Russian Firms Slash Employee Bonuses Amid Economic Strain

A recent report indicates that Russian businesses are significantly reducing or completely eliminating bonuses and incentive payments for employees as part of their cost-cutting measures.

The study, conducted by the HeadHunter recruiting service in collaboration with the pension fund NPF Evolyutsiya, was shared by the pro-Kremlin newspaper Izvestia on Friday.

Nearly one-third of employees who previously received bonuses have reported a decrease or total elimination of these payments over the past year, reflecting the slowdown in the Russian economy.

According to the survey, 20% of participants indicated that the amount of their bonuses had been reduced, while 9% noted that bonuses had ceased altogether.

For 25% of those surveyed, bonuses represented between 10% and 30% of their overall net pay.

Fifteen percent of individuals reported that bonuses constituted 10% of their salary, while a similar percentage indicated that bonuses made up 30% to 50% of their earnings.

The data revealed that managers, IT professionals, real estate agents, and employees in sales, finance, and construction fields were the most impacted by reduced or canceled bonuses.

Regions where workers most commonly reported losing bonuses included Sverdlovsk (42%), Novosibirsk (36%), Samara (32%), Rostov (31%), and the Republic of Tatarstan (32%).

“Bonuses and incentive payouts are often the first expenses that companies cut when they aim to save costs without officially reducing salaries or laying off staff,” noted Vladimir Chernov, an analyst at Freedom Finance Global, in his comments to Izvestia.

“Due to high-interest rates and limited access to credit, firms are becoming less adaptable. They’ve reached a point where monetary incentives can no longer be the primary motivators,” stated Dmitry Dudarev, HR director at the communications firm CROS, referencing the Central Bank’s key rate of 20%.

Alexander Vertekov, deputy general director of the recruitment agency Rabota.ru, mentioned that “companies are now focused on streamlining operations and boosting productivity. Cutting personnel expenses allows businesses to reallocate their budgets toward the development and application of new technologies.”

Maria Koleda, a representative for the independent trade union Novy Trud, informed Izvestia that the reduction in bonuses decreases employee motivation, making them more inclined to seek employment elsewhere.

To retain essential staff, companies are increasingly implementing non-monetary incentives, including flexible work hours, remote working arrangements, opportunities to participate in interesting projects, and employer-funded training, according to Chernov.

Additionally, SuperJob, another recruitment service, has noted that employers are more frequently providing holiday gifts, offering interest-free loans, and arranging free consultations with psychologists, legal advisors, and financial experts to make up for the diminishing bonuses.

According to Chernov, companies are also enhancing their benefits packages and introducing non-material recognitions such as certificates, mentions in company news, and access to strategy sessions.