Kremlin throws open the doors

By bne IntelliNews September 7, 2010

Tim Gosling in Moscow -

Russian immigration policy is now among the laxest in the world for highly skilled workers as the Kremlin aims to harness scientists and senior managers from Europe and beyond to help drive the modernisation of its economy.

In May, legislation was passed easing immigration rules for highly skilled workers. President Dmitry Medvedev has said that Russia must modernize or die, and he hopes to import experience and skills from abroad to help in this mission. At the same time, the programme hopes to help attract more foreign investment in Russia by making it easier for multinationals to bring over managers and specialists.

The development of high-tech industries has grabbed most of the headlines in the last few months. Whilst Russia deserves its reputation for educating scientists, it falls down when it comes to offering them commercial opportunities - and therefore loses many to other countries. That's the driving principle behind attracting companies such as Nokia and Intel to Skolkovo - the $2bn project to build "Russia's Silicon Valley" just outside Moscow.

Yet it's not just science fiction Russia is playing with; the country also needs to attract experienced managers across its corporate sector to improve efficiency, productivity and innovation. A report from IBM published last year points out that while the quality of Russia's scientific research institutions is amongst the best in the world, management schools rate poorly in global rankings. This means "skills are an obstacle for many Russian companies," the report concludes, "with 59% reporting labour resources as a significant obstacle to development."

Foreign managers will be key then, as Lilit Geovorgyan of consultancy IHS Global Insight puts it, because they "bring relevant skills, since most of the companies envisaged to be the backbone of modernisation are likely to be designed after western prototypes specialising in cutting-edge high technologies."

Furthermore, Gennady Odarich of PricewaterhouseCoopers points out that foreign managers can also act as role models for the Russian staff under them, helping to mould future generations in both skills and mindset.

Give me your experienced, your skilled...

To encourage their arrival, the Russian government has essentially imported immigration schemes for qualified people from countries such as the UK, Canada and Australia. Signed into law in May, the new legislation transforms a tortuous immigration procedure into one of the easiest in the world, for highly skilled people at least. Qualifying employees and their family receive a three-year visa rather than face a yearly trek home to reapply, with the additional benefit of the chance to bypass emergency income tax (30% for the first six months) and go straight onto Russia's flat 13% rate.

Perhaps the biggest bonus for companies is that highly skilled employees are now exempt from the Federal Migration Service's annual quota on foreign employees. To contract foreigners who don't qualify as highly skilled, companies must still apply for permission to employ from abroad in January, with no recourse to revise this through the rest of the year.

Headhunters such as Nikita Prokofiev of Odgers Berndtson suggest the plan is working in helping companies focus on importing the most valuable professionals, even whilst they're increasingly looking to hire locally for the majority of positions. "The market has evolved and now hiring Russians is preferable for many companies," he says. "15 years ago, someone bilingual with a basic command of finance was much in demand, but now companies are only looking for senior people with very specific skills."

As well as a strong desire to employ staff who understand the local business culture, this is due to no small extent to the definition of a highly qualified employee, which runs to no more than an annual salary of RUB2m ($67,000). In contrast, salaries in the local market are still recovering from the economic crisis, whilst skilled and experienced people from the West expect a premium to relocate.

Odarich suggests the appetite for such candidates is strong, with PwC having "many clients asking about the new system - both for current employees and future hires." Best of all, he points out, is that the groundwork is ready: "It does seem to be running smoothly already - the authorities have put a lot of effort into making sure that the bureaucracy understands the new process at all levels."

That's a welcome contrast to the chaos which ensued when a new customs regime was introduced in the summer.

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