Multinational companies continue to pay more than 200,000 Russian-based workers despite promises to suspend or cease operations in the country, raising fears of mass layoffs or nationalization as hopes fade for a speedy end to the war in Ukraine.
A number of Western companies from McDonald’s to Renault have pledged to pay wages to thousands of workers when they Stopped operations In the country last month. An analysis by the Financial Times shows that at least 206,000 employees continue to be paid.
The real number is expected to be much higher, as large employers including the owners of KFC Yum Brands and Coca-Cola have not confirmed whether they are still paying staff.
The analysis comes when Moscow Mayor Sergei Sobyanin warned on Monday that among workers in foreign-owned companies in the Russian capital “about 200,000 workers are at risk of losing their jobs,” saying authorities Approved support plan Worth Rbs3.36bn ($ 41.4mn) for those at risk.
While white-collar employers like Boston Consulting Group, Linklaters and McKinsey are moving workers to positions in different states, blue-collar workers in the manufacturing, retail and consumer sectors risk the burden of job losses if companies do not see a near chance of reopening.
Chip Berg, CEO of Levi Strauss, said that this month the jeans brand is still there Pays to 800 employees plus in Russia. But he added “the way things are going now, I’m not optimistic that we will return to full activity in the near future.”
Companies that have suspended operations are still required to pay employees under Russian law, according to Peter Finding, an attorney at FisherBroyles.
Options included paying employees as usual, paying a six-month salary combined with layoffs and severance packages, or referring employees to business areas that are not affected by the suspensions, he said.
Employers may also agree to keep employees on reduced wages while operations are disabled, he added, adding that employees will have little bargaining power in this scenario.
IKEA Undertook to pay its Russian staff for three months until the end of May, one month above the two-month severance pay required by Russian law.
One employee said staff members occasionally went into her abandoned stores to update the paperwork, but they feared unemployment in the coming months. The company declined to say whether it would lay off employees.
According to a A survey from BCGMost investors believe it will take two to five years for Western companies to return to Russia.
Finding, who has experience advising multinational companies with Russian operations, said employers are likely to lay off inactive workers instead of continuing to pay salaries for years. “It would be very nice but not particularly commercial,” he said.
Continued payment to employees at a minimum wage of about 12,500 Rbs ($ 156) per month is a relatively small expense for large companies.
McDonald’s, which reported global revenue of $ 23 billion last year and continues to pay 62,000 workers in Russia, said its total wage and lease costs in the country total $ 50 million a month.
However, many Western companies are struggling to transfer money to an economy hit by sanctions and are unable to generate income while operations are down. They may have to pay staff for reserves from their Russian businesses that may run out soon, according to Finding.
“There seems to be quite a lot of insolvencies and liquidations in Russia,” he said. “In theory, when a Russian employer goes through liquidation, they are obligated to pay employees before that happens. If there is no money there, they can not.”
The Russian government is already making efforts to avoid mass unemployment, launching a Rbs40bn package that Prime Minister Mikhail Mishustin said would support some 400,000 workers.
Some executives have Expressed concern That Moscow can also seize assets of Western companies in Russia or allow the theft of their intellectual property.
“The Russian government has passed these laws saying they can nationalize a business if a company goes out,” Lewis Berg said. “They can literally take our trademark.”
Josh Graben, a U.S. trademark attorney Found That “trademark invaders” have already applied to use logos similar to those of McDonald’s, Coca-Cola and other Western brands.
Companies including British American Tobacco have chosen to transfer business to Russian partners. It could preserve jobs after they leave, Finding said.
However, staff in these circumstances face uncertainty about how they will be handled by new employers. One multinational employee said it was an “open question” how they would receive a salary. “The Russian brand group even pays its staff in envelopes,” they said, referring to a common practice used to avoid taxes.
When the layoffs will begin may depend on public pressure from Western consumers. Laura Marie Eddinger-Schones, chair of sustainable business at the University of Mannheim, Germany’s leading business school, predicted that businesses could face pressure to lay off Russian staff as the war continues and evidence of Russian atrocities grows.
“after the Boca“Sentiment is really changing and changing,” she said. “There is a collective understanding that it’s not just Putin. “There are a lot of Russian citizens who, if they do not actively support them, accept it.”
However, despite the power of Western public opinion, “large sections of businesses think there will be some return,” said a reorganization expert with experience working in former Soviet countries, noting that consumer businesses tended to suspend operations instead of leaving Russia altogether. .
There is also uncertainty about the impact that job losses within Russia could have on pre-war political opinion.
“We want as much pressure on Russia as possible,” Eddinger-Shuns said. “Even dismissals of people who are not guilty of war can create pressure.”
However, the reorganization expert said that job losses are more likely to harden sentiment within Russia against the West.
“Sooner or later we will see tens of thousands of people who used to work in large unemployed Western factories,” they said. “It will serve as a political tool by the Russian government to say, ‘Look at these Western businesses that we should not have trusted.'”
This article has been revised since initial publication to include additional Western employers
More than 200,000 workers in Russia still on western payrolls Source link More than 200,000 workers in Russia still on western payrolls