Labor market and salaries in Russia, 2014

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Labor market and salaries in Russia, 2014

  1. 1. Labor Market and Salaries in Russia 20.5.2014 Samuli Pesu Partner Awara Group
  2. 2. Awara Group LEGAL ACCOUNTING RECRUITMENT & TRAINING MARKET RESEARCH 200 specialists 6 offices 3 countries Practical solutions for business needs Guidance for risk management Best customer service & communication 2
  3. 3. LABOR MARKET IN MILLION CITIES IN RUSSIA
  4. 4. 12 Million Cities (census 2010). 74% Urban Population Source: RIA Novosti and GKS
  5. 5. Million Cities in Russia (census 2010) 11.5 4.9 1.5 1.4 1.3 1.2 1.2 1.1 1.1 1.1 1.1 1 Source: GKS
  6. 6. Labor Force in Russia (total 75.4 million) in Q4 / 2013 7 2.8 3.8 0.7 1.4 2.3 1.8 1.7 1.3 2.1 1.9 2.1 2 1.4 Source: GKS
  7. 7. Unemployment Rate (%) in Russia in 4Q / 2013 5.6 2 2 2.8 4.7 5.7 6.1 4.4 2.7 7.4 4.2 6 4.4 6.1 7.6 Source: Rosstat
  8. 8. Salary Index in Russia (Russia average 100) in Q2 / 2013 70% 75% 72% 84% 86% 82% 78% 78% 94% 85% 100% 121% 125% 197% 100% 0% 50% 100% 150% 200% 250% Volgograd oblast Republic of Bashkortostan Rostov oblast Chelyabinsk oblast Republic of Tatarstan Omsk oblast Samara oblast Nizhny Novgorod oblast Sverdlovsk oblast Novosibirsk oblast Leningrad oblast Moscow oblast St. Petersburg Moscow Russia Source: Mojazarplata.ru, analysis by Awara
  9. 9. Increase of Wage to Previous Year vs. Inflation 2000 - 2013 20.9 19.9 16.2 10.9 10.6 12.6 13.3 17.2 11.5 -3.5 5.2 2.8 8.4 17.9 21.0 21.6 15.8 13.7 10.9 12.7 9.7 9.0 14.1 11.7 6.9 8.5 5.1 6.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Increase of Average Monthly Wage to Previous Year (%) Inflation (%) Source: Rosstat and Деловая жизнь
  10. 10. Minimum Wage (1.1.2014)  Russia = RUB 5 554 (EUR 111)  St. Petersburg = RUB 8868 (EUR 177)  Moscow = RUB 12 600 (EUR 252)  Real salaries much higher 10
  11. 11. Employer's Insurance Contributions  The insurance contributions are paid in full at a rate of 30% for an annual income (from the same employer) of up to RUR 624,000 (EUR 12460), after which limit the income is subject to a rate of 10% without any further limitations.  Under the general rule the 30% insurance contributions are divided as follows: – 22% is contributed to the Pension Fund (10% tail exceeding the limit goes here as well); – 2.9% is contributed to the Social Insurance Fund; – 5.1% is contributed to the Compulsory Medical Insurance Federal Fund Source: Awara Russian Tax Guide 11
  12. 12. Insurance Contributions  In addition, the rates for mandatory work-related accident and health insurance range from 0.2% to 8.5% of the total salary.  Foreign nationals that have received a work permit under the privileged status of a so-called highly qualified specialist are exempt from insurance contributions (except mandatory work-related accident and health insurance). Source: Awara Russian Tax Guide 12
  13. 13. Employer’s Cost  For an office employee in Moscow to receive 5000 EUR net salary, the employer must pay the following: – 5000 / 0.87 (13% income tax) = 5747 EUR gross monthly salary. Annual gross salary 5747 EUR x 12 = 68964 EUR – Annual Insurance contributions (30% on 12460 EUR + 10% on 56504 EUR over the limit) = 9388 EUR . – Mandatory work-related accident and health insurance (0.2% on annual gross salary 68964 EUR) = 138 EUR  Total sum: 78490 EUR / year  Monthly: 6541 EUR 13
  14. 14.  Two types of work permits available: – Highly qualified work permit • Rather easy process, takes about 1 month • Valid for 3 years • Personal income tax of 13% applies in Russia upon receipt of such work permit – Normal work permit • Longer process, takes about 3-4 months • Valid for 1 year • Necessary to obtain quota (not for top positions) • Personal income tax of 30% applies until foreign nationals have stayed in Russia for 183 days over a 12-month period. Source: FMS, Awara Publications 14 Foreign Employees Work Permits
  15. 15. SALARY SURVEY – AVERAGE BASIC SALARY LEVEL (EUR) AFTER TAXES 2013-2014
  16. 16. 16 Sales Director Average Salary 3800 2100 2300 2100 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  17. 17. 17 Sales Representative Average Salary 1500 1000 700 1200 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  18. 18. 18 Chief Accountant Average Salary 2100 1400 1200 1200 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  19. 19. 19 Lawyer Average Salary 2100 1600 1000 800 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  20. 20. 20 IT Manager Average Salary 2800 2100 1900 1700 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  21. 21. SALARY SURVEY – BASIC SALARY LEVEL (EUR) AFTER TAXES 2013-2014 FOR *TOP EARNERS
  22. 22. 22 Sales Director Top Earners 9400 7300 5200 3100 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  23. 23. 23 Sales Representative Top Earners 3100 2500 1500 1900 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  24. 24. 24 Chief Accountant Top Earners 4200 3200 2500 1700 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  25. 25. 25 Lawyer Top Earners 7300 4200 2500 1200 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  26. 26. 26 IT Manager Top Earners 5200 4200 5200 2600 MOSCOW ST. PETERSBURG YEKATERINBURG SOCHI
  27. 27. 27 E-Commerce & Online Marketing Salary Survey in Moscow 4300 3000 2200 3000 7000 3900 3000 4800 E-Commerce Director Head of Internet Projects Social Media Marketing Manager Digital Marketing Manager Lower Range Average Higher Range Average
  28. 28. Benefits / Managers & Specialist 72% 59% 35% 32% 24% 13% 8% 8% 4% 7% 13%
  29. 29. Recruitment Time at Awara  Middle management and specialists: 2 – 4 weeks  Top management and board members: 3 – 6 weeks  The above mentioned time periods are general recruitment times for different level of positions. Actual time of delivery depends on individual requirements and client’s commitment to providing necessary feedback and information.
  30. 30. Questions or Comments?
  31. 31. Thank You! Samuli Pesu Partner, Head of Sales and Marketing Awara Group E-mail: samuli.pesu@awaragroup.com Mobile: +7 926 710 43 61 Office: +7 495 225 3038 www.awaragroup.com

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