Massive brain drain of runaway workers roils Russia’s economy: NPR

Alexandra Prokopenko grew up in Moscow. She was always fascinated by economics: money, business, and the way economies work.

A few years ago, I got my dream job as a consultant at the Central Bank of Russia in Moscow.

Prokopenko loved Moscow. The city was vibrant and beautiful – full of restaurants, music and culture. But by far her favorite place was Meshchersky Park, a giant city forest, where Prokopenko would go jogging.

“It was my favorite place,” she recalls. “I always felt really great there.”

But Prokopenko’s Meshchersky works are a thing of the past. She left Moscow, as well as her job at the Central Bank, shortly after the Russian invasion of Ukraine.

Prokopenko now works for the German Council on Foreign Relations. Its focus remains on the Russian economy – it publishes new analysis and data every week.

She says she’s glad to be there, but she’s not home.

“I miss Moscow very much,” she says. “I miss Moscow every day.”

Prokopenko is part of a huge wave of young Russians who have fled their country. Although hard numbers are hard to come by, Estimated hundreds of thousands To leave Russia since its invasion of Ukraine.

This contributed to the reduction of the labor force in Russia.

According to one estimate, More than 1.3 million Russians are under the age of 35 The Russian workforce left only last year, although that number could include other factors such as workers taking jobs not officially included in the statistics.

Particularly among those who have fled the country are educated workers with in-demand skills such as engineering or computer programming. This massive loss of talent appears to be one of the biggest economic consequences of Russia’s invasion of Ukraine.

“I don’t think the Russian authorities will admit it, but we saw a massive brain drain,” says Prokopenko.

A comprehensive demographic crisis

Even before the invasion, Russia was experiencing a labor shortage: businesses and factories complained that they could not find the workers they needed.

“It’s now a full-blown demographic crisis,” says Oleg Itskiewicz, an economist at the University of California, Los Angeles.

This is a big problem for the Russian economy, says Itskoky: Without workers, many businesses and businesses have to downsize or even close entirely.

But labor shortage is not the only problem facing the Russian economy.

In 2022, the Russian economy has maintained its strength despite harsh sanctions, earning the nickname “Fortress of Russia.” Much of this economic difficulty came from oil prices. The invasion of Ukraine caused a global panic that sent oil prices skyrocketing.

Russia has been able to sell its oil to China and India, among others. Many of the sanctions imposed on selling oil and natural gas to Europe did not kick in until the end of last year.

2023: The year of tough choices

But 2023 is very different for the Russian economy. European sanctions have kicked in, so oil revenues have plummeted and now the war is costing Russia hundreds of millions of dollars a day.

“2023 is the year of difficult choices for Russia,” says Itshoki.

Right now, he says, Russia needs the money, which means President Vladimir Putin will either have to raise taxes (most likely on businesses) or force people to buy war bonds — or both.

This could erode support for the war, which Putin desperately needs.

“It is clear that the Kremlin cares about what is not particularly popular with the population,” Itsky says. “They’re trying to navigate unpopular places.”

Russia Castle started to feel the heat.

Russian Industrialization: Back to the Future

2023 is also starting to reveal some cracks about production and manufacturing in Russia.

The lion’s share of resources and technology is directed to weapons. At the same time, the sanctions mean that Russia cannot import goods from many countries, and manufacturers often cannot obtain products or parts.

“For example, airbag technology is not available in Russia,” Itssky says. “And so cars assembled in Russia are without airbags.”

or anti-lock brakes.

Many trains, planes, and other high-tech goods made in Russia use decades-old technology.

Russia can still import a lot from places like China, but that takes business away from Russian companies and also risks creating greater economic dependence on China, which Putin doesn’t want.

The problem of the people of Russia

Yet Itskhoki and Prokopenko contend that the biggest problem facing the Russian economy is not products or sanctions: it is people.

A generation of skilled workers who are now fighting on the front or who have fled the country.

Skilled workers like Prokopenko herself, who says she still dreams of long walks in the woods of Meshchersky Park but isn’t convinced it will happen anytime soon.

“I would love to go back, but I don’t feel like it would be safe for me,” she says. “People in Russia can become prisoners for nothing.”

Prokopenko says she is in contact with many of her fellow Russians who have left, most of them young skilled workers like herself. The consensus, she says, is that as long as Putin runs the country, there is no turning back.

And this is a big problem for Russia not only now but also going forward.

After all, while sanctions and restrictions on manufacturing could affect the Russian economy for years to come, the loss of a generation of its best and brightest could hurt the country’s economy for generations.