What is the minimum wage in Russia: dynamics by years

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:55

The most common tool for protecting the least well-to-do working population is fixing the minimum wage (hereinafter referred to as the minimum wage). In many countries of the world, a single indicator is set, but in some of them, the minimum wage is determined by region, as in China, or by industry, as in Japan. In Greece, the government only approves the agreement reached, but in the most developed and we althy countries (Finland, Denmark) with strong trade unions, it has already been abandoned, where employers should not pay less than in collective agreements.

The top earners are Australia ($9.54), Luxembourg ($9.24) and Belgium ($8.57).

What is the minimum wage in Russia?

Once or twice a year, the Russian government calculates, based on the forecast of economic development, what the minimum wage in Russia will be for the next period, and, unfortunately, so far, most often, it sets it based on what it can pull the budgetnot how much the workers need.

In the first few years, the minimum wage (officially in Russia the term "minimum wage" or minimum wage is used) was adopted one for the whole country.

Since 2006, a new mechanism has been adopted, now each region can independently determine this indicator. In Russia, the minimum wage is set for a month, in many countries, for example, the USA, Australia, Korea and most developed countries, an hourly minimum is set.

What is the role of the minimum wage

Countries introduce a minimum wage when the level of economic development allows to protect the lowest income groups of workers. The level of qualification and performance of these people is estimated low by the market and the state.

The introduction of a minimum wage mechanism forces employers to pay an amount that allows them to live on it (according to the government). Sometimes this even makes it possible to overcome the "poverty line", and on the other hand, it works to reduce income stratification among the working population. Richer countries are also using minimum wage increases to increase consumption.

Minimum wage is used for:

• wage regulation;
• calculation of benefits for temporary disability, pregnancy and childbirth;
• calculation of fees, payments, fines.

What's included

All that an employee receives in a month is wagessalary, bonuses, additional payments, except for those related to the climatic conditions of the region, and all types of payments are included in the minimum wage.

Minimum wage includes:

• remuneration, in accordance with the employment contract;
• incentive payments (bonuses, sales percentages and other incentive payments);
• compensation payments (allowances, additional payments for work in difficult and special conditions that differ from normal).

Until 2007, in areas with difficult natural and climatic conditions, the federal minimum wage was multiplied by the regional coefficient, which ranged from 1.2 to 2, and employers could not pay workers in the region less than this amount.

The inclusion of all additional payments in the minimum wage has significantly reduced the income of workers in the regions of Siberia and the Far East. However, since December 2017, regional allowances and additional payments for work in difficult climatic conditions have again been withdrawn from the minimum wage.

How it affects the economy

The adoption by the state of the minimum wage indicator, first of all, serves to reduce social tension associated with low incomes of low-skilled workers and their families. At the same time, a significant increase in the indicator reduces the supply of jobs and increases unemployment. Enterprises, especially the SME sectors, are not always able to provide increased wages and are forced to lay off or transfer staff to part-time, and sometimes pay wages to"envelope".

In addition, by raising the wages of the lowest paid workers, the employer will have to revise the earnings of "adjacent" employees in order to approximately maintain the proportions between different categories of workers.

The costs of creating new places are rising and prices are rising slightly, especially in the retail and services sectors, where in developed countries, mostly low-skilled labor is used. In order to reduce the cost of raising the minimum wage, developed countries are providing funds for compensation payments in the main sector of small and medium-sized businesses.

How it has changed over the years

Economic conditions allowed the introduction of the minimum wage mechanism only in 2000, when the minimum wage was set at 132 rubles and the figure was less than 10 percent of both the subsistence minimum (9.8 percent) and the average wage (6.1 percent), and was in fact a purely formal indicator that did not provide income protection for the lowest paid workers.

Over the next eight years, the minimum wage in nominal terms increased more than thirty times, which was provided by a low base level and high growth rates of the country's economy. After such a significant increase, the minimum wage was only 17 percent of the average wage, while in European countries, the figure is between 20 and 50 percent.

The table shows the change in the minimum wage by year in Russia from 2000 to 2015. It shows thatthe increase in the size of the minimum wage did not always follow economic logic, and a significant difference was also shown between the smallest and the largest of them.

This is the dynamics of the minimum wage in Russia from 2000-2015. The ratio of the lowest to the highest pay indicates a division of society by income level, which was not so noticeable at the end of the last century.

Recent major increases in Russia's minimum wage:

• in 2007 by 109.09 percent is largely due to the inclusion in the minimum wage of all allowances and additional payments, as well as district coefficients;
• in 2009 by 88.29 percent due to a significant devaluation of the ruble due to the economic crisis.

More than doubling the minimum wage in 2007 for most workers was not such a significant increase in income, but a simple redistribution between basic and additional pay and all additional payments were now included in the figure.

Most of all, workers with low additional earnings and compensations, mainly in the regions of the European part of Russia, benefited the most from this increase, workers in Siberia and the Far East received the least, where more than the national average, additional payments and district odds.

The slow economic recovery made it impossible to significantly increase the minimum wage in recent years. And only Russia's exit from the crisis last year, which showed growth of gross domestic product by 1.5 percent, and low inflation of 2.5percent made it possible for the first time since 2009 to significantly increase the figure from 7800 to 9489 rubles, which is an increase of 21.7 percent.

