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Opens from January 8th to 14th, 2026 Dosha With the following article a window into Russia.
What the Kremlin recently announced reads like something from Putin’s wish book. The Russian economy has successfully converted to war, the sanctions have had no effect and have even opened up new growth opportunities.
However, the reality in companies is different. There is falling demand, skyrocketing costs and missing components everywhere. A research by the Russian exile medium Dosha showshow the supposed war economy is hollowing out the civilian sector. The full text is available in Russian.
Autumn 2025: The Zemros group – the largest cement manufacturer in Russia with 18 factories and around 13,000 employees – was one of the first to announce the switch to shortened working hours. In the country’s largest industrial enterprises – GAZ, AvtoVAZ, Rostselmash and Uralvagonzavod – layoffs, production shutdowns and noticeable losses in income are increasing.
More and more Russian companies in numerous industrial sectors are beginning to convert their workforces en masse to three- and four-day weeks. The official reason is: declining demand and the alleged need to “secure jobs”. Formally, employment remains, but in fact employees bear the costs in the form of reduced working hours, falling incomes and growing hidden unemployment.
The most dramatic example is Rusal, the most important company in the Russian aluminum industry. The Kremnij plant in the Irkutsk region was closed on January 1, 2026. It is one of only two Russian companies producing high-purity silicon for the chemical and electronics industries.
An economy of “extraction”
Experts are already talking about an “economy of extraction”. The Russian economy was boosted in the short term by high military spending. Government orders, a rapid expansion of arms production and investments in selected factories and regions ensured growth. But nothing has stabilized it permanently.
This is also due to the high key interest rate. It makes loans and leasing unaffordable for capital-intensive industries. Investment programs are being frozen and purchases of machinery and equipment are being scaled back. At the same time, sanctions imposed in 2024 and 2025 by the EU, the US and their allies have blocked Russia’s access to technologies and industrial equipment. In mechanical engineering, imports in the high-tech segments previously covered 70 to 80 percent of demand, according to estimates by the Russian consulting firm Delovoy Profil. It was not possible to replace them quickly.
According to data from the job platforms Rabota.ru and SberPodbor, around 12 percent of companies are currently preparing for layoffs, which is more than at the end of 2024. At the same time, the demand for new employees is falling. Only one in four companies is currently actively hiring. The labor market is gradually no longer “deficit”. But not because people are better off, but because companies are simply running out of money.
The raw materials and processing industries are hit particularly hard. In the coal industry, Deputy Prime Minister Alexander Novak warned in the spring that around 30 companies with around 15,000 employees were at risk of closure. At the beginning of autumn, the fears were confirmed. Kuzbass authorities said 17 businesses have already been closed. Since the beginning of the year, the number of job vacancies in the region has fallen by 40 percent.
Escape to the arms industry – or to the front
The furniture industry, which has so far held up relatively well due to brisk residential construction, recorded a decline of 8.1 percent. The metal industry shrank by 3.3 percent, which primarily affected companies in the transport and construction sectors. In Tyumen, the Sveza plywood plant closed, causing 325 people to lose their jobs. In the Chelyabinsk region, the Asha metal plant is shutting down its stainless steel department and laying off over 300 employees, primarily from export-oriented production areas.
Uralvagonzavod (UVZ) – the largest manufacturer of freight cars, armored vehicles and other military products – offers employees from the civilian sector retraining and transfer to “military” workshops secured with orders.
For many there are only two options: either they go to war as “volunteers” – as long as they are men – or they apply to companies in the defense sector such as the Ural wagon factory, where state contracts currently ensure stable capacity utilization and there are hardly any layoffs.
The arms industry is devouring the civilian sector and thereby destroying its own foundation. It is clear that Russia’s war economy is running on time. The only question is how much longer.
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