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

The KSE Institute has published a paper analyzing the potential impact of a new Russian mobilization on low-skill workers' wages. Using data on vacancies, regional decrees, and casualty records, the study estimates the effects of mobilization on civilian employment. Mobilization would remove more men from civilian jobs, but the state could replace expensive contract hires with compulsory service.

The study finds that the loss of contract payments would likely outweigh any wage gains from labor scarcity. Russia's military sector has reduced hiring significantly, with weapons and aviation manufacturers cutting advertised positions by 37% and other military industries by 14% over the past year. The remaining 94% of military positions require little to no experience or qualifications, indicating a focus on low-skill labor.

Contract payments have become a major recruitment tool, with a median payment rising from RUB 1.5 million to RUB 2.5 million in two years and total sign-on bonuses now around RUB 1 trillion annually. The study estimates that removing 100,000 men from the workforce would increase wages by 0.1-0.2 percentage points, while mobilization of 500,000 men would only add 0.1-0.2 points to real wage growth.

A call-up of 1 million men would result in a 0.6-1.2 point increase. The wage gains are estimated at RUB 20-200 billion, far less than the RUB 1 trillion in annual sign-on bonuses that could be eliminated. Low-skill workers and regions with the lowest local wages would be most affected, as these are the groups most targeted by the military's contract recruitment.

It would take a mobilization of roughly 3.5-6.5 million men to catch up to the losses from contract payments, which exceeds the scenarios considered in the study.