And what about the regions?

Since 2006, Russian regions have been able to set the minimum wage, most importantly, it cannot be lower than the federal figure. The value of the minimum wage in such areas is established on the basis of consensus between the main participants that form the rules on the labor market: representatives of the state (the government of the region), authorized workers (trade unions) and associations of employers (unions of industrialists and entrepreneurs).

All employers in the region must pay wages not lower than the level of the regional minimum wage, or they can refuse to use it within 30 days, then enterprises must use the federal minimum wage when calculating.

Increased minimum wages are accepted by regions with a favorable economic situation, and in some cases even with difficulties with labor resources. In some years, from 30 to 45 subjects of the federation set higher minimum wages.

Dividing further

Many regions did not stop at adopting one minimum wage level, but determined different parameters for individual districts, cities, and there is even the village of Khatanga, in the Krasnoyarsk Territory, the only one in Russia that has its own individual minimum wage. The adoption within the regional minimum wages is typical for areas with a large territory and complex naturalclimatic conditions, mainly in the regions of Siberia and the Far East.

In the same Krasnoyarsk Territory, thirteen values of the minimum wage have been adopted, in the Sakhalin region six, in the Tomsk region - five. Some regions resorted to some discrimination against businesses and set them a higher minimum wage than in budget organizations that received the federal minimum wage, which is more typical for poor regions of the European part of Russia and national republics trying to save budget funds.

Somewhere more, somewhere less

How much the minimum wage in Russia and how it can vary by region depends primarily on the state of the economy of the subject of the federation, and only secondarily on working and living conditions. Another important factor affecting the value of the indicator is the state of the labor force.

In general, across the country in 14 regions of Russia, the minimum wage is set at a level not lower than the subsistence minimum. Some regions set the minimum wage in proportion to the subsistence minimum, for example, in the Kemerovo region it is 1.5 times the subsistence level of the working-age population, but not lower than 9489 rubles.

However, the cost of living in Kuzbass is practically at the same level - 9391 rubles. The Moscow minimum wage is the fourth largest indicator after the Magadan Region and some districts of the Krasnoyarsk and Kamchatka Territories, and has been set at 18,742 rubles since January 1.

The minimum wage in Russia's regions more than doubles from 9,489 rubles adopted at the federal level, mainly in the regions of Central Russia and most national republics, to 26,376 rubles in the rural settlement of Khatanga, Krasnoyarsk Territory. The number of regions that adopted increased minimum wage obligations in 2018 has significantly decreased, many of them decided to cheat and set the minimum wage at the federal level for state employees and higher for other workers.

Work better, of course, in Moscow

from the highest. Moscow has a single minimum wage for all employees, which is approved equal to the subsistence level for the working population and is valid for one quarter.

In the third quarter of 2017, due to low inflation, there was a decrease in the living standard in Moscow compared to the second quarter, while the minimum wage remained at the same level. From January 1, the minimum wage was adopted in the amount of 18,742 rubles. For comparison, in the Moscow region this figure is 13,750 rubles for commercial enterprises, and 9,489 rubles for budgetary organizations

Going to the living wage

Russian sizeminimum wage should be equal to the subsistence level of the working population, as defined in the Labor Code of the Russian Federation, which should imply automatic indexation, but the mechanism does not work yet. In the early 2000s, the minimum wage was only about 10% of the subsistence minimum, the gap gradually narrowed due to higher indexation of the minimum wage. In 2009, the minimum wage reached 80 percent of the subsistence minimum, and by 2020 it was planned to equalize the two minimums in two stages - the subsistence level and the wages of percent. Finally, the government decided to comply with the Labor Code of the Russian Federation.

From January 1, 2018, the cost of living in Russia, according to the Decree of the Government of the Russian Federation of December 08, 2017 No. 1490, based on data for the 3rd quarter of 2017, is:

• per capita - 10,328 rubles;
• for the working-age population - 11,160 rubles;
• for pensioners - 8,496 rubles;
• for children - 10,181 rubles.

What will we live on in 2018

The government decided to pay the minimum wage in Russia in 2018 in the amount of 9489 rubles, for the first time in eight years, adding more than 20 percent. The minimum wage has reached 85 percent of the subsistence minimum and has been promised to be further raised to 100 percent in the next two years. But we were all a little lucky, and at a meeting in the Tver region with workers, Vladimir Putin promised that it would be possible to live on the smallest wages.

“We maintain the positive dynamics of the Russian economy. We havethe opportunity from May 1 of this year to equalize the minimum wage and the cost of living, we will do it.”

B. V. Putin.

Now from May 1, the minimum wage will be increased to 11,163 rubles and, as in most developed countries of the world, it will be no less than the subsistence level, and the lowest paid groups of the population will be able to live on wages. In addition, the ratio of the minimum to the average wage has also become more than 20%, approximately at the level of Eastern European countries.

According to the Ministry of Labor, the change in the minimum wage in Russia as a whole will affect 1.5 million workers, including 0.9 million state employees.

These are the forecasts for the future in the country.