Russia's Labor Market: The Specificities of its Adaptation to the Current Crisis

Abstract

As in all of Russia’s earlier economic crises, wage flexibility has become the main mechanism of the labor market’s adaptation to the current crisis. As a result of the high rate of inflation observed in late 2014 – early 2015, real wages dropped by 9.5%, although nominal wages remained unchanged. The considerable reduction in labor costs made it possible for employers to abstain from cutting jobs, due to which the rise in the unemployment rate was utterly insignificant.1