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Remote working brings rich opportunities for Russia’s recruiters

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Until last month, the chief executive of Russia’s Alfa-Bank had always assumed he was the only person employed at the lender who hailed from Tarusa, a small town of just 9,000 people.

Now he knows of three others; all hired in the bank’s IT development department over the summer as part of a major pan-national recruitment spree that, as a result of Covid-19, no longer relies on the talent pool in Moscow and a handful of other big cities.

The pandemic’s enforced shift to remote working has unlocked the opportunity for many Russian recruiters to tap far more of the country’s 145m strong population, the majority of whom are based thousands of miles from businesses in Moscow or St Petersburg, across a vast country spanning 11 time zones.

“[Tarusa] is a lovely town but either you get out of there and move to Moscow for a job, or you are stuck,” Vladimir Verkhoshinskiy told the Financial Times. 

“So much development in Russia is blocked due to the huge distances in this country,” he said. “[But] we are entering a completely new reality now.”

Before this year, Alfa-Bank hired all of its programmers, IT developers and data scientists from just five cities where it has large offices.

But this year, Mr Verkhoshinskiy said two-thirds of new recruits have been hired from places outside those cities, many without ever meeting a human resources manager from the bank in person. The lender recently opened a call centre notionally based in a small city in southern Russia for 50 employees. Only two of them work from a shared office.

An Alfa-Bank branch in Moscow © Andrey Rudakov/Bloomberg

“Covid-19 has accelerated this trend, which is creating positive regional employment prospects for talent based outside Moscow and St Petersburg,” said Semyon Yakovlev, senior partner at McKinsey & Co in Russia.

“Several [Russian] companies have already announced plans to shift to a hybrid or completely remote working model after the pandemic,” he added. “Turning remote working into a competitive advantage involves quite a few components, and designing an effective structure and instilling a caring culture may be as important as harnessing the power of technology.”

A legacy of the Soviet Union, most Russian cities boast universities, technical colleges or other educational institutions for students after high school. The majority of places are free of charge, according to government data.

The OECD estimated in 2016 that 54 per cent of Russian adults have tertiary education, the second highest level among the OECD’s members and partner countries.

But the country’s vast size has meant that unless they emigrated to Moscow or a handful of other large cities, many of them were cut out of the big corporates’ potential hiring pools.

While many countries are embracing a rapid rise in the number of people working remotely, the long-term impact from the coronavirus pandemic on Russia’s employment market could be one of the most significant.

“Russia is uniquely positioned in this domain, with its well-educated population and strong educational institutions, for example, in Siberian cities, especially in the technical field,” said Mr Yakovlev.

While the pandemic’s enforced shift to remote working created the opportunity, its impact on an overhaul of outdated government regulations has also made regional hiring far easier.

Russian executives have long bemoaned the country’s high level bureaucracy and red tape, and the state’s demand for decisions to be chronicled on reams of paper documents, with official stamps and signatures.

Covid-19 helped to spur a modernisation of those regulations. A physical “employment record book”, a Soviet-era holdover that is mandatory for any citizen being hired — and must be stamped and signed by all previous employers — was this year permitted to be replaced by a digital version. Digital signatures are now legally recognised on documents.

Both those decisions, said Mr Verkhoshinskiy, were critical in allowing employers such as Alfa-Bank to broaden their geographical hiring horizons.

“We can hire people online. We can train people online. We can fire people online,” he said. “Beforehand, all that would have been impossible.”

“It’s not only about the regionalisation of our workforce,” Mr Verkhoshinskiy added. “It’s more about humanising work. Even people in small places can find good work, a good salary. If you have elderly parents, you no longer need to leave them to go to Moscow to get a job.”

The failure to increase economic development and living standards in the country’s south and east, and address yawning inequalities between regions has long been a concern for the Kremlin, and an area of rising discontent in poorer parts of the country.

Citizens visiting a Russian employment office during the pandemic © Kirill Kukhmar/TASS/Getty

Moscow’s official unemployment rate stood at 2.3 per cent at the end of July, with St Petersburg at 3.2 per cent. Across Siberia, that rises sharply to 8.2 per cent, and many of Russia’s individual regions have unemployment rates in excess of 15 per cent. 

There are also significant economic benefits for employers who are able to shift jobs out of Moscow. The average monthly salary in the capital, at about $1000, is roughly 80 per cent higher than the national average. 

The average salary in the Novosibirsk region is a little over $500, meaning that if a Moscow employer is simply able to find and hire someone from there before they get on a train or plane to emigrate to the capital in search of work, they can save significantly on wages.

“Of course, we also save money,” Mr Verkhoshinskiy said. “It also makes total economic sense. It’s a win-win situation.”

Unsurprisingly, other Moscow-based Russian corporates are looking well beyond the capital for their new hires.

“You are only as good as your people and we have made sure to search across the whole of Russia for the best tech talent” said Oliver Hughes, chief executive of Russian online bank Tinkoff. “We are fortunate in that Russia has tons of tech talent.”

