Russia's Severstal warns of construction risks as region bans migrant labour

By Anastasia Lyrchikova and Alexander Marrow

MOSCOW, Feb 28 (Reuters) - Russian steelmaker Severstal CHMF.MM on Friday slammed a decision by a regional governor to ban migrant workers in the construction industry and said the move could cause serious harm to industrial projects.

The company reacted swiftly and sharply to the ban, announced in a decree on Thursday by Georgy Filimonov, governor of the Vologda region northwest of Moscow.

The rare public clash between a powerful regional politician and a major business highlights Russia's reliance on migrant workers and the difficulties that companies are facing as the country grapples with a widespread shortage of labour.

"Such measures jeopardise the implementation of dozens of construction projects, both in the region's industrial and social spheres," Severstal said in a statement on the ban.

It said the move would "seriously complicate" its plan to build a low-pollution iron ore factory in Cherepovets, a major city in the region, where it plans to invest over 120 billion roubles ($1.36 billion) this year, and could jeopardise a contract with a Chinese supplier.

Heavy recruitment by the armed forces and defence industries has drawn workers away from civilian enterprises, and hundreds of thousands of Russians have left the country since President Vladimir Putin sent his army into Ukraine in 2022. With unemployment at a record low of 2.3%, Putin has flagged labour shortages as a major economic problem.

Filimonov, the Vologda governor, did not state the grounds for the migrant ban, but he has publicly questioned why businesses cannot recruit local workers.

Migrant workers from Central Asia have described growing hostility towards them in Russia since Islamist militants from Tajikistan attacked the Crocus City Hall, a concert venue near Moscow, killing 145 people, in March 2024.

Nationalist politicians are ratcheting up rhetoric against foreigners and pushing legislation that impacts the lives of migrants working in Russia or those wanting to do so.

Filimonov in October published a video showing workers putting the finishing touches to a new, life-sized statue of Soviet-era leader Josef Stalin.

Videos previously published by Filimonov demonstrate an affinity for Soviet leaders, and photographs of secret police chiefs Lavrentiy Beria and Felix Dzerzhinsky hang on the walls of his office. He has dubbed a painting of himself shaking hands with Stalin, which hangs in his reception room, as "conceptual".

Severstal said its repeated efforts to engage with the regional administration had been rebuffed.

"Instead of constructive interaction, we were confronted with the distortion of facts, manipulation and a refusal to comply with agreements already reached," Severstal said.

($1 = 88.4500 roubles)