Market Know-how: No Workers in the Moscow Suburbs

In the Moscow suburbs there is currently no personnel to work for created enterprises. Heads of constructed factories, logistic centers and industrial zones, even near large cities in the Moscow region are being forced to look for employees from all over the region and elsewhere. Once the financial crisi passes in the country and the creation of industrial districts in the Moscow region will continue, this problem will become even more serious.

The Moscow region has the second highest population in Russia with almost 6.5 million people and the share of the urban population at 80%. In the last 15 years many inhabitants of the region and visitors have tried to settle more closely to Moscow and find work in the capital. A ring around the mega city in which works mainly Moscow companies has been formed around Moscow.

At the same time with the establishment in the Moscow region of new enterprises, logistics centers and modern factories, the region needs workers again. The first enterprises which settled near large towns in the region were lucky: they have accumulated an efficient part of the population. However those businessmen who decided to set up their companies far from settlements or arrived to the region after everyone else, are now having problems solving the personnel question. The main reason is that only a small percentage of the population is efficient in the region, and the majority of them prefer to work in Moscow.

Potential deficit

In the present conditions of financial instability many development projects, and also the construction of new enterprises, will either be suspended, or will be realized slower. But after the crisis passes the problem of finding personnel will become even more important. The Moscow region is second in terms of the volume of industrial production among the other regions of Russia, and it is obvious, that this is not its limit.

To gradually restart manufacturing and move onto innovative models, the government of the Moscow region has created its own program of development of industrial districts. The program has been developed for this purpose and supposes the construction of 72 industrial zones in the region with a total area of about 13,500 hectares. The program was approved back in summer 2005 and intended for five years. Within its frameworks it was planned to construct no less than 7 million sq.m of premises for the accommodation of class A and B logistics premises, 4.5 million sq.m of office premises, and at least 0.3 million sq.m for the accommodation of social infrastructure premises. Furthermore 40,000-50,000 workplaces should be created.

However the question, from where to take the personnel, let alone experts and managers, did not arise. It was not even supposed that there might be problems with this. The program is now being realized at less fast rates than the government would want, nevertheless there is already work on several projects being done, so the personnel question is coming to a head at the moment.

Among developing industrial zones it is necessary to name the starting project of the program – Volokolamsky industrial district which is filled with enterprises of Terre Di Llama; an industrial park measuring 2,000 hectares in Stupino; System technopark and Techopark Information Business System on 428 hectares in Dubna (near the Moscow region); Kulon-Istra on 33 hectares near Istra; and the Belyi Rast project.

"The personnel problem within the limits of realizing a project for the creation of an industrial zone in Stupino is appropriate for us," says the co-owner of Komstrin, Maxim Sotnikov. "When we were developing the planning of the Stupinsky area, we stipulated the development of a residential zone (for housing construction) near the industrial district. We want to expand the Sitne-Shchelkanovo and Zhilveo settlements and construct there 200,000-300,000 sq.m of housing," Sotnikov says. According to him, without it there will be nobody to work at the enterprises. "For the same reason, next to a cement factory under constriction in Sukhoi Log we are building housing for workers and managers," he adds.

"In the Volokolamsky industrial district introduction of the enterprises to their full capacity will require approximately 12,000-15,000 people. From the inhabitants of nearby settlements/villages it is possible to involve no more than 1,500 people – this is obviously insufficient. It is necessary to solve the problem of the shortage of personnel already now," says financial director of Terre di Llama, Nikolai Razgulyaev.

The Volokolamsky district is located 15km from Volokolamsk, 75km from the MKAD. But accommodation for workers will not be a solution to the problem. "Every employee has a family, children. This will increase the area’s population by about 40,000 people. One solution to the personnel problem could become the creation of towns with complete engineering and social infrastructure near Volokolamsky industrial district," Razgulyaev considers.

In his opinion, the new scheme of the territorial planning of the Volokolamsky area and the general plan of development of the Moscow region can essentially promote the realization of the project. Plans to creation a residential zone there may be considered. "If workers in the district will live in a town 1-3km from their workplace it will be economically wise to organize a system of corporate transport to drop people to and from work. This would also raise production efficiency by reducing the time spent travelling to work," Razgulyaev summarizes.

To relocate or to travel

The construction of housing near districts, in the opinion of many enterprise owners and operating companies is the optimum solution to the problem. "I, as an employer, don’t like the fact that managers travel 100km every day to work. I am imposed by those managers who live near work; I promote such managers with big pleasure. It is necessary to create settlements near workplaces. It is possible to attract managers with quality housing and infrastructure, for example by building a restaurant, or fitness-center, etc," argues Sotnikov.

"It is possible to attract qualified personnel for work in similar districts only by intra-regional migration. Certainly, the main motive for employees may be the provision of comfortable and convenient housing, which is currently the main problem in the development of such industrial zones," agrees Vyacheslav Shiryaev, general director of Vesco Group. According to him, the construction of industrial enterprises in similar districts should be accompanied by the construction of tens of thousands of square meters of inexpensive comfortable housing, which subsequently will be populated.

"We offer a complex solution to the problem: we have developed the concept of low storey suburb settlements for such industrial districts as they can be quickly built and would be ready to move into and completely furnished, with the lay out of internal networks and other options," Shiryaev says.

It is possible to solve the staffing problem of a smaller enterprise located not far from Moscow with shuttle buses that go from the nearest metro station. This is what ahs been done at the industrial zone on Altufevskoye shosse, which is only 5km from the MKAD. Corporate buses transport the employees to the office of Major, which is 8km from the MKAD on Novorizhskoye shosse (Major City), from the nearest metro station. "Now there is no need to buy your own buses, it is enough to conclude a contract with an operating company," says Alexander Zhuravlyov, general director of Major Auto Trans.

Today the majority of producers in the Moscow suburbs possess out-of-date technology, the same methods of work and the corresponding personnel. Whereas young and talented experts aspire to work in the capital. The creation of new industrial districts with the participation of large stable companies developing at fast rates and the creation of a number of mini-cities will promote the attraction of young qualified personnel, and their aspiration to find a job in such industrial districts. In particular, they count on the youth in Dubna where a new modern technopark is being created.

Free agents

The universal trend is that in large developed cities ruralization is occuring, i.e. outflow of the population from cities. So-called free agents who can work from home or go into the office once every two weeks tend to live and work in a village. They are workers from innovative spheres, directors, engineers, etc. In the US now as Sergey Zuev, director of the Center of Regional Research at the Academy of National Economy, notes that 13-15 million "microbusinessmen" reject the growth of business, considering small volume as a competitive advantage unlike severely regulated large corporations. Such employees could be demanded in the created industrial districts in the Moscow suburbs. The main thing for them will be good quality and convenient housing, infrastructure and the presence of means for work (access to the Internet). Thus, agglomerations around Moscow would be created not by a principle of "the closer to Moscow the better," but by a principle of geographical advantages of territory and convenience of residing. Builders, in turn, would not become attached to already practically completely built up territories near the Moscow suburbs for the construction of cottage settlements, but would create accessible variants of housing with infrastructure in the whole Moscow region. The Moscow region has the opportunity to begin development under this scheme.