After Staffing Industry Analysts reported on Monday that lawmakers in Russia are proposing to ban foreign recruitment agencies, a second reading to change the law on agency labour might decide the fate of international staffing firms operating in the country.

The potential ban has been brought about after the Chairman of the State Duma committee on labour and social policy, Andrei Isayev, prepared an amendment to the labour law in retaliation for US lawmakers passing the Magnitsky Act. This change to US law will penalise Russian officials suspected of violating human rights and has been received badly in Russia.

 “The Russian state and the Russian parliament are fully determined to adopt retaliatory measures,” said Mr Isayev, defending his proposals. But the gravity of a ban has been downplayed by the Ministry of Labour which denies that Mr Isayev's proposal will have any official status and instead appears to be more of an independent response.

Yekaterina Gorokhova, general director of Kelly Services,told Kommersant, a liberal Russian newspaper that it is the foreign staffing agencies that have "brought civilized expertise in the provision of temporary personnel, expertise that has been tried and tested in the West and which, among other things, protects employees' rights. The great mass of Russian companies do not possess such expertise. I hope this is just a temporary emotional outburst. Because of a clash that has occurred between the countries' leaderships, the agencies' employees have become hostages to a conflict that has nothing to do with them."

Large recruiters affected by a potential ban would include the likes of Adecco, Antal, Brunel, Gi Group, Grafton, Hays, Hudson, Kelly Services, ManpowerGroup, PageGroup, and SThree, all of which have operations in the country. Nevertheless, the proposed ban on foreign competitors, if it goes ahead, may be good news for the market leader, Ancor Group, a Russian staffing firm which announced a strategic business alliance with Randstad in November 2012.

At a roundtable in the State Duma last Friday, officials discussed the draft law on agency labour. Then Mr Isayev, part of the presidential party United Russia and a fierce supporter of Mr Putin, “unexpectedly stated that he is incorporating in the document a proposal to ban the accreditation of foreign corporate entities, organizations established by them, or their subsidiaries in the capacity of nonstate employment agencies for services for the provision of temporary personnel,” the BBC writes.

The draft law wants to restrict the use of agency work although the Ministry of Labour does not appear to support a full ban. It proposes tougher rules and states that agency labour may only be used temporarily for jobs not lasting more than six months or when an employee needs to be replaced for a short time. 

Staffing firms have condemned the news and said such measures would drastically cut agency labour in Russia. Instead of introducing a ban, they suggest the government should tighten its grip on “unscrupulous” employment agencies which exploit workers.