How Hidden Unemployment Works in russia

It’s no longer a secret that russia’s official unemployment rate of 2.2% is a myth. The secret lies in the fact that an increasing number of russian companies are putting employees on reduced schedules, sending them on unpaid leave, or announcing production halts. Formally, these people remain “employed”, although in reality they are losing a significant portion of their income.

According to data from the central bank of the rf, about 14% of companies are considering staff reductions. “avtovaz” is already sending employees on corporate leave, hundreds of thousands of construction workers are working part-time, and “russian railways” (rzd) employees are forced to regularly take unpaid days off.

In 2025, the number of workers who were in forced part-time employment, on furloughs, or on unpaid leave reached 5.5 million. This is more than during the 2020 pandemic crisis. Of these, about 4 million were on leave without pay.

Economists point out that russia’s labor market traditionally conceals problems not through mass layoffs, but through a reduction in actual employment. It is more profitable for employers to formally keep employees on the payroll than to carry out official layoffs, which carry legal and reputational risks.

The situation in the industrial sector is especially dire. The number of workers transferred to part-time work at the employer’s initiative has increased eightfold over the past year. At the same time, the number of people on involuntary furloughs has reached record levels and continues to rise.

The official unemployment rate increasingly fails to reflect the true state of the economy. Thus, the kremlin’s grandiose claims of record-low unemployment increasingly resemble statistical manipulation. Formally, millions of russians remain employed, but in reality they work fewer hours, earn less, and find themselves in economically vulnerable situations with increasing frequency.