The exodus of Western companies from Russia could cost hundreds of thousands of jobs in Moscow alone.
The city’s mayor, Sergey Sobyanin, said in a blog post Monday that 200,000 people were at risk of losing their jobs. Authorities were setting aside 3.36 billion rubles ($41 million) to support them, he added.
Scores of Western companies have left Russia or suspended operations in the country after President Vladimir Putin ordered the invasion of Ukraine in late February. Businesses have been sold, offices shut, and production of everything from beer to cars halted.
Sweden’s Ingka Group, owner of retailer IKEA, has 15,000 employees in Russia. A company spokesperson told CNN Business last month that it has guaranteed three months’ salary to its workers.
Yet it is unclear how long companies can keep up the support. Sobyanin said the Russian government is stepping in to help those workers left behind.
“The [support] program is addressed to employees of foreign companies that have temporarily suspended their activities or decided to leave Russia,” he said.
According to the mayor, the assistance plan includes training, employment in temporary and public works, and incentives for organizations and firms to hire workers whose companies have left.
Western sanctions have hobbled Russia’s economy and pushed the country to the brink of its first default on foreign debt in more than a century. Inflation has soared and economists are forecasting a deep recession.
Lacking access to about half of its foreign currency reserves — now frozen under sanctions — Russia attempted to pay in rubles, not the dollars stipulated in contracts, on two maturing bonds in early April, credit ratings agency Moody’s said Friday. Russia has until May 4 to meet its obligations or it could be considered to be in default, the agency said. S&P has already called out Russia for a “selective default” on those bonds.
US Treasury Secretary Janet Yellen last week skewered governments and companies that have kept their ties to Russia.
“Let me now say a few words to those countries who are currently sitting on the fence, perhaps seeing an opportunity to gain by preserving their relationship with Russia and backfilling the void left by others. Such motivations are short-sighted,” she said in a speech at the Atlantic Council.