November 4, 2008 at 17:55The crisis in Russia: links of one chain
The crisis in the Russian economy has been brewing for a long time. In many of its industries, “overheating” was observed, analysts foreshadowed it, starting in 2007, positioning it as “a long overdue and very global problem”, the peak of which is now expected by the summer of 2009.
Obviously, any forecasts should be based on facts. And they are such that the crisis also acquires the features of a social one, because incomes of the population, consumption of goods are reduced, and unemployment is projected to increase.
There are problems with food and medicine, the import of which in Russia reaches 40% and 80%, respectively. The increase in world prices for these categories of goods will lead to the expenditures of gold and foreign exchange reserves, a reduction in social programs, and a transition to an emergency saving regime.
Thus, “crises in crisis” occur, which are caused by interconnected market links and social processes. The trust on which many successful "economic chains" were built and disappears and therefore they are torn. Once stable bonds are torn, links leave each other to survive, the notorious “domino” effect is observed, with its inherent panic, in which multiple “bubbles” are revealed and burst.
What is happening now at numerous enterprises? What is being done to overcome the crisis? What is the situation in the markets?
One can see that many have a hard time, different positions are taken: active and “expectant”, someone in search of new ideas and solutions, someone is afraid, someone no longer wants to work. It is always clear that in any case, the strongest will survive, who have managed to foresee the most important.
Labor market
There are opinions that the ground is being prepared for layoffs. A more optimistic forecast is a reduction of up to 10% in the personnel of Russian companies.
In any case, in free flight there will be a mass of “office workers” who will have to relearn and receive other qualifications.
In the media, one can even find words of gratitude in some way: “thanks to the crisis - it blows off the foam from the inflated states”. The thesis is not unfounded, but also disappointing.
With vacancies the situation worsens daily, it can be seen, for example, on hh.ru - “72768 vacancies, 2421114 resumes”. Obviously, now companies are trying not to hire staff. Headhunters used to look for valuable shots, but now they think how to fire them painlessly.
For example, it is known that the growth in the number of resumes of marketers in the labor market has exceeded all reasonable expectations. Apparently, the situation is such that companies dismiss employees who occupied “fashionable marketing” positions, not taking into account the thesis that during the crisis it is impossible to save on marketing and advertising.
However, it must be recognized that such layoffs are inevitable during the current crisis. Despite the hopes in the popular business literature about personnel as the main value, its auxiliary and service parts, marketing and advertising services are becoming the “first victims”. Further, the queue can reach other “inefficient” and “objectionable” employees.
Well, if this does not allow to reduce costs to the proper level, then middle and possibly senior managers will be asked to “go down the stairs” a little and whoever doesn’t like it will be shown at the door.
And again the “chain” and its social component. A decrease in the number of employees, a decrease in wage funds will definitely lead to a decrease in the income of the Pension Fund. The enterprises simply reduced the amount of deductions.
Against the backdrop of a difficult demographic situation, a decrease in the number of economically active population, the situation is clearly not encouraging. And without that, the meager pensions of our old people can expect delays in payment. And about any any noticeable increase in them so far is out of the question.
Now a little about those who are still paying to the Pension Fund. A lot of people in the wake of the media-intensive “boom” of consumption-lending are accustomed to living as they say “beyond their means”, as a result of which they will “get” the most. The old truth was forgotten that loans are bad because they simply need to be paid back, and even with predatory interest, closed by effective rates and conditions, cleverly hidden in loan agreements in the form of “stars” and “lines in small print”.
Being on such a “wave”, a successful manager, who is also a participant in the “bubble inflating,” with a salary of 100 thousand rubles, will suffer rather than with the same, but with a salary of 20 thousand rubles. It is clear that the fall of the first will be much more painful - the failure of a mortgage, the refusal to buy a prestigious car (sales at car dealerships are falling - they give less and take on credit), deprivation of rest, no less than in the Seychelles. And the related spheres and industries “along the chain” will feel this on themselves.
Production sphere
Engineering, metallurgy, metalworking. In these industries
various types of production are reduced, energy consumption is significantly reduced, prices for metals and other strategically important products are falling, the need to optimize costs and prudent savings on everything is manifested.
Downtime alerts appear. Accordingly, work collectives either dissolve or go on forced leave. Those who worked on government orders have a particularly difficult time.
The situation is also worsening among suppliers of industrial equipment. Bills are left without payment for a long time. The number of new orders is noticeably reduced. One of the reasons is that buyers used to issue equipment on lease and on credit. It is clear that in times of crisis, these operations lose their relevance.
