ECONOMICS
On Sept. 18, Russia's automotive giant AvtoVAZ announced plans to shift to a four-day workweek due to a slump in the automotive market. This form of hidden unemployment has already become widespread in the country, and the government has neither the will nor the resources to remedy the situation. If a chain reaction of mass layoffs is triggered, the labor market will not be able to absorb the resulting shocks.
Content
The longer the war, the shorter the week
Trauma of the past or hope for the future?
What about the rest of the world?
In Russia, the reason is regression, not progress
The perils of the four-day workweek in Russia
The longer the war, the shorter the week
More and more Russian companies are announcing the shift to a four-day workweek. Among them are automobile and engine plants, steelworks, and the country’s largest cement producer. Agricultural equipment manufacturer Rostselmash is leaning towards reduced working hours, and at Russian Railways (RZD), administrative staff at the central office have already switched to a four-day schedule, an employee of a partner company told The Insider. “Our orders have already dropped, and if you need to resolve an issue, you keep dialing numbers not knowing which employee might be available,” he explained.
As of Aug. 1, KAMAZ had already switched to a four-day workweek in divisions without full workloads. As a source at the car plant told The Insider, the company “lost a military contract this year, hence the problems. For now, we're still working a full week, but assembly has been moved to a four-day schedule.” Starting from Sept. 29, AvtoVAZ adopted a shorter week for a trial period of six months. “This measure is aimed at preserving jobs and the workforce, while preventing mass layoffs at the company,” explained Dmitry Mikhalenko, the company’s Vice President for Human Resources and Social Policy.
Coal mines in Kuzbass are also considering a shift to a four-day workweek. “Fifteen mines and open-pit sites have already been shut down. Spiridonovskaya mine is also laying people off. For now, workers are being reassigned to other mines, but things aren’t going well there either. The four-day workweek keeps coming up, but as far as I know, it hasn’t been implemented anywhere yet,” a local told The Insider, expressing concern over possible cuts to miners' salaries, which are already low. “On the other hand, it’s still better to get at least some pay on time, instead of the way it is now — with delays of up to six months,” he added.
It’s still better to get at least some pay on time, instead of facing delays of up to six months, miners say
A steelworks employee told The Insider that discussions are also underway about moving to shorter working hours — albeit initially only for administrative staff. The idea has not been met with enthusiasm: “People are resisting for now, because that would mean losing not only part of their salary but also their bonuses. On top of that, vacation pay and other benefits would shrink. So everyone did the math and saw they’d take a serious hit financially,” he said.
In addition, many employers are cutting bonuses without resorting to reduced working hours. Since bonus payments may account for up to 80 percent of income for many Russian workers, the effect is tangible.
Under amendments to the Labor Code that came into force on Sept. 1, the maximum deduction from bonuses cannot exceed 20 percent of total earnings. This statute applies only to disciplinary sanctions, and so employers have found another loophole. “They re-hired all of us as self-employed. Technically, we are no longer employees but contractors getting piecework pay,” said a sales manager at a major real estate developer. According to the Federal Tax Service, the practice is gaining popularity across a variety of sectors, from retail to manufacturing.
Trauma of the past or hope for the future?
Why are the four-day workweek, unpaid leave, and other forms of hidden unemployment a preferable alternative to simply laying off redundant workers? The reason is rooted in generational traumas and Russian tradition. With the closure of the Moscow Labor Exchange 95 years ago, the Soviet government announced that the problem of unemployment had been solved. However, some in Russia still remember the surge of unemployment in the 1950s that accompanied the post-WWII downsizing of the army and general prisoner amnesty, or the long-running problems of coal miners dating back to the 1960s. Almost every adult Russian also has fresh memories of rampant unemployment following the “shock therapy” reforms of the 1990s.
Even then, efforts were made to avoid layoffs. Research institutes and state-owned enterprises continued operating even if they had to rent out their premises to private businesses to go on, while factories paid workers in kind. Haunted by these flashbacks, the Kremlin keeps a close watch on unemployment levels. Vladimir Putin never misses a chance to report on yet another “record low.” Regional authorities, eager to maintain the Kremlin's trust, often put administrative pressure on employers to stave off mass layoffs.
Preventing a rise in unemployment is a Russian imperative rooted in generational trauma
Russians are not accustomed to seeking employment far away from home, and domestic population mobility statistics reflect this reality. The recent surge in subsidized mortgages has further entrenched this trend, as it is nearly impossible to leave a depressed city or region if you still have 25 years left on a mortgage for an apartment that is very difficult to sell. Internal migration is also hindered by an underdeveloped rental market, the lack of social housing, and weak regulation of rental relations.
Employers, however, have their own motives to retain staff despite financial hardship. When things take a turn for the better, qualified professionals will not be easy to replace: even an assembly-line worker at a car plant requires around six months of training, and a skilled steelmaker, process engineer, or sales manager with an extensive client base is even harder to come by.
The desire to retain workers is especially strong in cases when management believes the current difficulties are temporary. Certain sectors, such as raw materials or metallurgy, tend to have a cyclical market, with years of weak demand followed by years of growth. At present, global conditions are unfavorable, compounded by the impact of sanctions on many branches of heavy industry. Therefore, many employers in these sectors are pinning their hopes on the end of the war and the lifting of sanctions.
In the automotive industry, however, such hopes are hard to justify. Even if sanctions were lifted, it is unlikely that anyone would buy domestic products, which struggle to compete even with Chinese equivalents.
