Tuesday, 22 July 2008

Western Workers cash in on Russia

Guardian Weekly

Tuesday July 22nd 2008

Many professionals in the US and western Europe are considering a move to Russia, where high energy prices have sparked a boom in the economy and lucrative career opportunities abound. Jason Corcoran reports

Some foreign professionals can expect to double their incomes in Moscow. Photograph: Getty Images

As the US enters recession and many European economies attempt to cope with financial meltdown and a collapse in housing prices, Russia goes from strength to strength. A boom in consumer spending, oil tilting towards $140 a barrel, a high growth rate, coupled with success in football and the Eurovision song contest, have put the spotlight on Russia in 2008.

Western bankers in particular are charging to Moscow to cash in on a record number of lucrative takeover deals, as London and New York have increasingly become graveyards for the major financial institutions.

Jonathan Astbury, a managing director at the headhunter Sandton Group, which works with Goldman Sachs and Société Générale, said financiers are being incentivised to defect to Russia.

He said: "This is a slight premium compared to New York and London but the main benefit is that they are taxed at just 13% across the board, so they are significantly better off in real terms. Certainly, in career terms, we feel the continued malaise in western markets – notably the UK and North America – is making many bankers contemplate eastern Europe, Asia and the Middle East as the main viable career options in the short term."

Astbury has detected lots of movement by expatriates between places such as Hong Kong, Dubai, Mumbai and Moscow: "Once a person has made the emotional decision to try an overseas move, subsequent relocations then seem less daunting," he says. This was very much a characteristic of the 1980s and 90s when Hong Kong, Tokyo and Singapore saw a major influx of expatriates to staff roles, many of whom stayed to build long-term careers within the region.

Russian banks Renaissance Capital and Troika Dialog have doubled their headcounts over the past 18 months, often looking overseas for expertise, in a period when the world's biggest financial institutions have been forced to slash personnel in the wake of the credit crunch.

Andrew Keeley, head of financial institutions research at Troika, has spent six years in Moscow, and now divides his time between the Russian capital and London. "Bankers moving into Moscow from the west can expect to double their incomes because a major skills shortage still exists here," says Keeley, who comes from Kent.

The top bankers in Russia can command about $8m on two-year deals, according to recruiters. More junior staff involved in sales, trading research and IT earn similar rates to London but benefit from low taxes and higher bonuses.

High energy prices have ignited the economy and wages are rising across the board to keep pace with inflation. The boom has spread from oil and gas to the consumer sectors as Russia's rising middle class has developed a voracious appetite to buy cars, refurbish their apartments, eat out and go on holidays.

Western retailing giants such as Starbucks, Wal-Mart and Carrefour are waking up to the opportunity and have opened outlets or representative offices in Russia over the past year. Yet, Russia can't transform Moscow into a financial centre to rival New York or London overnight, nor can domestic retail chain X5 rapidly become a Tesco.

There is a skills deficit across the board in management, financial services, extraction industries, telecoms, IT – and that's where the western-educated and experienced middle managers come in.

Luc Jones, a partner at Antal International, a global recruitment firm active in Russia since 1993, places expats in retail banking, legal, auditing and financial services. Jones says: "Multinational firms have realised they are not going to make big money in the US and western Europe and we have seen a decoupling effect with markets like Russia, where they can still make big returns."

Adam Robinson recently quit his job as head of PR for the London Metal Exchange to join Moscow public affairs agency Mmd. "In hindsight, it was a good time to leave with the credit crunch really biting. I know companies at home are tightening their belts." Although he arrived three months ago, he says that he hasn't seen much of Russia's notorious bureaucracy apart from the three pages of forms he filled in at the dry-cleaners.

Recruiters say that being able to converse even a little in Russian is a big advantage socially and professionally but not essential for working in large corporations.

Russia's visa system has long been a regular feature of expat life. Annual trips to renew year-long multiple-entry visas usually required a welcome jaunt to a neighbouring capital such as Riga in Latvia.

However, the rules have already been tightened this year and those on business visas are not allowed to spend more than 90 days in Russia at any time without either a residence permit or a work permit. Foreign nationals on visa runs also have to return to their country of origin to renew.

Visas have been an issue for expats working at TNK-BP, the joint petroleum venture where BP is battling for control with four Russian billionaires. The Russian shareholders argue that management allows preferential treatment of foreign specialists while discriminating against Russian staff, who they allege have received inferior pay and conditions. Visas for 150 foreign staff are due to expire in July and have not yet been renewed. A further 148 international experts seconded to the venture from BP have been locked out of the office since March.

Between Moscow and Munich

New Yorker James Wilde is a career expat, having lived overseas in Austria, Germany, France and Brazil for the past 13 years. A director previously at BT Global Services in Munich, he was tempted to Moscow eight months ago by an offer to work as a financial controller at MTS, Russia's largest mobile operator.

The opportunity to work at a fast growing company, with operations as far afield as Uzbekistan and Armenia, was irresistible.

He says: "I also was excited about coming to Russia for the cultural experience. I had been to Russia several times before, to climb Mt Elbrus and heli-board in the Caucuses as well as visit friends in St Petersburg."

Wilde, 37, has immersed himself in Moscow life despite working up to 60 hours a week. A keen language student, he spends six hours a week learning Russian from scratch.

Moscow is easily the most expensive place Wilde has lived in for groceries and accommodation, but his remuneration package and the flat tax rate of 13% has more than compensated.

"The other thing I like about it is that if I need to return to my place in Munich I can do it relatively easily, whereas in Brazil it was always two days of travel," he adds.

"Some particular negatives are the nightmare traffic and the obsession with money. The positives are that the people are very motivated and funny, and once you know some locals well you find a warmth and depth of soul that is really fantastic."



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