Russia is facing a labor crisis that is reshaping its economy, workforce, and even its national priorities. As the country grapples with the fallout from the war in Ukraine, a shrinking population, and a persistent focus on inflation, policymakers and business leaders are sounding the alarm about the urgent need to attract skilled foreign workers and rethink the nation’s economic strategy.
According to the Russian Labor Ministry, 92% of the total quota for labor migrants in 2026 will be reserved for skilled workers, primarily for industrial enterprises and large-scale infrastructure projects. The remaining 8% will be allocated to unskilled workers—those employed in harsh conditions—as well as other roles like veterinary sanitary staff and animal care workers. The ministry emphasized that the quota size was determined based on requests from Russian companies themselves, underscoring the acute demand for labor across various sectors.
Despite these efforts, the reality on the ground paints a more complicated picture. In the first six months of 2025, Russian employers managed to fill only a quarter of the established quota for migrant workers. "This result continues a multi-year decline in interest in Russia from far-abroad countries," noted The Moscow Times. The Federal Security Service (FSB) reported that about 5.48 million migrants entered Russia for work in the first half of 2025, but the majority hailed from former Soviet republics in Central Asia, rather than the more distant countries Russia is now targeting.
In response to the labor shortfall, Russian companies are increasingly recruiting workers from Nepal, Vietnam, Bangladesh, and even Myanmar—one of the world’s poorest nations. The construction, retail, and service industries are at the forefront of this push, hoping that an influx of labor from these "far-abroad" countries will help resolve persistent staffing shortages. The number of Indian workers heading to Russia has surged by nearly 25% over the past year, following a quota increase to 71,800. For many of these migrants, the move is financially attractive: jobs in Russian construction and services pay, on average, about 60% more than similar roles in their home countries.
The roots of Russia’s labor shortage run deep. The war in Ukraine has had a profound impact on the country’s workforce. As The Moscow Times reported, "300,000 people were mobilized and sent to the front, another roughly 500,000 signed contracts with the Ministry of Defense to go fight, and between 600,000 and 1 million left the country." This mass mobilization and emigration have left a gaping hole in the labor market—one that foreign workers alone may not be able to fill.
German Gref, the influential CEO of Sberbank and a longtime ally of President Vladimir Putin, has emerged as a vocal advocate for a new approach. On October 23, 2025, Gref addressed Russia’s State Council on Demographic and Family Policy, warning that the country’s preoccupation with inflation is blinding policymakers to a far bigger problem: stalled economic growth. "We've been so focused on fighting inflation lately that we've somewhat forgotten about economic growth. Without economic growth, there will be nothing. We won't be able to solve social problems or anything else," Gref said, as reported by Business Insider.
Gref stressed that economic growth relies on two pillars: labor productivity and the number of people employed. Both, he warned, are under severe pressure in Russia today. "In principle, it is achievable if we begin actively using artificial intelligence, robotics, and all other new technologies, but this requires significant investment and a major commitment to education, science, and so on," he said. Yet, he acknowledged, "this will be difficult to achieve given the capital shortage and the high interest rates we have today." The central bank’s recent cut of its key interest rate by 50 basis points to 16.5% is seen as a modest step, but business leaders argue that borrowing costs remain too high to spur the needed investment.
Gref’s economic projections are sobering. He expects Russia’s GDP growth rate over the next two years to hover between 1% and 1.5%, with 2025 growth possibly slumping to just 0.8%. That’s a sharp drop from the 4.3% GDP expansion recorded in 2024. The implications are serious: earlier this month, a top Russian business leader warned that the country’s economy has slowed to a pace that could jeopardize its ability to cover rising defense, security, and social costs.
Russia’s demographic crisis is compounding these challenges. Labor Minister Anton Kotyakov has projected that the country could face a labor shortage of nearly 11 million workers by 2030. The war in Ukraine has only intensified the problem, with battlefield casualties and a mass exodus of young professionals depleting the working-age population. As a result, Russia has leaned heavily on foreign workers from Central Asia to fill labor gaps, but Gref cautions that this strategy is flawed. "We mostly attract very low-skilled labor, while we ourselves are losing highly qualified specialists," he said, urging the government to actively attract skilled professionals from abroad and offer incentives for foreign graduates to remain in Russia. "It is a matter of national security and the survival of the country," Gref declared.
The demographic squeeze is already distorting Russia’s economy in unexpected ways. Unemployment remains extremely low—around 2.1%—but this is largely due to a shrinking labor pool rather than robust job creation. Rapid wage growth, fueled by the scarcity of workers, is contributing to inflationary pressures. Employers, desperate to fill roles, are increasingly turning to retirees and even teenagers, a sign of just how tight the labor market has become amid wartime spending.
President Vladimir Putin has responded to the crisis by making population growth a national priority, calling it a matter of "ethnic survival." He has even urged Russian women to have as many as eight children. Yet, the numbers tell a grim story: in 2024, births in Russia fell to 1.22 million—the lowest since 1999—while deaths rose to 1.82 million, according to government data.
As Russia looks to the future, the path forward is fraught with uncertainty. The government’s efforts to attract skilled migrants from across Asia may help alleviate some of the immediate labor shortages, but deeper structural reforms—investment in technology, education, and a more welcoming environment for global talent—are likely needed to ensure long-term economic stability. For now, the country stands at a crossroads, its economic fate tied as much to the movement of people as to the movement of money.