Even if sanctions were lifted, it is unlikely that Russians would buy domestic cars, which struggle to compete even with Chinese equivalents
The only possible respite could be provided by the state, which has already imposed a prohibitive recycling fee on foreign cars. So far, however, this has not helped Russian manufacturers. Could they be hoping that the aging car fleet will break down before foreign cars are allowed back into Russia — and that buyers will turn to them out of desperation?
What about the rest of the world?
Overall, shorter working hours are a popular trend in developed countries. However, the aim there is not to cut costs but to improve employees’ work-life balance, prevent burnout, and possibly even increase productivity. A two-year experiment in the United Kingdom that concluded in 2023 showed that with a shorter workweek, sick leave and resignations fell by 65 percent and 57 percent, respectively, while burnout risks decreased by 71 percent.
The pilot program of the nonprofit project 4 Day Week Global, co-organized by the Autonomy think tank and researchers from Boston College and the University of Cambridge, involved 3,000 employees from a few dozen companies.
Under the terms, the companies could either give project participants an additional day off every week, reduce the number of working days in a year, or shorten daily hours — all while keeping salaries at the same level. Most employers opted for four 10-hour workdays per week. According to the 4 Day Week Foundation, 200 British companies with a total of 5,000 employees have now joined the movement.
The new policy was most readily embraced by marketing and advertising firms, as well as media outlets (30 companies). They were followed by organizations in charity and social services (29 companies), information technology (24 companies), and business, consulting, and management (22 companies).
The Tokyo Metropolitan Government has also shifted its employees to a four-day workweek. The move was aimed at boosting birth rates (which in 2023 hit a historic low) by offering parents more time to spend with their children. Poland launched a pilot project to introduce a four-day workweek this past July.
In these cases, participation is voluntary, and instead of a four-day workweek, employees can opt for six-hour workdays or additional vacation days. In Iceland, the four-day workweek experiment has been running for several years, with excellent results: GDP is growing, productivity is rising, and unemployment is falling. The country is now officially transitioning to a four-day workweek.
The four-day workweek has been a boon for Iceland
In one form or another, a dozen or so countries are implementing projects to transition to a four-day workweek. So far, everyone seems satisfied: employees, employers, and governments alike. The switch is becoming a hallmark of a post-industrial society, where the old rule that “work is measured by exhaustion” no longer applies. A higher share of intellectual labor demands efficiency over hours, while the humanization of society pushes businesses to abandon sweatshop-style practices.
Russia has also demonstrated an interest. In 2019, after returning from Geneva, Dmitry Medvedev even raised the idea with the Ministry of Labor. By 2023, 81 percent of employers in the country also supported the concept of a four-day workweek — provided that pay was lowered along with working hours.
In Russia, the reason is regression, not progress
The current developments in Russia, however, have entirely different economic causes. Job search websites report a rise in the number of applicants, and the number of active CVs consistently exceeds the number of openings. Demand for workers is currently 27 percent lower than it was last year.
Demand for workers in Russia is already 27 percent lower than it was last year
The economy is decelerating, and at a faster pace than expected: Russia’s GDP grew by 1.1 percent year-on-year in the second quarter, according to Rosstat. This is lower than the 1.4 percent growth recorded in the first quarter, and below Bloomberg economists’ forecast of 1.5 percent growth for the second quarter. Economists now debate only whether a recession will come this year or next.
Meanwhile, the state budget has fewer resources to cushion the blow of unemployment: the deficit remains high, and war spending is unlikely to decrease in 2026. The divide between Russia's military and civilian economy exacerbates the situation, with civilian enterprises more likely to take the fall. The truck manufacturer KAMAZ began experiencing difficulties right after losing a military contract. If the government decides to continue the war, troubles in the civilian sector may even work to their advantage, luring more people into the defense industry and the armed forces.
KAMAZ ran into a rough patch right after losing an army contract
That said, when entire regions start lagging behind, the government does step in. Plans are in the works to support bankrupt firms in sectors essential to the economy, along with those affected by sanctions. But this will apply only to major companies of nationwide significance. Moreover, these relief loans can help only if the difficulties are temporary. But what happens if the crisis drags on?
The perils of the four-day workweek in Russia
Like other forms of hidden unemployment, the short workweek distorts Russia’s labor market, making it difficult for officials and businesses alike to make a realistic assessment of the demand for labor. As a result, the state does little to stimulate job creation or assist the unemployed.
Various “job fairs” organized by regional authorities, often for reporting purposes, rarely help people find decent work. People are also reluctant to register as unemployed because of the negligible benefits on offer: a maximum of 15,044 rubles ($182) in the first three months and 5,880 rubles ($71) thereafter, with a minimum of 1,764 rubles ($21). To compare, the minimum wage in 2025 has been set at 22,440 rubles ($272), and the subsistence minimum for able-bodied citizens is 19,329 rubles ($234).
To stave off an economic collapse, the authorities would do well to focus on prevention: identify key companies that are worth saving, develop effective measures to combat unemployment, and modernize the public sector employment system. However, doing so would require effort and funding, which the Kremlin currently prefers to direct elsewhere.
Ordinary Russians sense that hard times are coming: with both confidence and consumption on the decline, people put aside what they can as a rainy-day fund. While this is healthy behavior, shrinking consumer demand pushes producers deeper into crisis — and with them, the entire civilian sector of the economy. If Russians are not buying the new domestic-made Moskvich because it is uncompetitive, tomorrow they will not buy one because they will not be able to afford it. Consequently, Russian employers who are holding on to workers by shortening the workweek are doing so in vain — the good times are not coming.