Economic Figures
2007 was the ninth continual good year for the Russian economy. This puts the goal of President Putin to achieve duplication of the GDP by 2010 compared to 2004 within reach. The Russian economy is growing on many levels. The growth rate through consumer spending is especially strong. The building industry contributes massively to the growth with over 20%, while the producing economy achieved improved results compared to the previous year, but still did not reach the desired value. Important economic sectors are the oil and gas industry, the heavy industry, as well as the basic material industry. |
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Opportunities for Investors
The year 2007 brought a strong increase of foreign investments in Russia. Foreign direct investments amounting to about 55 bn. USD (4.5% of the GDP) were recorded in 2007, a duplication from last year. A large percentage of the foreign direct investments continues to go into the oil and gas sector.
In any case, the increase of foreign investments in 2006 as well as in 2007 shows, that the trust of the foreign investors continues to grow. Economic researchers estimate that the real economic growth in Russia will come to be over 6% during the next years. There are no stumbling blocks for the Russian economy in sight.
2007 continued to show a constant stream of new Austrian investors to Russia, in the area of production, as well as in sales. Main focal point was the building material sector, followed by wood processing. The presence of the Austrian finance sector in the Russian Federation continues to be strong. Of course, the investments mainly go into Russian regions, whose importance also become increasingly visible in 2007.
The good prognosis for the Russian economy is also a good prognosis for Austrian exports. The Russian market, which can be defined as »rich in chances, but difficult«, offers good opportunities. Many Austrian companies are already realizing them.
Education, Personnel and Labor Market
As already during the last years, the inflation target of the government, which was set at ambitious 8%, was missed again in 2007. There was acceleration towards year's end to about 12% and also in 2008 this high inflation continues.
The massive increase of the nominal and real salaries continued in 2007, and there were actually 15% higher, nominally about 25% higher salaries until the end of November compared to 2006. After the actual salaries had already increased by 13.4% in 2006, the Russian companies are increasingly feeling the massive increase in personnel costs, which is especially visible in the larger cities like Moscow and St. Petersburg.
The unemployment rate for Russia is currently at 6.1% according to ILO-Standard, but it is spread very differently regionally. While there is a massive labor force deficit already now in the larger cities, the unemployment rate in some rural areas continues to be relatively high. From 142 mio. inhabitants, about 74 mio. are at an age able to work. 67.2 mio. of them are employed workers. 48.2% are active in the industry sector, and 51.8% are active in the service sector.
The average wage level is at 330 EUR with an increase rate compared to the previous year amounting to approx. 25%. Still, approx. 22 mio. people are living underneath the minimum wage. The salaries have developed very different branch-specifically and regionally. The highest wages are paid in export-oriented raw material companies, in »oligarchic« holdings, in production-companies for mass goods, and in telecommunication companies. The lowest are found in agriculture, education, and health care. The differences between national and international companies are increasingly disappearing. Moscow and St. Petersburg are 100 to 150% higher than all other regions.
53% of the population are women with a higher level of education; they own 40% of the smaller companies. Only 10% of the top manager positions are filled with women, who earn up to 37% less than men.
The employer's contribution to the legal social insurance, the so-called »social tax«, amounts to 26% of the annual income subject to income tax of the employee with regressive tax rate, decreasing to 2% for annual salaries over RUR 600.000. This means that income parts over currently yearly approx. € 16.600 are only burdened with payroll taxes of 2%. The income tax of employees (withheld by employer or self-declared) is set at 13% flat tax on the entire income (= »world income«), but at 30% for foreigners subject to »limited« tax in Russia (the so-called »183 day-rule« is to be considered here). Regulations for »general« and »individual« timely (meaning prior to employment) procurement of employment authorizations for foreigners need to be strictly adhered to, as also the regulation for limited taxability, timely tax declarations, and tax deduction. It is recommended to employ professional help in advance.
The labor market in Moscow is a special world. Of the 10.4 mio. inhabitants, 6.3 mio. have work, 38% possess higher education at an unemployment rate of only 0.5%(!) 2,500 representatives of foreign companies and more than 7,500 companies with foreign capital contribute to the business life of this city, in which approx. 215,000 job advertisements are posted every week.
The current educational system is based on an 11-year school system and 5-6 year duration for achievement of a university diploma. The tendency to a harmonisation between the Russian and the European educational system is clearly visible: approx. 4,000 students absolve MBA-Programs per year.
Competent On-site Personnel Consulting
HILL International Russia is present on the Russian market since 1989, and was the first international HR-consulting company in the former USSR.
From 1992 first large recruiting campaigns for example for 3M, Coca Cola, Mars, Robert Bosch, SCA, Schneider Electric and Unilever were conducted successfully. Long-term cooperation is the basis for our connection to Germany companies like OSRAM, VEKA, Wacker Chemie, just to name a few.
The focus of our effort lies on the value-oriented search and selection of positions of the top and medium level management as well as on best-qualified specialists. |
Natalia Kulikova, Director of the branch |
Our customers profit from extensive knowledge and the experience of the highly-qualified multi-lingual team of psychologists and consultants with versatile experience in the areas General Management, Marketing and Sales, Finance, Accounting, Process Controlling and Production.
Since 2002 we also accompany our customers in the area of Personnel Development with Management Audits, Leadership Development Programmes, Assessment Centres and Coaching.
HILL International Russia is assisted in its work by the experience and know-how of the HILL Network. Over 30 years of personnel and management consultancy, scientific methodology, and an extensive network in Europe and Central Asia enables HILL to provide successful consultancy in the areas of personnel and management.
For inquiries and requests please contact:
HILL International Russia GmbH
Natalia Kulikova
Director of the branch
World Trade Center, Entrance 6, Office No. 1117
Krasnopresnenskaya nab., 12
RU-123610 Moscow
Phone +7495 258 13-69
Fax +7495 258 13-70
E-mail hill@hill-moscow.ru
www.hill-moscow.ru
