Putin orders full recovery of Russia's labour market in 2021

MOSCOW: Russian President Vladimir Putin on Thursday ordered officials to fully restore the country's labour market, hit by the coronavirus crisis and economic shutdowns, in 2021.

During a federal budget meeting, Putin said around 3 million people were registered as unemployed, which he called a high figure. This week the government said the unemployment rate was seen increasing in June to 6.3%.

So far, the government has used measures such as tax deferrals for businesses and cheap loans for small- and medium-sized companies as a way to prop up the struggling labour market. It was not immediately clear what additional measures might be used to help a recovery.

"The task of fully restoring the labour market should be fulfilled in 2021," Putin said.

He added that besides emergency measures to offset the crisis, the federal budget must take long-term goals into account in the future.

The pandemic has already dealt a severe blow to a 25.7 trillion rouble ($361.4 billion) package of state spending, known as the national projects, a cornerstone of Putin's 2018 re-election campaign, with the deadline for their full implementation extended by six years until 2030.

Hit by the double-edged sword of the coronavirus and low oil prices, Putin said Russia's economy contracted as much as 12% in April, a month he designated as holiday, but during which most people were confined to their homes under lockdown restrictions.

The central bank has estimated that Russia's second quarter gross domestic product fell by 9.5-10% year-on-year.

The government and finance ministry in early July confirmed its intended maximum spending in 2020-2021 would breach the fiscal rule, a mechanism designed to shield Russia's economy from swings in oil prices and protect its reserves.

The fiscal rule dictates that oil and gas revenues above oil prices of $42.4 per barrel should be diverted to the National Wealth Fund.

"In the future it is important to preserve responsible fiscal policy, including the fiscal rule and inflation targeting, in order to clearly balance and build up resilience in the whole public finance system," Putin said.