New Russian Mobilization Could Leave Low-Skill Workers Poorer, KSE Institute Says

KSE Institute has released a new paper, “Fewer Bodies or Cheaper Bodies? What a New Wave of Russian Mobilization Would Do to the Wages of Those Who Stay Behind.” Drawing on 16 months of Russian vacancy data, regional decrees, and casualty records, the study estimates how a new call-up could affect civilian wages. Mobilization would remove more men from civilian employment, but it would also allow the state to replace costly contract recruitment with compulsory service. The study finds that the loss of contract payments would likely outweigh the wage gains from greater labor scarcity. Russia’s military industry has cut hiring sharply. Over the past year, weapons and aviation manufacturers reduced advertised positions by 37%, other military industries by 14%, and drone makers by 13%, while civilian vacancies rose by 7%. At the same time, 94% of advertised military positions require neither experience nor qualifications, compared with 46% of civilian vacancies, meaning the army largely recruits from the same low-skill segment of the labor market.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official. Sign-on bonuses have become a major recruitment tool. The median payment rose from RUB 1.5 million to RUB 2.5 million over two years, while sign-on payments now total around RUB 1 trillion a year. Contract pay alone is about five times the civilian wage available to the workers the military targets; including the bonus, one year of service is worth a median of about nine years of local income. Other Topics of Interest ‘A Deliberate Tactic’: Zelensky Condemns Russian Drone Strike on Kyiv School According to Ukrainian authorities, the drone’s 50 kg (110 lbs) warhead pierced the school’s floor but did not explode. Removing men from the civilian workforce raises wages, but only modestly. The study estimates an additional 0.1–0.2 percentage points of real wage growth for every 100,000 men removed from civilian employment. Because mobilization would largely replace the roughly 400,000 men a year already recruited under contracts, a call-up of 500,000 would add only about 0.1–0.2 points to real wage growth, while one million would add 0.6–1.2 points. The resulting wage gain is estimated at RUB 20–200 billion, far below the roughly RUB 1 trillion in annual sign-on bonuses that mobilization could eliminate. The losses would fall most heavily on the men and regions that currently receive contract payments, especially where local wages are lowest. According to the study, wage gains from labor scarcity would only catch up with the withdrawn payments at a call-up of roughly 3.5–6.5 million men — well beyond the scenarios considered. The full study can be found here. KSE Institute is an analytical center at the Kyiv School of Economics. In 2005, KSE / EERC and the Stockholm Institute of Transition Economics (SITE) established the Kyiv Economics Institute (KEI) to provide scientific economic facts for economic policy-making and changing the policy-making process based on data and facts. Since the beginning of the full-scale invasion, KSE Institute analysts have focused on key wartime projects (LeaveRussia, participation in the Yermak-McFaul International Sanctions Group, Reconstruction projects), actively cooperating with the Ukrainian government in assessing damages, the effectiveness of sanctions against the aggressor and the development of scenarios for the recovery of Ukraine’s economy after the war.