The Chairman of the State Duma committee on labour and social policy, Andrei Isayev, has prepared an amendment to the labour law in response to the passing of the Magnitsky Act in the US. This would effectively ban foreign staffing companies in Russia, allowing only national recruitment agencies to operate.

The US Congress last week passed a bill to ‘stabilise’ trade with Russia, which will also penalise Russian officials linked to human rights violations. The bill was harshly criticised by officials in the country with the Russian ministry calling it “absurd.”

Named after a Russian whistle-blower who died in prison, the Magnitsky Act will see the US listing Russian officials suspected of human rights violations, also denying them visas and freezing their assets. The ban on foreign staffing companies is only one aspect of Russia’s retaliation for the Magnitsky Act which will embrace a wide range of US citizens who will be denied Russian visas and whose accounts in Russia will be frozen.

The Russian newspaper Kommersant today writes that Mr Isayev has presented the amendments to labour law on Friday as a response to the “discriminating” Act. However, the lawmaker has come under fierce criticism himself for proposing to, in effect, ban foreign recruiters in Russia.

Mr Isayev is Deputy of United Russia, the majority party in the country, and is a prominent supporter of President Putin. Russia’s association of private employment agencies (ACHAZ), whose founding members include US staffing companies ManpowerGroup and Kelly Services, was “shocked” about the announcement.

Ekaterina Gorokhova, head of ACHAZ and Kelly Services in Russia, said that foreign staffing agencies bring expertise that most Russian companies do not possess. This also includes the protection of temporary agency workers.

She said the conflict in government has “held us hostage”. Foreign staffing firms have called for balanced and rational responses from the government.

The Russian staffing market is characterised by credible recruiters but also by a sizeable black market made up of small operators prepared to pay temporary workers in cash to duck taxes and social charges. A ban would most likely see an increase in such illegal activities.