Even before the pandemic, Tinkoff set up virtual development hubs in southern Russia and Siberia “to appeal to developers who generally prefer to work remotely,” Mr Hughes added.

X5, Russia’s largest food retail group, says that 15 per cent of its new hires this year were from Russia’s regions — a figure it expects to grow in the future.

“We began to realise that Moscow has a finite number of IT professionals, so this year we turned our attention to the regions,” said Denis Kuznetsov, a group spokesman. “Larger towns, especially those with places of higher learning focused on technology and related subjects, have a fairly large number of developers.”

And executives say that the trend is likely to long outlast the effects of the pandemic. 

Almost all of Alfa-Bank’s 17,000 non-branch staff are at present working from home, and by the end of next year, Mr Verkhoshinskiy is preparing for just over a third to work from an office full-time — and almost 25 per cent of them to never have to visit one.

“When all this Covid-19 started, we had 800 [software] licenses for remote work, and 17,000 people who potentially needed them,” he said. 

“It was a very intense time . . . but within three weeks all of them were working remotely,” he added. “In the last seven to eight months we have developed more new products than in the whole of 2019 . . . there has been absolutely no loss in productivity.”



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Armenia’s prime minister claims military is plotting a coup

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Armenia’s prime minister has claimed the country’s military is plotting a “coup,” and taken to the streets with his supporters after senior army figures in the former Soviet republic called on him to resign.

Nikol Pashinyan has faced months of protests demanding he step down after the defeat of Armenian forces in a six-week war with neighbouring Azerbaijan that ended in November.

The army weighed in on Thursday, calling on the prime minister to quit after he fired the first deputy chief of staff for criticising him.

A letter to the prime minister signed by 40 senior officers warned Pashinyan not to use force against demonstrators, but did not say whether the army would act to remove him from power.

“The current government’s ineffective management and serious mistakes in foreign policy have put the country on the brink of collapse,” the officers wrote on Facebook.

Pashinyan later fired the chief of the general staff, Onik Gasparyan, ordered police to secure government buildings in Yerevan and told his supporters in the capital’s Republic Square to avoid violent clashes.

Demonstrators at an opposition rally in Yerevan demand the resignation of Nikol Pashinyan. They cheered as a fighter jet flew overhead © Artem Mikryukov/Reuters

Describing the situation as “manageable” the prime minister denied he was planning to flee the country and said the army’s statement was an “emotional reaction” to a dispute over the defeat in the Nagorno-Karabakh conflict.

“We have no enemies in Armenia. I am calling for calm,” Pashinyan said, according to Russian news agency Interfax. “Of course, the situation is tense, but we need dialogue, not confrontation.”

He later took to the streets with several thousand supporters and a megaphone — an echo of the 2018 “velvet revolution” that swept him to power following a march across the country that galvanised popular support. A few thousand opposition supporters gathered at a different square and cheered as a fighter jet flew overhead.

Pashinyan has fought off calls for his resignation since signing a Moscow-brokered peace deal in November that cemented territorial gains for Azerbaijan in Nagorno-Karabakh. The mountainous enclave in the South Caucasus is internationally recognised as part of Azerbaijan, but is populated by ethnic Armenians who seized control after a war that broke out in the dying days of the Soviet Union.

Azerbaijan, a mostly Muslim country and a close ally of Turkey, launched an offensive in September with the aim of retaking the entire enclave. Armenia’s army was ill prepared for oil-rich Azerbaijan’s modern drone fleet and significant backing from Ankara.

More than 3,300 Armenian soldiers died in the conflict, with a further 9,000 wounded. Thousands of civilians were displaced, including some who set their own homes on fire as they fled land now under control of Azerbaijan.

Russia, the traditional regional power broker and Armenia’s most important ally, remained neutral even as several previous ceasefires failed and has deployed 2,000 peacekeepers to secure the region.

Pashinyan admitted the terms were “unbelievably painful for me and my people” but argued the concessions were necessary to prevent further losses.

The devastating defeat sparked fury among Armenians who stormed the country’s parliament and attacked its speaker, demanding the prime minister’s resignation.

Pashinyan backtracked on a pledge to step down after snap elections earlier this month and remained in office in the face of opposition from Armenia’s ceremonial president, three parliamentary opposition parties, and key church leaders.

The Kremlin said on Thursday it was “following events in Armenia with caution” but considered them “exclusively Armenia’s internal matter”.

Dmitry Peskov, President Vladimir Putin’s spokesman, told reporters Russia was “calling on everyone to be calm” and said “the situation should remain within constitutional limits,” according to Interfax.



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German accounting watchdog chief to step down in wake of Wirecard

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The head of Germany’s accounting watchdog is to step down following mounting political pressure over corporate governance shortcomings exposed by the Wirecard fraud.

Edgar Ernst, the president of the Financial Reporting Enforcement Panel (FREP), said on Wednesday he would depart by the end of this year. He is the third head of a regulatory body to lose his job in the wake of one of Germany’s biggest postwar accounting scandals.

