Russian Consumer - Unemployment and Income: The Outlook for 2022

In its modern history, Russia has not suffered any major spikes in joblessness. Its unemployment rate has ranged from between 4.8% and 8.3% since 2005 (versus 3.6-9.9% in the US for the same period). However, considering the sectors currently affected and companies scaling down operations in Russia, we see 1.1 mln out of the total 71 mln jobs at risk. But because this comes amid a labor shortage, which emerged in late 2021, companies are aiming to hold on to personnel, while the government is announcing extra social support measures. In a conservative scenario, the unemployment rate could go up from 4.3% in December 2021 (the lowest ratio since 2000) to 5.7% this year. We see more risks to wage growth and assume +7% at large companies and no wage growth at small ones and in the grey economy. As a result, this would mean an increase in the total wage pool of just 2.4% (in our conservative scenario). Support, however, will come from social payments (an extra R585 bln announced to date), which will lift total household incomes by 5.5% in ruble terms in 2022, although this is below the inflation forecast of 20-25% from our economics team.