Russia’s war fuels a wage spiral that threatens army recruitment

Russia’s war in Ukraine is intensifying an acute deficit of workers that’s hitting businesses from metal refineries to posh Moscow restaurants and igniting a race to increase salaries that threatens the Kremlin’s ability to replenish the armed forces.

The competition for employees has pushed wages up at a double-digit pace and made once-relatively lucrative military service less appealing, even after a 10.5% increase in monthly pay to fight in the war last year. Specialists such as engineers, mechanics, machine operators, welders, drivers and couriers can now find jobs with salaries comparable to or greater than in roles with the army after compensation for such work rose by 8%-20% last year, according to data from local recruitment service Superjob seen by Bloomberg.

For a period after Russian President Vladimir Putin ordered a mobilization in 2022 for the war, companies lost employees to the army and defense plants, which offered much higher wages than even the most generous civilian factories. Then, private sector salaries began to rise in response, and many companies regained their competitiveness.