Guide to living and working in Russia

Russia

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Country Overview

 

Population

143.2m

Unemployment Rate

5.8% (03/08)

Average annual unemployment rate 1995 – 2004

8.6%

GDP

€1,338bn / $2,087bn

GDP per head

€5,810 / $9,059

Capital

Moscow

Major language

Russian

Life Expectancy (UN)

59 years (men)

73 years (women)

Monetary unit

1 rouble = 100 kopecks

Internet domain

.ru

International dialing code

+7

 

Russia ended 2007 with its ninth year of continuous growth. Since the 1998 financial crisis it has averaged 7% annually. High oil prices and a relatively cheap Rouble initially drove this growth. Since 2003, consumer demand and, more recently, investment have played a significant role. Over the last six years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. During this time, poverty steadily declined and the middle class expanded. Russia massively improved its international financial position since the 1998 financial crisis. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of about 3% of GDP.

In 2007, Russia's GDP grew 7.6%, led by non-tradable services and goods for the domestic market (not oil and mineral extraction). Inflation strengthened in the second half of 2007, approaching 12% by the end of the year. Despite Russia's recent successes, there are some persistent and serious structural problems. Oil, natural gas, metals and timber account for more than 80% of exports and a massive 30% of government revenues. The country is very vulnerable to swings in world commodity prices. Russia's manufacturing base is weak and needs to be modernized if the country is to achieve broad-based economic growth.

 

The Economy

 

 

Industries include: a complete range of mining and extractive industries producing coal, oil, gas, chemicals, and metals; all forms of machine building from rolling mills to high-performance aircraft and space vehicles; defence industries including radar, missile production, and advanced electronic components, shipbuilding; road and rail transportation equipment; communications equipment; agricultural machinery, tractors, and construction equipment; electric power generating and transmitting equipment; medical and scientific instruments; consumer durables, textiles, foodstuffs, and handicrafts.

 

Pay


 

Human development Index

 

Ranking:  67th
Index value:  0.802

The Human Development Index combines statistics on GDP, adult literacy, average years of schooling and life expectancy to provide an indicator of human development. The HDI shown here gives the ranking of 24 countries among 177. See http://hdr.undp.org/en/ for more information.

 

Getting a job

Overview of the labour market:

The Russian economy has boomed over the last few years and its growth currently shows no signs of slowing. Although there is still demand for specialists in the oil and gas industry, it is increasingly outweighed by vacancies in the construction, real estate, IT, telecommunications, banking, finance, automobile and retail sectors. Out of that group, the leaders are retail, finance, banking and IT.

In terms of salary levels, Moscow leads the tables. But other regions are catching up fast, some making particularly impressive progress. Two of Russia's major port cities, St. Petersburg and Vladivostok, are the closest to Moscow in terms of pay. Average pay in St. Petersburg jumped from 75% in 2006 to 90% of the Moscow average this year, while Vladivostok went from 55% to 73%. The nationwide average is 60% of Moscow levels. Among regional cities, pay is lowest in Yaroslavl and Voronezh at 44% and 40% of Moscow levels respectively.

Recently city policy in major centres, such as Moscow and St. Petersburg, is to move heavy industry out of the centre. This has caused a boom for the construction industry in setting up new factories and has created fresh opportunities in outlying areas for industrial specialists. Many foreign companies are expanding into Russia and setting up production facilities for the first time. One sector of the economy that is on the rise is the automobile industry. Major automobile companies such as Nissan, Chevrolet, Volvo, Renault, Peugeot and Citroen, are all developing their manufacturing capacity. 

More and more Russian IT companies are creating their own centres, attracting local and foreign programmers. As these technology companies continue to grow, they require more employees to meet demand. Most in demand are candidates with a  combination of IT, business skills and a good command of English. Companies are increasingly creating graduate recruitment programmes to ease the transition of students from the academic to the professional world, while gaining their loyalty.

Conditions and rights

Employment law:

Every employee must work under an employment contract that includes responsibilities, salary, leave, working hours and dispute resolution. Russian law contains provisions against discrimination on the basis of gender, religious belief and age. Written reasons must be given for a refusal to hire a woman with a child under three years old or a single mother with child under 14 years old. Russian law provides for a minimum wage, which is revised regularly to take account of inflation. Russian legal entities, including enterprises with foreign investment, may not compensate employees who are Russian citizens in a currency other than Roubles.

Working hours:

Standard hours: The regular working week may not be greater than 40 hours. Any additional hours are considered overtime.

Retirement age: 55 for women and 60 for men.

Maternity leave: A woman with an employment contract is entitled to paid maternity leave from seventy days prior to giving birth and seventy days after. Maternity leave benefits are based on the minimum wage rather than on a woman's current wage. Russia also provides a maternity grant, which is a onetime payment totalling three times the minimum wage or 45% of the minimum wage in the case of mothers who have worked less than one year. In order to receive a maternity allowance (or sickness benefits), a woman must have an employment contract. The maternity allowance amounts to 100% of the mother's salary, regardless of her length of employment.
Maternity allowances in Russia are followed by a monthly child allowance of 80% of the minimum wage for children up to eighteen months old. This allowance may be supplemented by a child-care allowance, set at 35% of the minimum wage, to compensate for earnings lost in the course of caring for children in this age bracket. The latter allowance is paid to mothers over the age of eighteen who have been in the labour force at least one year. An additional compensatory child-care allowance, equivalent to 35% of the minimum wage, is available to mothers of children under the age of three.

Russia Public holidays: 1st January, 2nd January, 7th January, 23rd February, 1st May, 9th May, 12th June, 7th November, 25th and 26th December.

