Russia’s labour market is not just tight — it has entered what central bank governor Elvira Nabiullina has repeatedly described as an unprecedented structural shortage, driven directly by the war economy.

Speaking in April, Nabiullina warned that Russia is now facing a situation, “we have never had anything like… in modern history,” adding that the labour squeeze “affects the entire economic situation.”

The scale of the distortion is striking. Unemployment has fallen to around 2–2.5%, effectively exhausting available labour, while the country’s labour reserve has shrunk sharply — by roughly 2.5mn workers since the start of the full-scale invasion, according to official-linked estimates.

Nabiullina has framed this as a structural break rather than a cyclical phase. “This is a new reality for the government and for business alike,” she said, warning that the shortage is no longer temporary but persistent.

The implications are central to macro policy. The lack of workers is pushing up wages, feeding inflation and limiting the central bank’s ability to cut rates. The Bank of Russia has explicitly identified labour scarcity — rather than access to capital — as the main constraint on growth and investment.

In effect, the war has created a binding supply constraint: mobilisation, emigration and demographic decline have removedmns from the workforce, while defence production continues to boost demand for labour.

The result is an economy operating at full employment but below potential — a rare combination where labour, not capital, has become the primary bottleneck.