Russia and its oil and gas industry are facing a serious labor shortage as the aggressor state's economy is put on a war footing.

Bloomberg reports this.

Russia's oil and gas industry has played a critical role in funding the invasion of Ukraine, giving the Kremlin the means to continue the war even as the conflict enters its third year. But the industry is suffering from labor shortages as the full mobilization of the Russian economy for war exacerbates a long-standing demographic crisis, the report said.

The situation was influenced by the intensifying demographic crisis in the Russian Federation, as well as high competition from the army and enterprises of the Russian defense industry.

The problem is not entirely new – Russia has been facing a shrinking working-age population for almost two decades. The decline in birth rates in the 1990s was the root cause, and the Covid-19 pandemic added challenges, but the invasion of Ukraine has significantly exacerbated the problem, the publication notes.

According to estimates by Kasatkin Consulting, the Russian oil and gas sector is short about 40,000 employees this year. The shortage, according to data from the job search portal hh.ru, applies to both qualified personnel and qualified workers.

According to Bloomberg calculations based on data from the Russian Federal Statistics Service, since 2017 the oil and gas industry has offered wages that are at least two-thirds higher than the national average. In January and February 2024, monthly wages in the industry averaged just over 125,000 rubles ($1,366).

This amount, “cannot compete” with the amounts that volunteers receive for service in the Russian army, and the one-time payment upon signing a contract, which in some regions reaches one million rubles, can be equivalent to almost a year’s salary of an average worker in an oil and gas field.

In May 2023, the Russian Central Bank surveyed 14,000 Russian employers and found that the number of available workers in the labor market was at its lowest level since 1998.