Business exodus could cost 200,000 Moscow jobs, says mayor of Russian capital

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 on Monday that 200,000 people were at risk of losing their jobs. Authorities are setting aside 3.36 billion rubles ($41 million) to support them, he added.

Dozens of Western companies have left Russia or suspended operations in the country after President Vladimir Putin ordered an invasion of Ukraine in late February. Businesses were sold, offices closed, and production of everything from beer to cars stopped.

Dozens of them, including McDonald’s – which employs 62,000 people in the country – have pledged to continue paying their workers, at least for a limited period of time.

The Swedish group Ingka, which owns the retailer IKEA, has 15,000 employees in Russia. A company spokesperson told CNN Business last month that it has guaranteed its workers three months’ pay.

However, it’s unclear how long companies can maintain support. Sobyanin said the Russian government is stepping in to help workers left behind.

“The program [de apoio] is aimed at employees of foreign companies who have temporarily suspended their activities or decided to leave Russia,” he said.

According to Sobyanin, the assistance plan includes training, employment in temporary works and public works and incentives for organizations and companies to hire workers whose companies have left.

Western sanctions have crippled Russia’s economy and brought the country to the brink of its first foreign debt default in more than a century. Inflation has soared and economists are predicting a deep recession.

Without access to about half of its foreign currency reserves – now frozen under sanctions – Russia has tried to pay in rubles, not the contracted dollars, on two bonds due in early April, credit rating agency Moody’s said. on Friday.

Russia has until May 4 to meet its obligations or it could be considered in default, the agency said. S&P has already criticized Russia for a “selective default” on these bonds.

US Treasury Secretary Janet Yellen last week jabbed governments and companies that have maintained their ties to Russia.

“Let me now say a few words to those countries that are currently on the fence, perhaps seeing an opportunity to win by preserving their relationship with Russia and filling the void left by others. Such motivations are myopic,” she said in a speech to the Atlantic Council.