Will the Russian economy be able to survive the next month of “non-working days”? Will the ordinary Russians’ salaries and the overall financial situation remain stable if one takes into account, for instance, the current exchange-rate volatility?
There are more and more reports on the media scene that are indicative of the federal government’s plans to extend the self-isolation regulations introduced earlier to curtail the novel coronavirus infection for another month. Many officials are also talking about the fact that the Russians are likely to have to stay at home at least until June.
Apparently, this decision has been already made. Even in Ukraine where the situation with the spread of COVID-19 is somewhat milder, the quarantine has been extended through to May 11. As a result, many Russians have concerns not only about their own financial stability, but also about the Russian economy in general. Will it be able to survive the next month of “non-working days”? Will the salaries and the ordinary Russians’ overall financial situation remain the same regarding, for example, the current volatility of the exchange rate?
Ekaterina Kosareva, the executive partner of the WMT Consult analytical agency, shed the light on this matter in an interview with wek.ru.
“So far, they have been talking about a possible extension until May 11,” says Kosareva. “Chances are it will be extended until May 15 or even for the whole May. For example, the regional authorities of the Republic of Bashkortostan (Bashkiria,) have used the right of independent decision and have already extended self-isolation to June 1.
People are going through this time differently. Someone has not lost money and can afford idling for some time. Others are working away from the office with pay or are in a downtime with 2/3 of their salary. Still others went on a paid or unpaid vacation or quickly retrained with the loss in wages. Today, it is no surprise that a manager of a restaurant is roofing over countryside houses.
According to a recent survey by rabota.ru, 70% of respondents are going to change their jobs in the short term. There has been a surge in layoffs across the country under various pretexts. In general, people’s well-being has been shaken, and many had to unseal their savings if they had any. It is difficult to talk about real financial losses and illustrate them with figures – there is no secret that many people still receive a salary or monthly bonuses off-the-books.”
According to Kosareva, as the Russian small and medium-sized businesses are the ones who have taken the heat, at the moment, their state is of the biggest concern. After all, mainly, big business continues functioning, with the exception of production which depends on components or raw materials that are imported.
“The state of micro, small and medium-sized businesses gives a cause for concern,” says Kosareva. “At the end of March, after the announcement about “non-working” days in April, the Chamber of Commerce and Industry warned of possible bankruptcies of more than 3 mln entrepreneurs and job loss by 8.5 mln people. This prediction is likely to deteriorate as self-isolation is prolonged.
There are several scenarios for these organizations -- to urgently change the business processes over to operating online, to use more aggressive marketing policy in order to seize the market during the crisis, to wait for the help from the government or “to freeze” business. Any of these strategies may be right for a particular enterprise but there is no universal solution.”