300,000 Russians Lose Jobs In Jan As Crisis Bites

The government hopes anti-crisis measures will revitalise the once booming economy.

About 300,000 Russians lost their jobs in January, bringing unemployment close to rates not seen since the socially unstable 1990s as collapsing oil prices and months of market crisis hit home in the real economy.

Data from the Federal Statistics Service showed the number of jobless jumped to 6.1 million or 8.1 percent of the workforce compared to 7.7 percent in December, when half a million Russians were laid off.

Falling oil prices and rising social spending are seen upping the budget gap to 8 percent this year and a report on Thursday said government efforts to bolster the economy, and subdue the potential for political unrest, would amount to some 1.9 trillion roubles ($53.33 billion). [ID:nLJ204494]

January capital investment plunged over 15 percent year-on-year, much worse than a 5 percent decline predicted by analysts, and average wages adjusted for inflation fell 9.1 percent compared to a 5.1 percent fall in analysts' forecast.

The unemployment figure is likely to grow quickly, with government officials warning April will be one of the toughest months in terms of job losses.

Officials now forecast the economy to contract by 2.2 percent in 2009, as falling oil and commodity prices lead a retreat from a decade of impressive growth. [ID:nLH577814]

Russia enjoyed its lowest jobless rates in 2007, with only 4.2 million of its 76 million workforce out of work, compared to highs of 9.2 million in 1999, when the country was trying to cope with the aftermath of the 1998 financial crisis.

Vedomosti business daily reported on Thursday the latest draft budget earmarks more than a quarter of spending on anti-crisis measures -- a sum equal to 1.9 trillion roubles ($53.33 billion). [ID:nLJ204494]

To make room for these expenditures, 21 percent of the plans set out in the previous budget would be cut in an effort to ensure that the deficit does not exceed 8 percent, it said.

The new budget, based on an oil price of $41 per barrel, is 558.6 billion roubles larger than the previous one.

The government hopes anti-crisis measures will revitalise the once booming economy.

Statistics Service data also showed completions of housing units in Russiafell 4 percent year-on-year to 3.1 million square metres.

In December, when housing completions are traditionally high, the year-on-year growth stood at 3 percent, while in December 2008 it was up by 8.2 percent.

Retail sales, which have been a vital part of Russia's economic boom of the past years, were still in positive territory in January rising by 2.4 percent year-on-year.

But it was still a down on growth of 4.8 percent, year-on-year, in December and a 16.3 percent rise in January 2008.