Times get tough for expats in Moscow
Text Dominic Esler
Exchange rates may have stabilised since Christmas, but expat employees, whose services are traditionally two or three times more expensive than Russians, continue to feel the pinch as jobs are cut and salaries lowered. Many have already left Russia to find new work abroad, while others are weighing their options.
Joris van Gelder was an early victim of the crisis. An Industrial Design graduate from Holland, Joris came to Moscow in August after securing a place in one of the city’s top design studios, expecting to stay Russia for at least two years. In October, the studio’s budget for self-initiated projects – the area in which Joris worked – was cut in favour of client projects, and he learnt that his contract would not be extended at the end of the three-month trial period. At this time, the crisis hadn’t made a big impact in Holland, as Joris jokes: “My friends and I came to the conclusion that I might be one of the first Dutch victims of the crisis.”
Back in Holland, Joris discovered that the design world had been badly hit in both countries. Around 70% of his university class have yet to find work in design, while most of the remainder are currently studying towards Ph.Ds. Joris eventually dropped the job hunt to start his own design studio, having discovered that the crisis offers good opportunities for small companies. Despite his short stay, Joris doesn’t regret coming to Russia.
Like Joris, Ivan and Maya also left Moscow before the end of 2008, although of their own volition. The Serbian couple, architects working in a joint Serbo-Russian firm, had been in Russia for almost eighteen months before the situation started to deteriorate in September. “For us, it started with late payments for our flat. Next our monthly salary payment also started to get late, at first by few days, and then by almost a month. Finally in December the director of the firm came out with a new proposal: 30 % less payment from January. For us that was too much, and the atmosphere in the firm was becoming even stranger than usual. So we decided to quit.”
The couple tried to find new work in Moscow, “But as the crisis was already on, we didn’t manage to find suitable work for us. We were searching for almost two months, and in the end we found something. But not in Moscow. Not in Russia, either. We had to make a fast decision in practically two weeks. And to prepare for moving out.” They are now in Montenegro: “Happy, working by the sea, with good conditions, and practically no crisis on our back.”
Given the frenzied level of construction in Moscow over the last decade it is no surprise that this is one of the industries most strongly affected by the crisis. Another sector that has suffered particularly badly is finance. Passport talked to an expat manager working at one of the Big Four accounting firms, who revealed that there has already been one wave of redundancies, with a second expected in May or June; at the moment everyone is waiting for the email to go around. Although this sector is traditionally more immune to recessions than banking (all companies, especially those going bankrupt, need audits), Tom thinks that the world of accounting is merely “a few months behind the curve.” According to him, many expats working in finance have come to Russia for a short career burst, and Moscow begins to look increasingly unattractive when stripped of its former air of opportunity. However, redundancy will not come as a huge shock for many in the sector: “Everyone that came out to Russia took a risk.”
For others, the economic downturn has only exacerbated the existing difficulties affecting foreign workers. Michelle, a bilingual English teacher from America, had already been hurt by the 2007 visa changes, which eliminated the possibility of living permanently in Russia on a multi-entry visa. A qualified and experienced language teacher, Michelle had to leave her well-paid job as a governess (with a dollar salary) at the start of 2008 because the agency she worked for wasn’t authorised to grant work permits.
Now teaching English in one of Moscow’s top language agencies, Michelle’s ruble salary has dropped by 40% against the dollar since autumn, and the number of corporate clients has also decreased. Michelle began searching for private clients last year in order to supplement her income, only to find that this market had also shrunk: in December her waiting list disappeared entirely for the first time.
The situation has started to improve since the beginning of the year, as more corporate clients trickle in, but the lower salary continues to make life difficult – especially if the rouble depreciates even further in the future. Despite having originally planned to live in Russia for about ten years, Michelle now finds herself considering an early departure. Fortunately she has some job protection: as a tenured teacher it won’t be difficult for her to find a new position in America.
For those without this kind of security, the return home is less certain: an important difference between today’s crisis and that of 1998. Elizabeth, an English teacher working in a private school in the south of Moscow, observes: “Some of my American teaching friends have said that they are better riding out the crisis in Moscow because it is harder to get a job back home at the moment.”
And yet, while everyone seems to know somebody that has left, or is considering doing so, how large is the scale of the problem?
Hard figures are understandably difficult to come by, with employers and employees hesitant to discuss such a sensitive issue. Serious organisations such as the Association of European Business (AEB) or the Russo-British Chamber of Commerce (RBCC) have not yet noticed a significant expat exodus, although so far, no surveys have been conducted. For the moment only circumstantial evidence exists.
IntermarkSavills, a major real estate agency dealing with expats in Moscow, has only noticed a drop of around 5% in the number of expatriate home-finding briefs for those relocating to Moscow for the first time in 2009. According to Galina Tkach, the company’s Leasing Department Director, “We are not witnessing a significant flight of expatriates back to their home countries; rather they are seeking ways in which to stay in Moscow and navigate the economic turbulence in a more cost-efficient way.” Although the average rental budget decreased by approximately 32% between October 2008 and March 2009, there has been an increase in the number of expats “taking advantage of current market opportunities and are opting to move apartments within the city that offer a more attractive pricing and location proposition.”
Other estate agencies have noticed a more significant change. According to Andrey Sado, director of the Residential Rental Department at Penny Lane, the influx of expats has slowed significantly. While last year 90% of requests came from new arrivals (and the other 10% from expats relocating within the city), this figure has now dropped to 65-70%. Sado also notes that Penny Lane has overseen many terminations – up to five a month.
Surprisingly, the international relocating companies have not noticed an increase in removals. Reiner Reints, Director of the Moscow branch of Corstjens Worldwide Movers Group, told Passport that he has seen little change over the past six months, and that it is currently a quiet season as usual (things usually start to pick up in April and May). Spokespersons for AIM and Allied Pickfords also confirmed that there hasn’t been a significant change in business.
Sherman Pereira, Regional Director of Crown Relocations, notes that although the last months of 2008 saw an increase in departures, these have actually dropped since the start of 2009. However, in common with Penny Lane and IntermarkSavills, Crown Relocations has also observed a simultaneous decrease in new arrivals: “We have seen an overall slowdown in expats making Moscow their new home. Companies are still and will continue to send expats to Russia; however, we expect to see this trending downwards compared to previous years.”
It looks like many expats are unwilling to leave Russia so easily, and are knuckling down for the long haul. Chris Helmbrecht is managing director of an advertising agency called KOLLEKTIV, and is widely known among the expat community for the popular social events he organises around Moscow. While Chris has seen a drop of around 30% in the number of people attending his parties, he has also noticed a change in the attitude of those that remain: “Many have more work or they just don’t feel like going out and spending money. I have more people on my list now, because most people like to network these days and are also looking for a good party rather than spending time at some club. People are afraid and are looking for new contacts so they can use them to find a new job, in case they get laid off.”
Life has certainly got harder for expats in Moscow, but so far it looks like the number of those leaving Russia remains a trickle rather than a flood. However, some are predicting that the worse may be yet to come. According to Nathan Hunt, president of the Canada Eurasia Russia Business Association: “If any mass exodus takes place, I would expect it around early summer.”