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How are events in Crimea affecting business in Russia

It is clear that Russia’s actions in Crimea are unpopular among international leaders, but are the current events having any repercussions for business? It may be too soon to tell the long-term outcomes as the situation could still worsen, but so far, there has not been a significant reduction in the number of client vacancies.

This could be attributed to the fact that the large Western organisations (who are traditionally the biggest buyers of recruitment services) are for the most part, too heavily invested in their Russian operations to withdraw at this stage, not to mention the fact that Russia is often a good source of income for them. Many have experienced turmoil since entering the Russian market, from the Rouble crash in 1998 to the Georgia conflict in 2008, and staying put has so far turned out to be a wise, and profitable, strategy.  

Political events seem to concern local organisations even less, and if anything, they may be hoping to increase their market share if their Western competitors were to exit. It’s important to bear in mind that locally the events in Crimea are very popular, and considered to be something of a victory for Russia on the international stage.

Russia recovered very quickly from the global financial crisis of 2008, owing to high prices for natural resources and a very low debt to GDP ratio when compared to Western economies (approx. 9%).  However after a period of relative boom, there has certainly been a general slowing-down of the Russian economy over the past 9 months. Agencies may have noticed the amount of requests decreasing, but this would have pre-dated the Crimea conflict.

The only certain effect so far has been to change the visa regulations for Ukrainian citizens entering Russia, and as Ukraine is one of the main sources of Russia’s migrant workforce, this is probably the most immediate issue facing clients and agencies.

Until recently, Ukrainians were able to visit Russia visa-free simply by presenting their Ukrainian passport upon arrival. However from March 2014, Ukrainian citizens must present a letter of invitation (LOI) from a Russian organisation to enter the country, which should contain the purpose of work and what financial and housing provision are to be provided by the employer. This may sound simple enough, but unfortunately these details written on company letterhead would not suffice. As with all Russian migration procedures, there will be an approved format, and it’s likely that only the Federal Migration Service will have the authority to approve such LOI’s. What the correct procedure will be to obtain such a document is yet unclear, and there could even be repercussions for Ukrainians working in Russia on formal work permits sponsored by employers or management companies.

LOI’s are not currently part of the work permit process for Ukrainian citizens, nor is a corresponding work visa entered into a Ukrainian’s passport, as with non-CIS citizens. Therefore it will be difficult for Ukrainians entering or re-entering Russia to prove that they have the right to work, without such an LOI.

Whether this new requirement for LOI’s will be applied even to those with work permits, or whether there is a special provision already in place, is currently only for the border guards to know. Hence we strongly advise any agencies with Ukrainians working in Russia to contact their management company urgently to be kept up-to-date about any developments, and to obtain documentary support before Ukrainians travel to Russia. Otherwise there could be delays getting workers to site, and it could jeopardise the client’s project and the agency’s relationship with them.

For professional advice and support for any agencies with workers in Russia, either Ukrainian or any other nationality, please contact Zelda Savage at Gateway to Russia, a specialist provider of contractor solutions and payroll in Russia: Zelda@gatewaytorussia.co.uk.

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