During the first month of self-isolation, employers took advantage of unpaid leaves, a practice common since the 1990s to avoid mass layoffs. However, if the lockdown continues for more than a month, another wave of unemployment will hit Russia, according to Alexander Safronov, Doctor of Economic Sciences and Vice Rector of the Financial University under the Government of the Russian Federation.
The expert claims that right now employees are being placed on unpaid leaves. This practice was very common in the turbulent 1990s when 4 mio people were on unpaid leaves. The same practice was used during the recession in 2008 and 2009.
We are witnessing a similar situation today; however, in a month people who are now on unpaid leaves will start considering their future, the expert notes.
Alexander Safronov stressed that no personal reserves will be enough if the coronavirus lockdown continues for over a month. As a result, people will start quitting, bringing a second wave of unemployment, Rossiyskaya Gazeta reports.
The expert stressed that, suspended for a lengthy period of time, companies are accumulating debt. Therefore, it is often easier to shut down a company than fighting consequences of a crisis.
Safronov added that there are two possible scenarios for the unemployment growth in Russia. According to the optimistic scenario, the number of unemployed people will increase by 1.5 mio by the end of the year, reaching a total of 5 mio. If the pessimistic scenario proves true, the unemployment rate will reach 10.5% or 7 mio people.