The collapse of Wirecard, which last summer filed for insolvency after uncovering a €1.9bn cash hole, triggered an earthquake in Germany’s financial and political establishment.

Felix Hufeld, president of BaFin, the financial regulatory authority, and his deputy Elisabeth Roegele were pushed out by the German government in January for failing to act on early red flags suggesting misconduct at Wirecard. Ralf Bose, the head of Germany’s auditors supervisor Apas, was fired after disclosing he traded Wirecard shares while this authority was investigating the company’s auditor, EY. The German government is also working to revamp the country’s accounting supervision and financial oversight.

Meanwhile, criminal prosecutors in Frankfurt are evaluating a potential criminal investigation into BaFin’s inner workings and on Wednesday asked the market authority to hand over comprehensive documents, the prosecutors office told the FT, confirming an earlier report by Handelsblatt. The potential scope of any investigation as well as the individuals who might be targeted is still unclear. BaFin declined to comment.

Ernst came under pressure as the parliamentary inquiry commission uncovered that he joined the supervisory board of German wholesaler Metro AG in an apparent violation of internal governance rules, which from 2016 banned FREP staff from taking on new supervisory board roles.

Last week, the former chief financial officer of Deutsche Post filed a legal opinion to parliament defending his move. He argued that his employment contract was older than the 2016 ban on board seats and hence trumped the tightened governance regulations.

The German government had subsequently threatened to ditch the private-sector body which currently has quasi-official powers.

In a statement published on Wednesday evening, FREP said that Ernst wants to open the door for a “fresh start” that would be untainted by the discussions around his supervisory board mandates. “FREP is losing a well-versed expert in capital markets,” the body said.



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Putin and Lukashenko’s ski fun shows cold shoulder to EU

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As news of new EU sanctions against Russia began to leak out of a meeting of bloc foreign ministers on Monday afternoon, Vladimir Putin and his Belarusian counterpart Alexander Lukashenko were discussing a different challenge to the Russian president.

“You can try to compete with Vladimir Vladimirovich,” Lukashenko, in ski gear, said to his son, Nikolai. “But you probably won’t catch up,” he added, with a smile to Putin as the Russian leader pushed off down the slope.

Putin and Lukashenko are the men behind Europe’s two repressive crackdowns over the past six months, who have both jailed or exiled their most prominent opponents and seen their security forces violently assault and detain thousands of peaceful protesters.

But in a summit in the snow-covered mountains of Sochi, on Russia’s southern coast, they revelled in their twosome of leaders shunned and sanctioned by Brussels, in a calibrated message to the EU that the cold-shoulder was mutual.

For foreign policy experts there were few details to digest, despite the complex negotiations going on behind the scenes as the two post-Soviet states seek to recalibrate their future relationship.

Putin is keen to deepen integration on Moscow’s terms. Lukashenko is desperate for Russian investment and trade co-operation but is loath to relinquish sovereignty. Yet in place of diplomatic negotiations and policy pronouncements, photographs and video footage of the two leaders enjoying each other’s company were in full display.

At the outset, Putin, in jeans and an open-collar shirt and blazer, greeted his guest with a handshake and a hug. “Even our appearance, clothes and so on, suggest that these are serious negotiations in ordinary clothes,” Lukashenko quipped. “It suggests that we are close people.”

Pleasantries exchanged, it was time for the salopettes and ski boots, and a shared chairlift to the summit. Putin, pushing off confidently, set off down the gentle slope, Lukashenko in his wake.

After a short ride on snowmobiles back to their chalets, discussions continued over more than six hours — and what appeared to be three different sized wine glasses.

“The optics for the international audience is that they have been able to maintain their positions and nothing can be done against them,” said Maryia Rohava, a research fellow at Oslo university specialising in post-Soviet relations.

“Now we’re talking not just about sanctions against Belarus but also against Russia,” she added. “And it seems like they look at that like, ‘Well, we don’t care . . . We’re just enjoying our winter break like autocrats do.’”

To be sure, the fun on the slopes was not wholly without power games. Putin was clear to underscore he was the senior partner, from wrongfooting his guest at the top of the ski lift to releasing photographs of their meeting showing Lukashenko scribbling notes as his host spoke.

But the mood music was in sharp contrast to Lukashenko’s last visit to Russia in September. Then, with protests raging and the Belarusian leader’s position looking shaky, Putin reprimanded his guest for mishandling the unrest and risking the toppling of an ageing post-Soviet regime that could weaken his own.

Then, in a businesslike and cold atmosphere, Lukashenko pleaded with Putin that “a friend is in trouble” and was granted a $1.5bn loan from Moscow — but not before his host remarked that Belarusian people should be given a chance to “sort this situation out”.

The absence of such language on Monday also sent a subtle signal to other illiberal regimes, particularly those on the outer rim of Europe who, like Belarus in the past, find themselves lured towards Brussels by economic opportunities but repelled by the reforms and democratic standards demanded in exchange.

The message to the likes of Georgia, Moldova, Armenia and Turkey is that Putin, whose relations with the EU are at rock bottom, is always ready to talk.



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