more damage. In addition to reducing the number of migrant workers travelling to the country, the full-scale invasion of Ukraine has also deprived the economy of anywhere between 1.5 million and 1.7 million people due to mobilisation and mass emigration since February 2022.

The deficit is only increasing, as the war continues to syphon off workers, while military experts warn that a fresh wave of mobilisation could be on the cards. This means that the almost three-year long war in Ukraine could have cost the Russian economy as many as 4.4 million workers.

The industries suffering most from labour shortages are those that are heavily reliant on migrants, and it is therefore these sectors of the economy that will be worst affected by the government’s anti-migration campaign. According to Florinskaya, most foreign workers are employed in the construction (23%), retail and services (21%), and manufacturing (16%) sectors.

Russia’s construction sector is currently experiencing record staffing shortages, equivalent to 2.5% of its total workforce, according to economists, while in retail the figure is 3%, and in manufacturing and other industries, about 3.5%. The Central Bank has confirmed that there is now a significant labour shortage, “especially in the manufacturing industries”.

“These estimates are close to the truth,” Sokolov confirmed, though he added that he thought it was too simplistic to conclude that a decrease in migrant labour automatically led to a proportional percentage reduction in GDP. There may indeed be a risk of “loss of potential GDP growth, but it is impossible to estimate a percentage”.

Be that as it may, the head of the Central Bank Elvira Nabiullina gave a clear warning in mid-September that labour market reserves were depleted, which would forestall any growth in production.

Nevertheless, prices will continue to rise, as companies are using both salaries and perks to compete with one another to win new employees. Indeed, some companies are also offering to pay for worker housing and transportation, as well as increasing annual leave days in an attempt to attract staff.

A stagnant economy in which prices nevertheless continue to rise creates what is known as stagflation, something Russia’s Central Bank governor alluded to without directly naming in September.

“In that situation, any additional stimulation of demand would only lead to an increase in prices without an increase in production,” Nabiullina said. The risk is heightened by the fact that the Kremlin is increasing military spending and throwing huge amounts of money at the military-industrial complex.

Offset losses

Russia becoming a less attractive destination for migrant workers is causing severe damage to the country’s economy, and though the country needs far more migrants, as employers readily admit, their number is almost certain to decrease further.

The authorities never mention how the ever-increasing number of anti-migrant measures will affect the economic growth they purport to stimulate. “The migration policy in Russia pays no heed to economics,” according to Gimpelson. “Candid xenophobic rhetoric is all about populist politics, but it goes against the interests of big business and even those of medium and small business,” Raksha said in a recent interview.

Data on migration levels to Russia this year appear to back up the prevailing trend of decreased migrant inflow to the country. For example, the number of citizens of Tajikistan entering Russia in the first six months of 2024 decreased by 16%, state-affiliated business news outlet RBC reported in August, citing the Tajikistan authorities.

However, the reduction is likely to be gradual, rather than drastic, as migrant workers from Central Asia, who make up the majority of Gastarbeiter in Russia “simply have nowhere else to go to find work,” the unnamed researcher told us. Exactly how much the number of foreign workers will decrease depends less on which laws Russia introduces than it does on the state of the Russian economy, researchers say.

If Russia finds itself unable to attract workers with higher earnings, then “the number of vacancies aimed chiefly at foreigners will shrink over time,” even without major restrictions in migration policy, according to Grigory Morozov*, a Russian demographer who focuses on post-Soviet international migration. “Companies experiencing a shortfall of workers will either have to cut production and, therefore, staff, or cease operating altogether,” Morozov continued, adding, “That will bring about a return to equilibrium, but with losses for the Russian economy.”

Russia’s shortage of migrant workers will only contribute to the already significant shortfall in healthcare professionals and increase hospital waiting times. In addition, pensioners may see a decrease in the value of their pensions in real terms, as legal migrants pay pension contributions, even though most won’t work in the country long enough to be eligible for a Russian pension themselves.

The consequences are already having an effect. The ban on migrants working as taxi drivers could leave Russia with a shortage of 130,000 drivers by the end of 2024, which, in turn, would cause the price of public transport to rise.

Vacancies for cleaners, couriers and food industry staff have increased by between 30% and 40%. “Quite aside from the sheer ignorance of their position, most xenophobes in Russia who want to see all migrants expelled from the country don’t realise that an absence of legal migrant labour will lead to an even faster rise in prices for all goods and services,” Sokolov said.

For the flow of migrant labour into Russia to remain at the current level, or even to grow a little, there are three prerequisites: high demand for labour, an increase in wages, and a ruble exchange rate favourable to foreigners, Sokolov continued. For now, the only one of these conditions to be unquestionably present is the first: employers continue to fall over themselves to find new employees, and while those employees are still being lured by ever higher wages, those will increasingly be undercut by inflation.

Indeed, Central Bank economists forecast that in 2025, wages will grow in real terms by just 3%, a long way short of the 7.3% growth expected on paper this year. This, coupled with a weakening ruble, combine to make Russia a far less attractive destination for migrant workers

Anti-migrant laws will make foreign workers, who are already disenfranchised, even more vulnerable. Now that the State Duma has allowed the police to deport migrants without resorting to the courts, there will be “even greater corruption and extortion at the Interior Ministry”, according to Sokolov.

Furthermore, banning people from doing certain jobs will make illegal immigrants of those who until recently had worked in Russia legally, forcing them to choose between going underground or returning to their countries of origin where there is no work, Sokolov concludes.

* Not their real name