Cleaning without migrants: how is it going in Russia?

The cleaning industry is now undergoing another shocking test. Companies have got a lot of challenges: to reverse the crisis, to maintain existing contracts and partnerships with the customers, improve profitability, and retain staff. The recruitment problems are of great concern now. Oleg Popov, the founder of Cristanval Russia, talks about a crucial issue that is the lack of migrant workers due to the closure of borders.

A staff shortage pushes us to alternative ways. On the one hand, you have to invest in order to retain the remaining staff, that is various bonuses, changes in the schedule, the number of working hours, etc. On the other hand, you need to look for workers to fill vacancies and fulfill the terms of existing contracts. And the new staff turns out to be more expensive.

Last year there was a significant outflow of migrants in every area that had been seriously affected by the coronavirus crisis. The Russian Federal State Statistics Service (Rosstat) reported that in three quarters of 2020 (compared to 2019), the net inflow of migrants decreased by 2.5 times, and instead of 166 thousand people, only 69 thousand people came to work in Russia. The reasons are known to all: quarantine, border closures and other restrictive measures. But there are other outflow factors as well. I mean the transition of migrants to areas where they can earn more money, construction, for example. In cleaning today, the total outflow is estimated at 20-25%.

Intra-industry factors also influence the staff shortage. In 2020 due to economic reasons the price for a number of cleaning services increased by about 30%, so migrant workers had to leave for competitors in the gray sector. Alas, many people are ready to receive their salary in an envelope today. Among Russians, according to official statistics, such workers make up 36%. I suppose that for migrants the figure can be safely doubled. The result is obvious: companies that pay salaries officially, with all taxes withholding, are suffering a severe staff shortage.

Migrant workers attraction has always been regarded as a cost reduction of the services of a cleaning contractor. I would like to note that even before the pandemic, labour costs in our field have significantly risen. This is due to the process of whitewashing the cleaning and, as a result, the payment of all employment taxes.

In response to the coronavirus pandemic a lot of restrictions had been adopted which caused the outflow of foreign workers and an urgent need to retain staff, and as a result the price of migrant services had grown even more. And not everyone was willing to pay. Commercial real estate customers had to revise the approaches in cleaning operators recruitment, the motivation system, recruiting strategy and tactics.

The rising labour cost could not but affect the cost of cleaning services. Since the pandemic started, contracts for commercial real estate customers had risen in price by about 20%, primarily due to an increase in the payroll. I expect questions about future increase in prices for cleaning services, because the outflow of migrants is still the case, as well as the crises, and the coronavirus has not gone anywhere. It is impossible to answer unequivocally. But I would like to note that the price level remains stable so far. Cost containment depends on the policy of the cleaning contractor. “White scheme” maintains its customer portfolio, uses the so-called crisis financial resources, working for the future. “Gray scheme”, avoiding taxes, takes risks on its own and increases the tax risks of its customers.

So, it is obvious that there are not enough workers. What optimization paths can the company use? Several options are possible. I will not talk about the reduction in the number of orders with the focus on how to survive the crisis. I will share some promising strategies.

1. Internal migrants instead of international ones. For many sectors, including cleaning one, the corona crisis has become an opportunity to take a fresh look at attracting employees from the regions. Of course, there were some complications. We are talking about the organization of work on a rotational basis, and we need to solve issues of accommodation and adaptation of internal migrants. The financial issue is also on the agenda. Shift workers and employers should get benefits from rotation shifts. For economics to converge with mathematics, it is necessary to revise the approach to the application of the rotational method, the search for internal migrants. And, very likely, it could not be done without raising prices for cleaning services. Russian migrants are more expensive than foreign ones for companies.

2. Technology instead of manual labor. The main principle of this strategy is: fewer hands – more technique. Many cleaning contractors use mechanization. But it is 100% effective everywhere. It is not enough just to buy some kind of cleaning, washing equipment. You need to buy one that realizes the full potential of mechanization and can really reduce the use of manual labor. I must say that such a project is not suitable for companies with a tight start-up budget and a small amount of funds for business development. Does this mean that only market leaders are able to implement mechanization? Of course not. There are different options for reducing manual labor. Someone prefers to rent the equipment, someone buys it on lease.

In my opinion, it is too early to make assumptions about cleaning without migrants at all. First, they did not leave the sector completely. Many remained, and today new people are already coming. One way or another, but when the restrictions are lifted, the borders are opened and the economic situation is stabilized, the country will face an influx of migrant workers. Some of them will come to the cleaning industry. It is most likely that the price of migrant services will not fall to pre-crisis levels. But it will be clear only after the borders are opened, because the market is not always predictable.


Interview with Oleg Popov

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