Advertising market
Forecast: for some time the advertising will be afloat, because for those who have purchased goods, paid advertising budgets, it is necessary to sell it all this way or another. Even apparently with discounts, as the turnover is clearly not enough. Then there will be a recession. On the streets of cities, it began to be noticed that advertising spaces were beginning to empty (on the walls of houses, extensions). On popular roadside billboards, you can only see ads from large companies.
Advertising agencies are also forced to cut staff, as customers begin to leave, and those who remain will reduce advertising budgets.
However, it should be noted that against the backdrop of such an advertising recession, Internet advertising will keep its position and even increase, as a simple, understandable and effective marketing tool. Here, the first place is context, the second is display advertising. It will retain its niche and search engine optimization (SEO), supporting an army of freelancers and profile companies.
Tourism market
Briefly: here, the fall of 2008 shows a large decrease in the number of tourists, and in some areas where at least some activity was observed, customers are simply absent. Again there is a break in the “chain” and the sociality of the problem. Managers counting hours in offices are not up to rest and travel. Loan tours in our banks also become irrelevant.
Tour operators and agencies at different levels will be forced to either cut salaries or simply dismiss people who are unemployed.
Banking
At one time, Russian banks chose a development path through cheap foreign borrowing, thereby increasing their debts.
Now they are looking for salvation in measures developed by the Government to support the banking sector, the essence of which is in huge injections (up to two thirds of the annual budget) from the reserve and national treasury funds and the use of funds from the budget surplus.
However, the effectiveness of these measures is still in question. In a similar interpretation, these injections may not reach the real sectors of the economy, and besides, they can stimulate corruption, because these astronomical amounts are distributed by government officials.
Now the banks have begun a wave of increase in interest rates on various types of loans and tightening requirements for borrowers. Many banks leave the mortgage market.
Thus, it is clear that the financial system of Russia, alas, developed in a conscious and constant separation from the movement of real sectors of the economy.
In concluding, it should be noted that most of the existing forecasts suggest that the consequences of the processes will be severe enough and the way out of the crisis will be more difficult than the way out of the previous one. It is worth mentioning that the burden of the external debt of Russian companies to foreign creditors amounts to more than five hundred and fifty billion dollars, as it becomes clear that this amount "pulls" on all the gold and foreign exchange reserves of Russia.
And the last one. the view that only the financial sector will be affected by the crisis and the so-called “middle class” seems erroneous. All processes taking place in the economy are closely interconnected. And the main difficulties caused by the current crisis await us ahead.
Obviously, any forecasts should be based on facts. And they are such that the crisis also acquires the features of a social one, because incomes of the population, consumption of goods are reduced, and unemployment is projected to increase.
There are problems with food and medicine, the import of which in Russia reaches 40% and 80%, respectively. The increase in world prices for these categories of goods will lead to the expenditures of gold and foreign exchange reserves, a reduction in social programs, and a transition to an emergency saving regime.
Thus, “crises in crisis” occur, which are caused by interconnected market links and social processes. The trust on which many successful "economic chains" were built and disappears and therefore they are torn. Once stable bonds are torn, links leave each other to survive, the notorious “domino” effect is observed, with its inherent panic, in which multiple “bubbles” are revealed and burst.
What is happening now at numerous enterprises? What is being done to overcome the crisis? What is the situation in the markets?
One can see that many have a hard time, different positions are taken: active and “expectant”, someone in search of new ideas and solutions, someone is afraid, someone no longer wants to work. It is always clear that in any case, the strongest will survive, who have managed to foresee the most important.
Labor market
There are opinions that the ground is being prepared for layoffs. A more optimistic forecast is a reduction of up to 10% in the personnel of Russian companies.
In any case, in free flight there will be a mass of “office workers” who will have to relearn and receive other qualifications.
In the media, one can even find words of gratitude in some way: “thanks to the crisis - it blows off the foam from the inflated states”. The thesis is not unfounded, but also disappointing.
With vacancies the situation worsens daily, it can be seen, for example, on hh.ru - “72768 vacancies, 2421114 resumes”. Obviously, now companies are trying not to hire staff. Headhunters used to look for valuable shots, but now they think how to fire them painlessly.
For example, it is known that the growth in the number of resumes of marketers in the labor market has exceeded all reasonable expectations. Apparently, the situation is such that companies dismiss employees who occupied “fashionable marketing” positions, not taking into account the thesis that during the crisis it is impossible to save on marketing and advertising.
However, it must be recognized that such layoffs are inevitable during the current crisis. Despite the hopes in the popular business literature about personnel as the main value, its auxiliary and service parts, marketing and advertising services are becoming the “first victims”. Further, the queue can reach other “inefficient” and “objectionable” employees.
