Russia’s war economy has hit its labor floor, and the country’s central bank chief has now publicly admitted it.
“We have never, until now, in the history of modern Russia, lived with such a deficit of labor force.”
The labor reserve has fallen by 2.5 million workers since the start of the full-scale invasion of Ukraine, audit firm FinExpertiza found in figures published this week. Bank of Russia chair Elvira Nabiullina confirmed the scale at the Alfa Summit on 28 April. “We have never, until now, in the history of modern Russia, lived with such a deficit of labor force,” she told the audience. “Never had this. And it affects the entire economic situation.”
Nabiullina has been the Kremlin’s most disciplined economic voice. She warned analysts in 2024 that labor was “almost exhausted.” Now she has named the ceiling. Vladimir Putin has avoided a second general mobilization since autumn 2022.
Wage-driven inflation persists and new tax hikes promise to slow the economy further.
Russia’s main tank manufacturer, Uralvagonzavod, began mass layoffs in November 2025, citing both sanctions and worker exhaustion. AvtoVAZ, the country’s largest carmaker, shifted to four-day weeks already in September 2025; Russian Railways announced 6,000 job cuts for 2026; Russian factories themselves cut their workforces for three consecutive months going into 2026, with production falling for a twelfth straight month, even as the same firms reported they could not find enough hands.
The Bank of Russia, which set its key rate at a record 21% in late 2024, cut it by five points through 2025—even as wage-driven inflation persists and new tax hikes promise to slow the economy further.
Where 2.5 million workers went
Russia’s labor reserve—the people without formal employment but ready, in principle, to take a job—has fallen from 7 million at the end of 2021 to about 4 million at the end of 2025, Russian outlet Izvestia reported, drawing on FinExpertiza analysis of Rosstat and federal employment service data.
The workforce will shrink by another 1.4 million in 2026.
That is a drop of nearly half. The reserve as a share of those employed has slid from 10% to 6%. In 2025 alone, 415,000 more workers vanished from the available pool. Rosstat now forecasts the workforce will shrink by another 1.4 million in 2026.
“Available labor resources are becoming fewer and fewer,” FinExpertiza president Elena Trubnikova said. Anastasia Gorelkina, who chairs the Sibirsky Delovoy Soyuz holding’s board, told Izvestia that some 2 million workers will need to be replaced annually through 2030 to keep pace with people leaving the workforce. The economy, she said, “literally took the available resources” through “defense orders, industrial restructuring, and logistics.”
Hundreds of thousands of Russians emigrated in the first years of the invasion.
The World Bank estimates Russia would need productivity growth of 3-4% a year to make up the gap—a rate the country has not hit since the Soviet collapse.
The army accounts for the largest share of the loss, The Moscow Times also reported, drawing on the same FinExpertiza data. Hundreds of thousands of Russians emigrated in the first years of the invasion. 1.5 million more were absorbed by the front: 300,000 in the autumn 2022 mobilization, then 500,000 contracts with the Defense Ministry in 2023, 450,000 in 2024, 420,000 in 2025.
The Center for Strategic and International Studies estimates 325,000 of those men have been killed. Total casualties—killed, missing, severely wounded—reach 1.2 million, a record for any army in any war since 1945.
Russia’s birth rates have been below replacement since the 1990s.
The civilian economy is bleeding from the same wound. The Russian Union of Industrialists and Entrepreneurs estimates the industry alone is now short two million workers. Moscow mayor Sergey Sobyanin has admitted to a 400,000-to-500,000-worker gap in the capital.
The Interior Ministry is short 170,000. Agriculture is short 130,000. Russia’s birth rates have been below replacement since the 1990s; the small generations born in that decade are now of working age, and there are not enough of them to replace those leaving the workforce.
The labor pool that historically backfilled the gap—Central Asian migrant workers from Tajikistan, Uzbekistan, and Kyrgyzstan—has thinned in turn since the March 2024 Crocus City Hall attack, after which Moscow accelerated deportations and passed laws stripping citizenship from naturalized Russians who refuse to register for military service.
Russia wants up to 20,000 foreign recruits in 2026, using coercion and deportation threats to bring people to the frontlines – Ukrainian intelligence
Inside a provincial job fair
In Pskov, a 200,000-resident oblast capital in Russia’s far west, 2,083 people walked into the regional job fair on 17 April. Pskov Oblast as a whole has barely 600,000 inhabitants. The published list of employers reads as the Russian war economy compressed onto a single floor, the local outlet PLN reported.
Pskov-Polymer (Nordman shoes). Pskov Electric Machine-Building Plant. AVAR (electrotechnical equipment). The cable factory Sevkabel. Grand Exclusive (wet wipes). The regional clinical hospital. The center for social payments.
Just 232 people walked out with a job, filling less than 5% of the openings.
Then: the FSB Border Guard Service. The National Guard’s Pskov military unit. Military Unit 55443-PS. The MChS, Russia’s Ministry of Emergency Situations. The branch of the SVO Veterans’ Foundation—SVO standing for “Special Military Operation,” the Kremlin’s official term for its war on Ukraine. The Defense Ministry’s contract recruitment point. One door. The same applicant pool.
