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Russian Business Giants Cut Thousands of Jobs to Survive Mounting Financial Strain
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Growing economic difficulties are forcing Russian businesses to reduce personnel expenditures.
According to a July survey by the Russian Union of Industrialists and Entrepreneurs, 40% of companies intend to cut labor costs, a share that has nearly doubled over the past three months, as reported by The Moscow Times on August 4.
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Among these enterprises, 28.1% are considering workforce reductions, representing 11% of all surveyed businesses, or roughly one in ten large enterprises.
Furthermore, 20% of cost-cutting firms, equal to 8% of all participants, plan to lower salaries or reduce employee benefits. Staff reductions are already taking place across major state and private corporations.
Russian Railways plans to reduce its central administration by 15%, eliminating 6,000 positions this year. Software developer New Cloud Technologies has dismissed nearly 80% of its workforce. State development institution VEB is cutting 15% of its personnel, while its subsidiary publisher Prosveshcheniye is preparing similar steps.
Layoffs are also affecting regional construction firms, Magnitogorsk Iron and Steel Works, where 10% of managerial positions are being cut, and Severstal.
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Financial institutions are downsizing as well, with VTB cutting 10% of its headquarters workforce and Sberbank laying off almost 2,500 workers in the second quarter, bringing its headcount down to 2021 levels.
To adapt to declining demand, 17.5% of surveyed companies plan to place workers on unpaid leave or reduce working hours. Restricting new hiring remains the primary strategy for managing expenses. Prior to downsizing personnel or wages, enterprises typically eliminate auxiliary expenses, including training programs, corporate activities, and business trips.
An analysis by Alfa-Capital examined operational personnel expenses across eight major companies, including Russian Railways, Gazprom, X5 Group, Russian Post, Sberbank, VTB, Aeroflot, and Rostelecom. While their average operational personnel expenditures grew by more than 10% annually through late last year, growth slowed to just 3% year-on-year in the first quarter, indicating a real-term contraction in spending.
Evgeniya Dvorskaya, chief executive officer of recruitment firm Electus, described the downsizing trend as a broader economic issue: "This is related to processes not in any single industry, but to a general increase in the tax burden and a slowdown in the growth rate of business and the economy as a whole."
Official figures point to a sharp deceleration in economic performance. Gross domestic product grew by just 0.3% from January to May, according to the Ministry of Economic Development.
The business activity index compiled by the Russian Union of Industrialists and Entrepreneurs fell for the third consecutive month in July to 42.4 points, marking its lowest reading since July 2022. Businesses cite rising operating expenses and falling consumer demand.
Consequently, aggregate corporate profits for the first five months of the year decreased by 1% compared to the same period last year, translating to a 7% decline when adjusted for inflation.
Additionally, 26.9% of surveyed firms reported shortages in working capital, driving contractor non-payments back to the top spot among major business concerns, identified by 40% of participants.
Meanwhile, the Russian economy, previously resilient due to military-related demand, faced significant challenges as growth slowed sharply to 1% in 2025 and contracted by 0.2% in the first quarter of 2026.
Officials attributed this decline to high interest rates, Western sanctions, and a strong ruble, while persistent Ukrainian drone strikes against refineries and critical infrastructure further disrupted industrial capacity and threatened fuel stability.
As a result, many business leaders and analysts expressed skepticism regarding the government’s ability to stimulate recovery, noting that the traditional drivers of economic growth had effectively vanished.
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