The generation of young, talented Russians who left the motherland in the wake of the 1998 crisis now have good reason to come home.
By Tremayne Elson, managing director of Antal International Russia.
If the financial results of major multinational recruitment firms and the number of vacant internal recruiter jobs are anything to go by, global employment markets are humming with activity. The good times are here and — fingers crossed — things are going to stay that way for the foreseeable future. The Russian employment market, as usual, has been the trailblazer, even though the rest of Europe is finally catching up. We’re nowhere near to market peak, with even the most pessimistic observers saying we’re looking at another two to three years of growth in demand for human capital. Despite even the current global market wobbles in inter-bank lending rates and the resulting liquidity crunch, Russia marches ahead steadfastly. The rapid growth of Russian domestic companies and the influx of Western investors have put pressure on the domestic candidate pool that has quickly resulted in major headaches for employers in Russia.
We have a situation where the demand, particularly for experienced managers — let’s say with two to five years’ post qualification experience — is increasing at a much faster rate than supply can ever meet. The resultant increase in market pressure has caused one major change in the market in the past 18 months: the top 25 percent of mid-level managers active in the employment market used to be happy to be made one job offer. Now it’s common for them to get two or three. The result is that the candidate plays off one offer against the other. A bidding war entails, often involving the existing employer as well. The result? Salaries go up, packages are enriched with extra benefits and the market is distorted, with newcomers earning the same or even more than existing employees in identical or similar jobs.
This puts HR directors in an untenable position. Staff naturally discuss details of their salary and benefits package with colleagues and friends in other companies. If newcomers are paid more then existing staff start putting pressure on management for pay rises, yet without paying a premium it is impossible to attract them in the first place. Experience shows that Russian companies have not reached the level of sophistication (some might say inflexibility) in pay grades and structure as some of the multinationals. They tend to be more comfortable with paying whatever it takes to secure and retain the best talent. It’s still an unfortunate feature of the market that, despite the low level of income tax, a surprising number of Russian businesses, and, even more surprisingly, certain Western businesses don’t declare full salaries for tax purposes. But these dinosaurs left over from the crazy 1990s are losing out, because the most intelligent employees with the highest potential want to take out bank loans or are simply feeling increasingly uncomfortable with defrauding the state.
Given this state of affairs, repatriates, or repats as they’re more usually known— Russian nationals who emigrated some time ago, and who are now returning in larger numbers than ever before — are being very proactively sought out by headhunters. Faced with an increasingly competitive fight for local talent, recruitment firms who have global reach through large office networks are now increasingly being asked to search internationally for Russian nationals. Repats have the added value of international experience, widely perceived as adding weight to any CV, and can integrate much faster into the Russian work place. That said, many people who stayed put in the Motherland and weathered the storms of the 1990s consider that repats sold out when they left and that the international experience they gained is really not all it’s cracked up to be. The bottom line is that actually not all repats are able to fit straight back in and be accepted by co-workers.
The core group of repats, who are also the ones most keenly recruited, consists of those who have been out of Russia for between two and eight years; that is to say, the cut-off point is the financial crisis of 1998. Many astute Russians used the immediate post-crisis period and their severance packages — if they were made redundant by companies generous enough to pay them anything — to invest in their education. But right now it’s sheer madness to leave the employment market as the stakes are simply too high when it comes to the opportunities on offer. The biggest demand naturally comes from employers seeking the skills that are most lacking in Russia, generally commercial or sales disciplines, or else in rapidly growing areas of the market — retail, investment banking, and other financial services. There is also a great demand for technical professionals with any kind of oil, gas or mining experience, although Russian specialists already established in this field are themselves being lured in the opposite direction.
Tanya Tikhonova, head of recruitment at Troika Dialog, says that she “will always search locally for talent, but where there is a lack of talent locally the next best option is a repat. Repats represent a very attractive option for us and they generally integrate smoothly back into the Russian professional work environment.” Through its international offices, particularly New York and London, Troika is actively scouring international markets for global best talent to fuel their growth, particularly in capital markets and corporate finance.
