Russia's worker shortage is easing, but not fast enough to change the arithmetic: the labour force will shrink for a decade, holding potential growth near 1.5% a year.

A Renaissance Capital note on Russian labour supply published on September 23 builds a composite index out of seven indicators, from registered vacancies and hiring plans to voluntary resignations and the gap between wage and productivity growth. It stood at 0.9 standard deviations above neutral in 2Q26, against 1.8 at the peak in early 2024, and is back to 2022 levels.

The loosening is cyclical rather than structural. Employers are cutting hiring plans while holding on to the staff they have, rather than paying to rehire later. Unemployment edged up to 2.3% in July after a long run at 2.1%-2.2%, and is still well under the 3.5% the brokerage puts on the natural rate.

That is why a slowing economy has not produced the slack one normally brings. Activity can cool while unemployment stays at a record low and pay keeps outrunning output per worker - the combination the central bank is most wary of, and one reason it stopped cutting rates on September 11.

Real wages rose 4.4% year on year in 2Q26, slowing through the quarter from 5.1% in April to 3.4% in June, and the fastest growth has moved out of the war-favoured industries into services, with hotels and catering up 20% in nominal terms in the first half. Companies are absorbing it rather than passing it on: the gross profit share of GDP fell in 1Q26 to below 40% seasonally adjusted, its lowest since 2015.

The supply side is the part that does not improve. The 2018 pension reform, which lifted the retirement age to 63 for men and 58 for women between 2018 and 2025, added 18 percentage points to participation among 55 to 59-year-olds and 8 points among 60 to 69-year-olds; without it the labour force would be about 3.5mn smaller. Two further steps, this year and in 2028, will keep roughly another 1.2mn people in work. Even so, Renaissance Capital expects the workforce to lose 0.6%-0.8% a year over the next decade, or 400,000 to 500,000 people, a third of it down to the age structure alone as the big 1960s cohorts retire and the small 2000s ones replace them. The baby bust behind that began decades before the war.

Migration is not filling the gap. Of 1.4mn permanent immigrants in 2Q26, 0.9mn were in the labour force - 1.2% of the total, down from about 1.9% in 2Q21. Temporary labour migration is larger, at roughly 3.0mn foreign workers at the start of 2026, but it is growing by only about 200,000 a year, and arrivals from Central Asia fell 15% in the first half.

That leaves productivity, which grew by an average of 1.6% a year between 2011 and 2025. Renaissance Capital expects it to pick up towards 2.0% as sanctions adaptation and new technology feed through, which with a shrinking workforce puts potential growth at about 1.5% - above what Russia is managing now. President Vladimir Putin put this year's growth at about 1% on September 17, ahead of an economy ministry draft of 0.6% and at the top of the central bank's own range.