The St. Petersburg Times
Issue #1420 (84), Tuesday, October 28, 2008

As the ruble fluctuates, stock markets slump and investment banks are sold off for a song, assessments of and forecasts for the financial situation vary. Sales of jewelry soared in October as Russians hurried to invest their money rather than leave it in banks, while television beamed politicians urging people to stay calm and offering reassurances that Russia’s economy is perfectly well equipped to weather the financial storm.

Despite optimistic official statements, redundancies have already been announced, with LEK construction company confirming 485 redundancies —10 percent of its staff — earlier this month, and local TV station Channel 5 announcing it would lay off 15 percent of its staff from Nov. 1. As the fall-out from the global financial crisis becomes increasingly apparent and widespread, the recruitment sector will also inevitably feel its effects, though opinions and forecasts vary as to the scale and nature of the consequences.

“The current financial crisis, and the general recession that will undoubtedly follow, is already having an effect on the search industry and the work of recruiters,” said Yury Mikhailov, managing partner at Consort Petersburg recruitment company.

The effect on some candidates in the financial sector has been disastrous.

“In September, we had a couple of candidates turned down by an investment bank when one was to start in three days’ time at his new place of work with our client (having left his previous tenure), and the second one was told he would not be getting any job offers due to the folding business,” said Mikhailov.

“Although so far no Richter-scale quakes have been felt on the recruitment market, the rumblings of a future storm can be heard in some distant examples from several companies in the construction, real-estate, finance and banking sectors, with up to 20 percent of staff being made redundant,” he said.

“We can see several, so far minor changes in the work of recruiting companies as a result of the crisis,” said Elena Kolmakova, business development manager at AVANTA Personnel. “Business in our industry is currently characterized by slowing growth in some sectors. It’s no secret that the first companies to freeze their projects are those working in the banking and construction industries and developers.”

Kolmakova said that AVANTA was operating as usual.

“We are continuing to work actively, we’re still receiving new orders on a daily basis to fill vacancies in a whole range of diverse sectors, including engineers, IT specialists, accountants, administrative personnel, lawyers, financial directors and managers, and manufacturing staff of various levels,” she said, adding that the company had not seen a decrease in the volume of CVs being submitted by job hunters.

While some employers are making cuts in their personnel, others are seizing the moment to restructure their organizations.

“There’s a growing tendency on the part of forward-thinking employers to try and snap up some of the professionals who have become available on the market,” said Mikhailov. “Some companies now perceive this moment as an opportunity to do an HR audit to review staff levels, revise some positions, enhance people’s responsibilities and motivation, and call on headhunters to provide them with a number one candidate to replace some of their low-performing employees in an effort to increase productivity and sales and maybe trim down some costs,” he said.

“The current situation may turn out to be advantageous for both employers and candidates,” agreed Kolmakova. “Employers can use the opportunity to reduce inflated staff and attempt to get rid of ‘unnecessary’ employees; others may choose to retain their current staff, since they understand that it will cost them significantly more to hire new employees in six months’ time,” she said.

Employees should not be overwhelmed by “artificially-created panic,” Kolmakova advised, but should take a time-out to assess the situation. “If you are really unsure about your position and company, you can always compile a CV and send it to the major recruitment agencies,” she said.

Mikhailov said he was amazed at how quickly — in just two months — the situation on the labor market had turned around 180 degrees.

“Whereas before, everyone was talking about a deficit in nearly every industry and professional segment, now some of the most sophisticated minds have come up with a new term — a ‘profitcit’ of manpower,” he said.

Kolmakova also noted the sudden turnaround, and suggested that headlines warning about mass redundancies were premature. “Just six to eight weeks ago, the printed press was talking about a famine in the personnel pool, about a universal deficit in workers and specialists in all spheres and highly-qualified managers,” she said.

Mikhailov predicted that the recent trend of companies actively hunting for candidates would gradually reverse to a normal situation in which applicants will need to put in more effort to search for jobs in order to find the best one.

“This will in turn affect salaries, whose unchecked growth will become minimal. I believe that the recruitment market might suffer accordingly, and probably shrink by at least 20 percent in the short term, when companies will look to cost-cutting measures and probably reduce their dealing with outsourced service providers and do most of their personnel selection themselves,” he said.

Mikhailov predicted that the smaller recruitment firms would suffer the most, and might be forced out of the industry.

Kolmakova said she expected some kind of balance would be achieved on the labor market between what employers could offer and what candidates expect — an equilibrium between supply and demand.