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Russia Proves Money Paradise For Foreigners, But It Never Lasts Too Long


The world's most highly paid expats live and work in Russia. The name expats applies in Russia to foreign specialists who work in big Russian companies and branches of western firms. The results of a special survey conducted by British HSBC shows that foreign specialists working in Russia have the biggest salaries in the world. Despite the crisis, the income of almost one-third of foreign managers working for Russian companies exceeds 250,000 U.S. dollars a year.

The top three positions are held by raw material supplying countries: Russia, Qatar and Saudi Arabia. The worst employment opportunities for expats are offered in the developed countries such as France, Spain, Australia, Germany, and Belgium.

However the crisis is slowly changing the situation. Some expats are leaving Russia due to harder life and high inflation, but many have their contracts severed by their firms that are seeking to save money as Russian specialists are paid less. In addition, Russians have learnt quite a few things over the past ten years.

A poll involving 3,100 expats representing companies from 29 sectors was conducted in February-April 2009. Russia ranked first among 26 countries. Almost half of foreigners (43 percent) working in Russia receive more than 200,000 U.S. dollars a year. The share of those who earn over 250,000 U.S. dollars is the biggest in Russia - 30 percent.

However Western employers consider Russia among the most uncomfortable countries and Moscow among the most expensive cities in the world for foreigners, Vedomosti quoted Rosexpert Managing Director Igor Shekhterman as saying. This explains why the cost of hiring expats in Russia has always been higher. Ninety-seven percent of respondents said their expected income, savings and investments in Russia were higher than in their home countries, and 83 percent of them have no plans to go home, even though 73 percent have had to cut their spending because of the crisis.

Most foreign specialists came to Russia in the early 1990s, and their appearance was associated with reforms in the country, Novye Izvestia said. It was then that foreign companies moved into the Russian market to open new production facilities and representative offices.

Since Soviet times citizens have treated foreign specialists with piety. Naturally, foreign top managers received salaries by far greater than their Russian colleagues.

However 10-15 years later it became clear that this calculation often appeared to be a costly illusion not because foreigners were bad specialists, but because they had no real connections in the Russian business community and the bureaucracy. Besides, attempts to inculcate Western business and management methods and skills in Russia were not always successful. And it became obvious that it was much cheaper and equally effective to train one's own specialists even though in Western business schools.

The situation is beginning to change, the recruitment company Alliance said on its website. Several years ago, any self-respecting company (especially in Russian branches of foreign firms) thought it necessary to have its own foreign manger, if only for the sake of prestige. Now their number is decreasing. According to the company Manpower, big Western companies employing 1,500-2,000 people have no more than 3-5 expats.

What is going on? Should the mass "exodus" of expats be considered as an escape from a sinking ship? Or does it mean that our business has finally become strong and no longer needs their services, and employers have turned to face Russian specialists? Experts think both are true.

Expats' task is to build a company in a foreign country, Business Development chief Irina Klyusova of Professionals Business is quoted as saying on the website. Foreign managers lay the foundation of business, and build a corporate culture and "corporate spirit". Their presence is necessary until the mechanism they have created starts working on its own.

Expats have raised a worthy replacement, Klyusova said. Russian managers have gone through an excellent school in Western companies, received an excellent education and now are ready to take the reigns. And yet there are also other reasons for expats' departure: the crisis requires cost-cutting policies. For example, AvtoVAZ has decided to discontinue the contract with Renault managers. Only one of the four vice-presidents and one of the three directors of directorates will keep the job. The fate of another four top managers is still undecided. Experts estimated their incomes at 200,000-400,000 euro each.

"We can see a clear tendency towards cutting any unnecessary expenditures, including 'expat packages'. Western companies are actively looking for a replacement for foreign superiors among qualified Russian managers,' Shekhterman said. Many of those who stay on cut their spending. For example, a flat rent for foreigners has dropped by at least 20-30 percent.

Roman Portnov, Director-General of the recruiting agency KPG Resources, says in most cases it is simply unprofitable to keep expats on the staff, especially if they can be replaced by Russian employees without detriment to the company.

"To some extent, the expat situation reminds of the situation where relatives and friends are hired for a job: they seem to be your own people and they are trusted more, but sooner or later there comes a time when you have to part with them," he said.

Alinga Consulting Group

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