The race for candidates in the labor market is close to completion
Business is running out of resources for the “salary race” — the massive luring of qualified personnel by companies for higher salaries. According to estimates by a number of analysts, in September wage growth has already slowed to 7.2% (previously during the year it was estimated at double digits), and the peak of salary increases has completely passed. Does this mean that the “golden days” for the labor market are behind us and employers will stop increasing employee benefits in 2024?
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According to a major Russian job search portal, 8 out of 10 employers increased employee salaries in 2023. Over the year to December 1, salaries increased the most in the IT sector (8.1%), construction (6.9%), marketing and advertising (6.6%), personnel officers (6.5%) and banks (6.2%).
The most interesting thing about the statistics is that the increase in wages in construction has almost caught up with the IT industry. The transportation, manufacturing, and mining industries compete with each other for skilled workers and laborers. Salaries of even line personnel in these sectors are growing quite noticeably, although not for everyone, but only for the most in-demand specialties.
For example, today they are looking for CNC machine operators with a salary of 100 thousand rubles on average, and the maximum level of their monthly income (with high qualifications and the necessary experience) is up to 180 thousand rubles. Over the year, the increase in salary for these specialists was 18%.
A lathe-borer can count on an average salary of 100 thousand rubles. And the maximum level of earnings (with the appropriate rank and experience) reaches 160 thousand rubles and also increased by 18% over the year.
Today, companies offer an average of 85 thousand rubles per month to an equipment adjuster, and the most experienced specialists can count on 150 thousand rubles. Over the year, their salaries increased by 13%.
A plumber receives an average of 70 thousand rubles a month, but the most experienced and competent specialists in this position can receive up to 160 thousand. Over the year, their salaries have increased by 17%. This is noticeably higher than the predicted inflation, which is expected to be 7.5% by the end of 2023.
But the year is already coming to an end. But whether this “ball of applicants” will continue in 2024 is a difficult question. Experts do not have a consensus on this matter. As noted by the professor of the Department of State and Municipal Finance of the Russian Economic University. Plekhanova Yulia Finogenova, in 2023, due to the resulting shortage of personnel, there was indeed a sharp increase in wages in a number of industries, and this applies to both highly qualified specialists and blue-collar occupations that require certain qualifications and skills.
However, from 2024, wage growth will slow down for two reasons: firstly, there will be a gradual increase in the number of specialists due to the development of retraining and mentoring programs. Secondly, an increase in wages without simultaneous technological growth and growth in labor productivity leads to increased inflation, the fight against which is one of the most important goals of the government.
“Producers of goods and services are forced to start saving, including on personnel costs,” Alexander Safonov, a professor at the Financial University under the Government of the Russian Federation, continues the topic. “Inflation and the high cost of loans are having an impact.”
True, this does not mean that next year wages will stop growing throughout the market. In sectors where the economy will allow this, for example, in export-oriented or in the housing and public utilities sector, IT industry, indexation is planned at 9.8%. In addition, the state has planned an increase in salaries for public sector employees and military personnel. However, the main indexation will take place from October 2024.
For other workers, wage indexation will depend on the economic situation in the industries. In other words, in some places salaries will not be raised at all, and in a number of areas wage growth will continue, but at a lower rate within the limits of inflation.
In addition to the professional one, there is also a regional aspect of the situation with the “salary race” among employers. There is an opinion that residents of the capital region will not feel any changes next year, but in the provinces the situation is different. “Perhaps over time in central Russia the “race” will slow down a little, but I think the demand for high salaries will remain in Moscow, as well as in remote regions, for certain specialties, for example, for those who work on a rotational basis,” says the founder HR-Tech by Happy Inc. Alexey Klochkov. “In situations where it is impossible to offer comfortable working conditions, companies will continue to rely on high salaries.”
In addition, the vector of attracting personnel is already shifting from material motivation to non-material motivation. This is the same money, but not in the direct sense. In 2024, the bonus system will expand: subscriptions to sports clubs, medical insurance, consultations with psychologists and lawyers, benefits for children of employees, interest-free installments, training at the expense of the company, preferential mortgages…
Wage growth has a short-term effect, but Regular care for employees encourages them to do more, which is what HR departments of organizations will try to do in the future, the expert believes.
However, there are alternative data. “According to our research, most employers increased wages in 2022 and 2023 and plan to do so in 2024. Basically, the increase is up to 10%, says Elena Artemyeva, Director of Data Science Analytics and Research at the Rabota.ru service. — Only less than 5% of companies, according to our surveys, plan to reduce the wage fund next year, mainly due to bonuses and a revision of incentive systems. But we cannot single out any specific areas here, since this is rather an exception to the rule.”
It is too early to talk about a slowdown in wage growth, since the values of their growth to a large extent depend on the base, on which they are considered. The expert has not yet observed any significant slowdown in the growth of salaries in vacancies during 2023, so that we can talk about a stable trend. There is still a shortage of personnel in many areas on the market, and in such conditions, employers have very little room for maneuver and manipulation with salaries, since there are alternatives, the analyst noted.