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. Last Updated: 07/27/2016

Laid-Off Workers Flood Search Firms

Corporate managers in Russia are laying off workers en masse as the financial shock of a 60 percent ruble devaluation hits home.

Stacks of resumes flood recruitment and executive search firms, where the number of job candidates has by one account doubled each week since the Aug. 17 decision by former Prime Minister Sergei Kiriyenko to cease supporting the ruble against the dollar.

The majority of layoffs are occurring in the financial services sector -- banks and securities houses -- and among administrative staff in large corporations.

"In general, people are looking for positions in their field of specialty," says Irina Lazutkina, recruitment manager for Kelly Services CIS. "But if the crisis continues for another month, then people will be ready to take whatever's available."

Although some large manufacturers and consumer products companies say they have yet to resort to layoffs, those who follow the labor market say many firms have brought operations to a standstill as they wait for the battered ruble to find its footing.

"Many domestic and foreign companies are freezing their activities in Russia, sending their workers on unpaid vacation," said Vladimir Shpilberg, a consultant for Exclusive Triza, who said his agency gets about 200 resumes a day.

Smaller trade-oriented firms likewise are cutting back, and advertising firms reportedly have been hit hard as companies scale back their budgets for print and television ads.

Russian companies are the hardest hit, Shpilberg said, describing the current labor market as "very complicated."

Russian banks have borne the brunt of the sudden financial collapse, with reports of massive layoffs filtering out of the country's top financial institutions.

Bank Menatep has said it will lay off 30 percent of its staff -- about 1,000 employees -- partly in preparation for merging with MOST-Bank and Uneximbank. Bank Imperial, which had its license revoked last week and which is closely associated with Gazprom and LUKoil, is set to lay off 2,000 employees.

Several banks, such as Vneshtorgbank and MOST, are in the process of deciding what their policy will be, and employee cutbacks are certain to follow.

Sergei Yegorov, president of the Association of Russian Banks, said during a recent news conference that the nation's financial sector likely will see 20 percent of its 750,000 jobs cut. That translates into 150,000 unemployed cashiers, managers and back-office specialists throughout Russia.

By contrast, a spokesman for Russia's state-owned savings bank Sberbank -- considered by some to be the financial system's most stable port in the storm -- said the bank was working "as usual" and that no mass layoffs are expected.

Many investment banks also are giving employees their walking papers, with a 30 percent staff reduction at MFK Renaissance, a 40 percent reduction at Brunswick Warburg amounting to 80 employees -- cut before the ruble devaluation hit Aug.17 -- and a 20 percent cut by mid-sized brokerage Aton.

"Layoffs are absolutely unavoidable," says Modest Kolerov, head of public relations at MFK Renaissance. "The present staffs of all investment companies were created under completely different conditions -- conditions which will not return for some time."

Other investment bankers disagree, with CS First Boston and Troika Dialog reporting that they haven't fired anyone.

Nicholas Gordon-Smith, managing director of CS First Boston, said that immediately cutting a business that took years and hundreds of thousands of dollars to build is the wrong strategy.

"Although the situation is very bleak," he said, "to respond to a short-term event before you can see into the future doesn't show much foresight."

Other financial services industries, such as auditing and accounting, have weathered the storm better, and officials of the Big Five accounting firms say they are adopting a "wait-and-see" approach to staff reductions. Only Price Waterhouse and Coopers & Lybrand are seeing significant layoffs, and this due to their merger, not financial instability.

And there is even some hiring taking place. Accountants and administration support are still in demand, said Andrei Krasnopyas, director of operations at Perry Lane Personnel. "The situation isn't as bad in these two areas," he said, "since companies can't do without accountants and someone to answer the phone."