Western companies that left Russia continue to pay salaries to their Russian employees
International companies continue to pay the salaries of nearly 200 employees in Russia despite promises to suspend or stop operations in the country, reports FinancialTimes.
A number of Western companies such as McDonald's, IKEA, Renault, Levi Strauss and others have pledged to pay wages to thousands of their employees while companies in Russia are suspended.
According to the FT, we are talking about at least 188 thousand employees, reports Economic Truth.
The real figure could be much higher, as big employers like KFC owner Yum Brands and Coca-Cola have not confirmed whether workers are still being paid.
Companies that have suspended operations are required to pay salaries to employees within two months under Russian law, FisherBroyles lawyer Peter Finding explains. In order not to break the law, they can charge a standard or reduced salary, pay a one-time payment for six months of work, or redirect workers to another place.
Finding noted that employers are more likely to lay off inactive workers rather than keep paying them for years. McDonald's alone, for example, spends $50 million a month to cover salaries and rent in the country.
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In addition, it may be difficult for international companies to transfer funds to Russian accounts due to sanctions, and therefore they will have to pay employees from the reserves of their Russian enterprises, which may soon run out.
Since Russia started the war in Ukraine on February 24, more than 750 businesses have said they will leave the country to one degree or another, according to the Yale School of Management. This includes well-known brands such as Spotify, Disney and Apple. Yahoo.
Levi Strauss CEO Chip Berg said in early April that his company was still paying more than 800 employees in Russia.
Moscow Mayor Sergei Sobyanin said on April 18 that 200 Russians in the capital were at risk of losing their jobs. Sobyanin added that 000 workers will receive payments from a job support program worth about $58 million, which has been approved by the city.
“We will see a lot of bankruptcies and liquidations in Russia,” he said. — Theoretically, when a Russian employer goes through liquidation, it is obliged to pay employees before this happens. But if there’s no money there, they can’t do it.”
Exactly when layoffs begin may depend on pressure from Western consumers. Laura Marie Edinger-Schons, chair of sustainable business at the University of Mannheim, Germany, believes that after the Russian atrocities in Bucha, there is a collective realization that the Russians, if not actively supporting the war against Ukraine, then accept it as a fact.
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Despite this, most business believes that there will be some return, as Laura Marie believes, so companies do not leave the country permanently. But layoffs will bring even more pressure on Russia, because the loss of jobs should affect the attitude of the population to the war. On the other hand, she admits, this could be used by the Kremlin for anti-Western propaganda.
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