Russian Industrial Firms Implement Furloughs and Staff Cuts Amid Economic Strain

Industrial Sector Faces Workforce Reductions

Major industrial companies across the Russian Federation are implementing workforce reductions, including furloughs and staff cuts, as the economy grapples with the ongoing conflict in Ukraine and the impact of international sanctions. This trend is observed across various key sectors, reflecting a broader economic slowdown, stagnating domestic demand, and a decline in exports.

According to reports, at least six major companies in the mining, transport, and transport engineering sectors have shortened workweeks to manage labor costs without resorting to mass layoffs. Ukraine's Foreign Intelligence Service indicates that one in ten Russian companies plans staff reductions this fall due to factors such as falling demand, rising taxes, and increased loan rates.

Key Industries and Companies Affected

Several prominent Russian industrial giants have been directly impacted:

• Cement Industry: Cemros Holding, Russia's largest cement producer with 13,000 employees across 18 factories, has switched to a four-day workweek until the end of the year. This measure is described by a company spokesman as a 'necessary anti-crisis measure' aimed at retaining all staff amidst a sharp decline in the construction industry and increased cement imports.
• Automotive Sector: AvtoVAZ, the country's largest automaker, also adopted a four-day workweek. Other significant players like the Gorky Automobile Plant (GAZ) and truckmaker Kamaz have similarly reduced working hours, though GAZ later returned to a five-day schedule.
• Mining Sector: The coal industry has faced significant challenges, with approximately 19,000 workers laid off in the Kuzbass region in the first half of 2025. Additionally, Alrosa, the world's largest diamond producer, has cut pay for non-production employees by 10% and suspended operations at less profitable sites.
• Energy Sector: State-run energy giant Gazprom is reportedly planning to dismiss 1,600 central office employees. This decision comes as the company faces substantial financial losses and a shrinking market presence in Europe, with exports to Europe dropping by over 80% since 2021.
• Other Industries: Sveza, a leading wood and paper producer, closed a plywood mill in Tyumen, resulting in over 300 job losses. The tank and railcar manufacturer Uralvagonzavod has moved part of its civilian staff to a four-day workweek due to weakening demand.

Economic Headwinds and Government Response

The widespread workforce adjustments reflect broader economic challenges. The Center for Macroeconomic Analysis and Short-Term Forecasting projects a significant slowdown in Russia's GDP growth to between 0.7% and 1.0% in 2025. This follows a contraction of 1.4% in 2022, though the economy saw growth in 2023 and 2024. Factors contributing to the current strain include high interest rates, a strong ruble, and weak demand both domestically and internationally.

Despite these challenges, official statistics have sometimes reported a 'labor shortage,' indicating a complex and evolving labor market with high turnover. Russian President Vladimir Putin has publicly stated that authorities are deliberately slowing the economy to curb inflation, which stands at 6.8%.

Outlook

The ongoing adjustments in the Russian industrial sector highlight the economic pressures faced by the country. Companies are seeking to reduce labor costs and adapt to changing market conditions, with measures ranging from shortened workweeks to outright layoffs. The long-term impact of these trends on the Russian labor market and overall economic stability remains a subject of close observation.