Well, if this does not allow to reduce costs to the proper level, then middle and possibly senior managers will be asked to “go down the stairs” a little and whoever doesn’t like it will be shown at the door.
And again the “chain” and its social component. A decrease in the number of employees, a decrease in wage funds will definitely lead to a decrease in the income of the Pension Fund. The enterprises simply reduced the amount of deductions.
Against the backdrop of a difficult demographic situation, a decrease in the number of economically active population, the situation is clearly not encouraging. And without that, the meager pensions of our old people can expect delays in payment. And about any any noticeable increase in them so far is out of the question.
Now a little about those who are still paying to the Pension Fund. A lot of people in the wake of the media-intensive “boom” of consumption-lending are accustomed to living as they say “beyond their means”, as a result of which they will “get” the most. The old truth was forgotten that loans are bad because they simply need to be paid back, and even with predatory interest, closed by effective rates and conditions, cleverly hidden in loan agreements in the form of “stars” and “lines in small print”.
Being on such a “wave”, a successful manager, who is also a participant in the “bubble inflating,” with a salary of 100 thousand rubles, will suffer rather than with the same, but with a salary of 20 thousand rubles. It is clear that the fall of the first will be much more painful - the failure of a mortgage, the refusal to buy a prestigious car (sales at car dealerships are falling - they give less and take on credit), deprivation of rest, no less than in the Seychelles. And the related spheres and industries “along the chain” will feel this on themselves.
Production sphere
Engineering, metallurgy, metalworking. In these industries
various types of production are reduced, energy consumption is significantly reduced, prices for metals and other strategically important products are falling, the need to optimize costs and prudent savings on everything is manifested.
Downtime alerts appear. Accordingly, work collectives either dissolve or go on forced leave. Those who worked on government orders have a particularly difficult time.
The situation is also worsening among suppliers of industrial equipment. Bills are left without payment for a long time. The number of new orders is noticeably reduced. One of the reasons is that buyers used to issue equipment on lease and on credit. It is clear that in times of crisis, these operations lose their relevance.
Advertising market
Forecast: for some time the advertising will be afloat, because for those who have purchased goods, paid advertising budgets, it is necessary to sell it all this way or another. Even apparently with discounts, as the turnover is clearly not enough. Then there will be a recession. On the streets of cities, it began to be noticed that advertising spaces were beginning to empty (on the walls of houses, extensions). On popular roadside billboards, you can only see ads from large companies.
Advertising agencies are also forced to cut staff, as customers begin to leave, and those who remain will reduce advertising budgets.
However, it should be noted that against the backdrop of such an advertising recession, Internet advertising will keep its position and even increase, as a simple, understandable and effective marketing tool. Here, the first place is context, the second is display advertising. It will retain its niche and search engine optimization (SEO), supporting an army of freelancers and profile companies.
Tourism market
Briefly: here, the fall of 2008 shows a large decrease in the number of tourists, and in some areas where at least some activity was observed, customers are simply absent. Again there is a break in the “chain” and the sociality of the problem. Managers counting hours in offices are not up to rest and travel. Loan tours in our banks also become irrelevant.
Tour operators and agencies at different levels will be forced to either cut salaries or simply dismiss people who are unemployed.
Banking
At one time, Russian banks chose a development path through cheap foreign borrowing, thereby increasing their debts.
Now they are looking for salvation in measures developed by the Government to support the banking sector, the essence of which is in huge injections (up to two thirds of the annual budget) from the reserve and national treasury funds and the use of funds from the budget surplus.
However, the effectiveness of these measures is still in question. In a similar interpretation, these injections may not reach the real sectors of the economy, and besides, they can stimulate corruption, because these astronomical amounts are distributed by government officials.
Now the banks have begun a wave of increase in interest rates on various types of loans and tightening requirements for borrowers. Many banks leave the mortgage market.
Thus, it is clear that the financial system of Russia, alas, developed in a conscious and constant separation from the movement of real sectors of the economy.
In concluding, it should be noted that most of the existing forecasts suggest that the consequences of the processes will be severe enough and the way out of the crisis will be more difficult than the way out of the previous one. It is worth mentioning that the burden of the external debt of Russian companies to foreign creditors amounts to more than five hundred and fifty billion dollars, as it becomes clear that this amount "pulls" on all the gold and foreign exchange reserves of Russia.
And the last one. the view that only the financial sector will be affected by the crisis and the so-called “middle class” seems erroneous. All processes taking place in the economy are closely interconnected. And the main difficulties caused by the current crisis await us ahead.