If you look at the economic and wage structures in Russia, you will see that people get a disproportionally large amount of money for little work

Mikhail Shamolin

said: Mikhail Shamolin, President and CEO of Sistema, one of Russia's top-10 companies by revenues and the largest publicly-traded diversified holding company in Russia and the CIS. Mikhail Shamolin feels that the ideology should be completely different. "We should propagate through all the means of mass communication that only through hard work will you make a decent living," he is quoted saying in a recent news report. Shamolin said he went to the Samsung headquarters in South Korea recently and saw workers who came to work at 6:30 a.m., left at 10 p.m. and worked on Saturdays. On a different trip, he saw Chinese telecommunications workers who had mattresses for sleeping over at the office. A similar approach to work should be promoted in Russia, he said. The productivity levels of companies that work in competitive sectors are comparable to those of companies in the West, but monopolies trail far behind, Shamolin said. For example, Sberbank and VTB make $200,000 per worker annually, which is comparable to the $175,000 at Deutsche Bank, while Russian Railways makes $47,000 per worker.

B.V. Obnosov

The Director General of the Tactical Missiles Corporation - the parent enterprise which comprises 19 affiliated enterprises of Russian Military Industrial Sector - Boris Obnosov, agreed that the Russian work ethic can depress production results. "How can we create competitive products if my engineer runs off from work at exactly 5 p.m.?" Obnosov said. "You cannot force him to work for any kind of salary. It must be in his blood."

Expert Rating Agency, #1 Russian rating agency working on a global scale, has come out with its latest Expert-400 ranking survey of Russia's top companies. The total sales revenues generated by Russia’s top 400 companies amount to 1.456 trillion USD. The Expert-400 study warns that large businesses in Russia are prone to fall into stagnation if suitable measures are not taken to increase the national competitiveness by increasing labour productivity. At present the average labour productivity in Russian companies is 40 percent of that of the Fortune 500 Global companies. The survey finds that the average labour productivity of Expert-400 companies is 183,000 USD/person. This is 3.4 times lower than their Japanese counterparts, almost 3 times lower than in Western European and U.S. competitors and 1.7 times lower than in the leading corporations of the BRIC partners.

Russian President Vladimir Putin

In his election articles, Russian President Vladimir Putin had called for 1.5-time increase in operational efficiency by 2018. The tools for labour productivity enhancement - improvement of business processes, using of cutting-edge technologies and training of workers and their skill development - all involve capital investment. According to Expert Rating Agency, a 1% increase in investment leads to 0.21% growth in labour productivity. Hence in order to achieve 1.5-times increase in productivity by 2018, the top Russian companies - whose combined investment in fixed capital stood at 12.5 trillion RUB (approx. 415 billion USD) in 2012 - would require an additional 4 trillion RUB (approx. 130 billion USD) worth of investment. Presently, Top 10 leading state-owned companies account for approx. 30% of the aggregate revenues of Expert-400 list. 

According to Expert Rating Agency, Russia no longer has the market advantage in terms of cheap natural resources, labor and utilities. "Local industries pay 55 percent more for electricity than their counterparts in the U.S., while gas and coal prices for Russian power stations are on par with the American ones.

The average net salary in Russia was 23,410 rubles per month in 2012, which is higher than the wages in all other countries in the Commonwealth of Independent States as well as some European Union members, such as Hungary, Latvia and Lithuania. The lack of professionals is a key issue in the country, Obnosov said. The Tactical Missiles Corporation employs about 40,000 people, but there is a trend of workers going to higher-paying jobs at Rosatom and the defense industry.

An old fashioned workforce with relatively weak technical skills and the inability of Russian companies to absorb new technology are significant obstacles to more widespread technology use in Russia. Appropriate human capital and skills are crucial for technology absorption, as technology alone is not sufficient to achieve productivity growth.