 

Contracts

Employment contracts: employment contracts are legally regulated, as are - to a lesser extent - collective agreements and individually negotiated deals. The terms of employment contracts, the conditions for hiring and the limits for dismissal are not flexible.

 

Visas and work permits

Visas:

  • All visitors to Russia need a visa.
  • Visas may be obtained from Russian diplomatic delegations outside Russia (usually the nearest Russian consulate).
  • In most cases a passport must be valid for at least 3 months after the date on which it is proposed to leave Russia.
  • Residents of the CIS do not need a visa.
  • All visas must be registered within 72 hours of the date of arrival at the hotel or at the Russian agency for the registration of visas (UVIR).
  • Tourist visas allow stays of up to 30 days.

Work and Resident’s permits:

  • Foreign residents who are interested in working in Russia must obtain a work permit.
  • A work permit is issued, subject to an investigation to ensure that the case concerns a skilled worker with no criminal record.
  • The employer in Russia must obtain the work permit before the employee arrives in Russia.

Some employees are exempt from having to obtain a work permit. These include journalists, lecturers in institutes of higher education and employees of foreign companies who are brought to Russia to install new equipment that has been supplied by foreign companies.

 

Tax, social security and healthcare

Taxation system:

The Russian tax system was comprehensively reformed in 2001. This reform was meant to ease the tax burden on individuals and companies, in addition  to simplifying national insurance payments. Russia has a single flat rate of personal income tax (in 2008 this is 13%, for non residents 30%). Russian residents pay 9% on dividend income. Exemptions are granted to certain income earners. The standard rate of Russian corporate tax in 2008 was 24%.

An individual is liable for tax on his income as an employee and on income as a self-employed person. Tax is payable on income earned in Russia and overseas by an individual who meets the test of a "permanent resident" of Russia. A foreign resident who is employed in Russia pays tax only on income earned in Russia. To be considered a Russian resident, residence must be established for at least 183 days in Russia during any calendar tax year.

An employer must deduct, each month, the amount of tax and national insurance due from a salaried worker. A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. In the case of a new business, the advance payments will be calculated on the basis of the business owner's estimate. The advance payments will be made at least 3 times in each year.
Social security system:

Old age, disability, and survivors: This type of programme covers employed citizens, self-employed persons and independent farmers. Special systems exist for civil servants, military personnel, police officers, war veterans and other specified groups. The system is funded by self-employed persons and independent farmers who contribute 150 roubles a month and employers who contribute 20% of the payroll. Agricultural enterprises contribute 10.3% of the payroll.

If each employee's annual earnings are less than 280,000 roubles, the total contribution is 26% of payroll. If each employee's annual earnings are greater than 280,000 roubles up to 600,000 roubles, the contribution is equal to 72,800 roubles plus 10% of annual earnings exceeding 280,000 roubles; if each employee's annual earnings exceed 600,000 roubles, the contribution is equal to 104,800 roubles plus 2% of annual earnings exceeding 600,000 roubles.

The employer's contributions also finance sickness and maternity benefits, medical benefits and family allowances. Employers may finance supplementary benefits out of their own budgets.

Unemployment: This benefit covers men aged 16-59 and women aged 16-54. The scheme is financed from federal and local government budgets, but republic and local governments may finance supplementary benefits for unemployed persons and their dependents out of their own budgets.

Benefits are calculated as a percentage of previous average wages and are paid for up to 12 months. The benefits decrease over time: 75% of the previous average monthly wage is paid for the first 3 months; 60% for the next 4 months; and 45% for the last 5 months. For a second 12-month period, the monthly benefit is equal to 30% of the local minimum subsistence level. The minimum monthly benefit is 720 roubles and the maximum monthly benefit is 2,880 roubles. For unemployed persons who do not meet the prior work conditions or for persons who have never worked, the benefit is 30% of the regional minimum subsistence level for the first 6 months and 20% of the regional minimum subsistence level for the next 6 months, but not less than 100 roubles per month.

Family allowances: cover children younger than 16 and up to the age of 18 if a full-time student. Child allowances are payable to families with income below the locally determined minimum subsistence level. The child must reside in the household and single parents receive twice the child allowance.

Child care leave allowance is payable to employees, students engaged in vocational courses and military personnel. 700 roubles is paid per month until the child reaches 18 months; or 7 years if the child is ill and receiving outpatient treatment; or 15 years if receiving inpatient treatment. A parent caring for a sick child receives 60% to 100% of wages for the first 7 days of illness; thereafter, 30% of wages (50% for single mothers) until the child's full recovery.

Health system:

The state health system in Russia is below western standards, so it is advisable not to use its services for minor health issues, especially if you want to avoid the huge queues. It is best to go to private clinics for western standard health care: many can be found in both Moscow and St. Petersburg. The prices will be similar to those of Europe or the USA, but recommendations for a good doctor from Russian friends can often save you a lot of money. The bigger state hospitals have good doctors in case of emergencies. Most people require health insurance to be treated at a hospital but some countries have health care agreements with Russia, which will mean their home health insurance can be used.

 

Lifestyle

Russia is the largest country in the world, bridging geographically Europe and Asia. Despite its past isolation, it is surprisingly westernised. It has a fast growing economy yet still bureaucracy can be an obstacle for ex-pats, since getting things down through the official channels without contacts or relatives to help can be challenging. Education and the Arts remain important elements of the modern society, with most towns and cities have a thriving arts scene, a number of theatres and concert venues.

The cost of living remains relatively low and there are large ex-pat communities, served by their own language newspapers and businesses.