Some 4,600 vacancies were on offer that day. Just 232 people walked out with a job, filling less than 5% of the openings. The rest of the 2,083 attendees dropped off CVs and went home.
Most of the vacancies on offer were like that—heavy manual labor, long hours, factory floors.
Mariia Yemelianova, manager at the Pskov Bread Factory, was franker than most about why. The plant needs people who can pull 12-hour shifts and regular night shifts on the line. “If you have no production experience, it will be hard,” she told PLN. “Not everyone can pull night shifts. Not everyone can stand at the line for 12 hours.”
Most of the vacancies on offer were like that—heavy manual labor, long hours, factory floors. The pool of people willing or able to take such work has thinned, along with the overall reserve. The cable factory Sevkabel, which employs 650, starts new hires at 50,000 rubles ($666) a month. Lunch in the company canteen costs 180 rubles ($2.40).
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The geography of pay
Where the labor pool runs thinnest, wages move fastest. In Russia’s Far East, the recruitment platform Avito Rabota analyzed Q1 construction salaries: electricians in Primorsky Krai now earn an average of 123,571 rubles ($1,647) a month, up 54% year on year. Defectoscopy specialists earn 113,667 rubles ($1,515), up 42%. Auxiliary workers—the people who sweep construction sites and shift materials—pull 110,118 rubles ($1,468), up 69% in twelve months.
Demand for welders is up 74%.
Russia-wide construction wages average 127,097 rubles ($1,694), up 18%. Demand for welders is up 74%. Most positions are rotational shifts—laborers trucked or flown to distant sites for weeks at a time, lodged in dormitories, paid to fill the hours.
Pskov lies more than 7,500 kilometers west of Vladivostok. An unskilled construction laborer in the Far East now earns more than twice what a trained Pskov cable technician earns starting out.
What the state believes it has to offer
The Russian state believes it has a response. In Krasnodar Krai—southern Russia, between the Black and Azov Seas—the regional Innovation Development Foundation hosted PRO.TEKH on 24 April. The regional fund has financed more than 700 projects totaling over 1.1 billion rubles ($15 million) since 2021, Kuban News reported.
The future, the event promised, will be automated.
The pitch: artificial intelligence, robotics, computer vision, drones. An eye-disease screening platform claiming 90% accuracy. Smart glasses for the blind built by a Novorossiysk schoolboy. Vineyard pest cameras. The future, the event promised, will be automated.
A few hundred kilometers away in the Novokubansky district, the same regional apparatus is running a parallel push for self-employment. Self-employed numbers in the district grew 31.6% in 2024 and another 24.9% in 2025, Kuban News also reported.
Ruslan Nazaryan bought a small resort in 2020 with one cabin; he now runs three and is building a swimming pool with an island for the 2026 season. Oksana and Kirill Oreshkin bought their first 3D printer in August 2023 and now run a workshop in Prochnookopskaya with eight printers and contracts with charities, federal retailers, and schools.
The number of registered Russian businesses fell to 3.17 million by September 2025.
The picture sold from regional press rooms—innovation funds and smiling entrepreneurs—does not match the data. The state cut support to small and medium enterprises by a third in 2025.
On 1 January 2026, VAT rose from 20% to 22%, and the exemption threshold for the smallest firms began stepping down, forcing 450,000 corner shops and single-owner workshops into the tax system. The number of registered Russian businesses fell to 3.17 million by September 2025, the lowest level since 2010. More closed than opened in the first half of the year.
In Pskov, the city’s oldest pizzeria, Moya Italiya, shut its dining room on 1 January 2026, calling the new tax regime “the straw that broke the camel’s back.” It now operates delivery-only from what local reporting called “a deeply hidden underground kitchen.”
Of Russia’s 16 million registered self-employed, many combine the status with a primary job.
Behind the Krasnodar self-employment growth lies a fact noted by Izvestia: of Russia’s 16 million registered self-employed, many combine the status with a primary job, and a growing share are workers reclassified by employers seeking to avoid social charges as taxes rise.
The state’s public answer to the labor crisis—automate, formalize the gig economy, celebrate microbusiness—is being administered by the same state squeezing the breath out of the small businesses it claims to celebrate.
The retraining
The labor shortage is not only an economic problem. In Pskov, regional human rights ombudsman Dmitry Shakhov reported in late April that 83% of citizen appeals to his office in 2025 dealt with the SVO. Not appeals about wages. Not appeals about housing. Appeals about who had been drafted, who had not come back, and what was owed.
The same regional employment center that hosted the April fair runs a parallel program: free retraining, courtesy of the federal “Personnel” national project, for the unemployed, the disabled, mothers on maternity leave, those over 50, pre-pensioners, “and participants of the special military operation and their families.”
The ministry’s “unconditional priority” is supporting veterans and their families.
If the participant did not return, his family qualifies. Pskov regional Labor Minister Alyona Trunova told a meeting of an SVO veterans’ club at the same April fair that the ministry’s “unconditional priority” is supporting veterans and their families through “individual paths: from professional diagnostics to retraining and accompaniment at the workplace.”
Natalya Bolgova, who teaches at the Pskov business school, explained the design plainly to PLN. “Unfortunately, in our times, there are cases when SVO participants die in the war, and we also help their relatives study.”