Not only is the demand for repat employees high, it makes perfect sense at the moment to relocate back to Russia in any case. Careers are being forged right now, people are having responsibility thrust on them, are being promoted at a pace they can only just keep up with, and if this isn’t happening, then they don’t have to look far for a new job in order to jump up a level in responsibility and salary. That, at any rate, is the perception, but perception can be a very distorted thing, and in reality this only applies to the very best, the top 10 per-cent of the white collar workforce. Everybody knows somebody who has doubled his or her salary, but probably at an early stage in a career, or else compared to a previous salary that was fairly modest. Spring-boarding a salary from $300 per month to $600 is still possible for someone who is underpaid yet very good, but jumping from $1,000 to $2,000 is unlikely. Nonetheless, it’s perceived as possible, because everybody knows at least somebody who’s done it, and these urban myths then get exaggerated every time they get passed on.
One major reason why repats are open to the idea of moving back to Russia is that, despite the fact that Moscow has made the headlines for being one of the most expensive cities in the world, it’s actually not. For the vast majority of Muscovites who shop at Auchan, eat 180-ruble ($7) set-menu lunches and grow vegetables at their dacha, the idea that it’s impossible to live more cheaply in Moscow than in London or Tokyo is simply preposterous. Compare living costs in Moscow with London, for example. Salaries over Ј33,000 (approx $5,500 per month) are taxed at 40 percent. You can’t afford to live in central London unless you are an exiled oligarch or married to one, so every day you have to commute at least 30 minutes by train, metro or bus, or a combination of all three, and that works out at Ј120 ($240) each month. Don’t even consider driving into central London — with the congestion charge of $16 and parking costs of over $40 per day, this is only an option for the super rich or plain stupid. Even in the suburbs your accommodation will still cost you Ј1000 (around $2000) per month for very modest shared accommodation, and on top of that you’ll have to pay council tax of between Ј150 to Ј220 per month, depending on the part of London where you live and how much the property is worth. So from your $5,500 monthly gross salary you’ve got less than $700 left to spend on food and entertainment. Forget saving — there’s always too much month left at the end of the money.
Not only does your money go further in Moscow, even with a lower salary than overseas — there are simply more jobs here and far fewer qualified candidates. It’s easier to get a good job and one where more responsibility is placed on you. In Britain and other Western European countries you, the potential repat, will be up against local nationals, so unless the job requires Russia-specific skills you will probably find it quite difficult to compete. As for the interval between promotions, 18 months appears to be the norm. In Western European countries it can take you five to ten times longer to achieve the same level of responsibility and seniority as in Moscow. In Moscow it would be realistic to expect to reach the post of finance director within six years of joining a company, and if you haven’t achieved this, or don’t at least have some sort of managerial title on your business card, then you’re lagging behind. Contrast this with Britain, where you’ll be lucky to make assistant finance manager in that time.
No wonder then that Russia is attracting so many repats. But how many people are we talking about? Does this really represent a major exodus back to Russia? Our experience is that for every 100 mid-level management positions we will attract two or three candidates currently working overseas. Around 10 percent of every 100 CVs submitted to us are from candidates based overseas, but many of them do not meet what we would class as the target profile. Emigres who left before the Soviet Union collapsed in 1991 are now so far removed from current-day Russia as to offer very little to modern day employers. In fact, even in the early and mid 1990s, when employers would consider hiring anybody willing to work who had even only average qualifications, many of the repats found the transition too difficult and would upset the cultural balance by constantly referring to how things were done in the West.
Employers may very well consider paying more — significantly more in certain sectors — for a repat than for a locally-based candidate, but only provided that person brings value added skills to the table. A Russian national working for an investment bank in New York or London with knowledge of a financial product new to the Russian market could command a significant premium and may be in a position to get his or her potential employer to bid an astronomical remuneration package. A would-be repat whose experience lacks an international remit involving Russia is not going to be as attractive as a native candidate with local experience.
The chances of being able to conduct a successful job search in Moscow from a distance are not great, so any repat contemplating the move should factor in at least one or two trips back, and should also prepare the ground in advance with phone calls and internet research. Recruitment firms can help immensely in this process as they generally have a good overview of the market and can help to assess potential salary levels. But choose carefully — make sure your recruitment partner is international and has offices locally.
If you’re a potential repat working overseas, then it’s fair to say that your market worth is greater in Russia than it is on the market where you’re currently based. Like any career move, there are plenty of other factors to be weighed up, but from a purely commercial and career point of view it has a lot to offer.
Tags: Russia