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Russian Industry Not Keeping Up
Russian industry is feeling the shortage of equipment and manpower more acutely all the time. That is among the conclusions reached in the latest report from the market condition survey laboratory at the Institute for the Economy in Transition, headed by Sergey Tsukhlo. The survey is based on responses from 1100 managers of large and medium-size enterprises and gives the reader the chance to assess the economy through their eyes.
At the beginning of 2008, 19 percent of enterprises experiences a lack of production capacity, and 11 percent had an excess of it. The balance (excess minus shortage, i.e., -8 percent) is the lowest since 1993. Twenty-three percent of enterprises experience a shortage of personnel. The redundancy rate is -6 percent. The survey indicates, however, that the shortage of specialists was eased somewhat in the middle of 2007. Enterprises seem to have adapted partially to the difficult conditions on the labor market. At the Institute for the Economy in Transition, they are calling the data “contradictory.” For example, they found that the financial situation in all sectors with the exception of light industry improved markedly at the beginning of this year. At the same time, demand for industrial products and the volume of their production fell.
The survey also identifies the cause of the massive jump in profitability in Russian industry. It is the growth of the factory price, which increased not only at the end of 2007 along with consumer inflation, but additionally in January 2008. “It would seem that price growth has played a mean trick on Russian industry: its products have lost their competitive advantage over imports,” Tsukhlo writes. Mention of that risk rose from 17 percent to 26 percent within three months to its highest level since 1996. Considering that even the most steadfast optimists at the Ministry of Economic Development and Trade do not foresee any notable slowdown in inflation, the competitiveness of Russian industry will continue to decline. That means new discussions of the “Dutch disease” are unavoidable.
www.kommersant.com
All the Article in Russian as of Jan. 29, 2008
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