How Russia’s Labor Crisis Is Compromising the Economy

Russia’s Labor Crisis and the Forces Driving It Into Uncharted Territory

Russia is facing one of the most severe labor shortages in its modern history — a crisis born of decades-long demographic decline, compounded by the war in Ukraine, mass emigration, and a dwindling flow of migrant workers. Economists warn that this “perfect storm” of challenges will not only persist but worsen over the next decade, reshaping the country’s economy and society in ways that could be catastrophic. What’s driving this labor crisis, and what does it mean for Russia’s future? Let’s take a closer look.

At the heart of Russia’s labor shortage lies a demographic collapse that has been decades in the making. The generations entering the workforce today were born during the 1990s and early 2000s, a period marked by economic turmoil following the fall of the Soviet Union. During this time, birth rates plummeted, halving between 1987 and 1999. These “missing generations” are now being felt across the labor market, with fewer young people available to replace retirees.

The numbers are stark: from 2012 to 2032, the number of workers aged 20–40 is expected to shrink by one-third, or around 13 million people. At the same time, the population aged 60 and above — retirees and pre-retirees — will double. This imbalance is putting…