July 18, 2024

Whether it’s the loss of employees or customers, Russian micro-entrepreneurs are nervous as their businesses are affected on various levels by the military mobilization.

In his new coworking space in Chelyabinsk, a city in the center of Russiabusinessman Maxim Novikov counts the empty spaces since the announcement of a military mobilization.

The site is usually full of Russian designers, programmers and young people working on their startups.

But since the president Vladimir Putin announced in September the mobilization of hundreds of thousands of young Russians, Novikov, 33, lost much of his clientele.

“Many stopped coming,” he told Agence France-Presse by phone.

Some joined the depleted ranks of the Russian army or are among the tens of thousands who have fled to neighboring Kazakhstan.

The Kremlin’s mobilization created uncertainty and chaos for businesses already hit by sanctions and affected by the impact of the pandemic.

In the past three weeks, just over half of the 77 positions on Novikov’s coworking site were filled.

You don’t know if the people who fled or were recruited will still pay the subscription fees, which they hired.

And now you’re worried about your loans.

“Turnover has already fallen by more than 40% this year,” lamented Novikov, who studied architecture.

“I wanted to buy a third space, but at the moment it will not be possible to take that risk,” he added.

fear of investing

But he is not the only businessman in Russia who is getting nervous about the void in the workforce.

“This means that there are projects that are stalled and that private companies will be afraid to invest,” explained Natalia Zuberevich, an economist at Moscow State University.

The Russian economy has been hit this year by unprecedented Western sanctions in response to Putin’s decision to send troops to Ukraine on February 24.

But Zuberevich pointed out that the mobilization is an “additional aggravating factor”.

He added that he is not surprised that young men from the provinces join the army, lured by monthly payments that are sometimes as much as their annual salaries.

Meanwhile, in the pompous center of Moscow, Yelena Irisova, 45, is shocked to see how her luxury leather bag company has suspended production.

He had about 10 employees in his small business, but two of his artisans have left the company in recent weeks, one for fear of being mobilized and the other to help his daughter, whose husband was sent to the front.

“After September 21, everything collapsed,” Irisova lamented. “Our sales fell by a third, from 10 to three orders a day.”

He says that his savings will allow him to continue “for a month or two, but no more”.

no orders

No Russian business has been left unscathed.

Katerina Iberika, 39, the owner of a bakery specializing in birthday cakes, is also afraid of going bankrupt.

His five employees are exempt from the mobilization, but the low morale among the public is what has his business at risk.

“Order cancellations for large events began two days before the mobilization”, declared Iberika to Agencia AFP. Currently he says that he receives almost no orders, except for some “very small”.

He is even thinking of leaving Russia.

Increasingly isolated and hit by sanctions and mobilization, the anxious Russian society is very careful with its expenses.

“People are looking to save some money,” said Sofya Donets, chief Russia economist at Renaissance Capital. “They’re not going to overspend.”

Given this, concerned employers asked the government to grant exemptions to the mobilization, especially for small and medium-sized companies.

The Russian Ministry of Economic Development told AFP Agency that it has drawn up a list of measures to deal with the situation, and has granted donations and micro-credits.

“A mobilized businessman may suspend the fulfillment of his obligations” to pay his loans, the ministry said.

Analyst Donets expects “more intervention and state aid” to mitigate the effects of the mobilization.

Especially since the Russian coffers continue to fill thanks to its energy exports.


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