In recent years, Russia has experienced a record-low unemployment rate, resulting in significant labor shortages. Despite this, economic growth nearly came to a halt in 2025, yet the unemployment remains at historical lows, according to senior economist Sinikka Parviainen of Finland's Bofit think tank, writing in the Pulloposti publication. The underlying cause of this labor shortage can largely be attributed to the poor demographic structure developed over the past decades, exacerbated by the consequences of the ongoing invasion conflict.

As a result of the labor shortage, wages in Russia have been rising rapidly, with nominal wages seeing a 14% increase in October 2025. However, Parviainen emphasizes that this situation poses significant challenges for businesses. This swift wage growth, driven by labor scarcity, is occurring in a context where economic growth has faltered, leading to increased labor costs that strain companies, particularly as market demand drops and tax burdens rise, creating a more challenging business environment.

The implications of rising wages amidst stagnant economic growth indicate a potential crisis for Russian businesses struggling with high operational costs and diminishing demand. The combination of demographic issues, the ongoing conflict, and economic stagnation creates a precarious situation that could affect the Russian economy's long-term stability and growth prospects.