Will minimum wage and subsistence minimum be equal in Russia?

Russian President Vladimir Putin considers the Russian government's plan to raise the minimum wage up to the minimum subsistence level a serious step.

At the meeting with the Chairman of the Federation of Independent Trade Unions Mikhail Shmakov, the President reminded that the minimum wage will be raised up to 7800 rubles from July 1, although it has not yet been compared to the subsistence level.

"We believe that the methodology of the minimum consumer budget could be more equitable," Shmakov said, noting that it is several times higher than the current minimum wage level.

"The government is discussing the possibility of raising the minimum wage right up to the minimum subsistence level as a serious step in the direction that you indicated," TASS cited him as saying.

The Chairman of the Federation of Independent Trade Unions, in turn, pointed out that "there are unacceptable conditions for workers, which we have not yet been able to agree".

Earlier, Russian Prime Minister Dmitry Medvedev ordered to get the country’s minimum wage up to the minimum subsistence level within the next two years.

The director of the Institute of International Economics at the Russian Academy of Sciences, Ruslan Grinberg, speaking to Vestnik Kavkaza, supported the equality of the minimum wage and the subsistence minimum. "Better late than never. Now they talk about all sorts of frauds when the minimum wage is equal to the subsistence minimum, but I think their scale will be minimal," the expert stressed.

In his estimation, technically, the equality of the levels of minimum wage and subsistence minimum is possible even now. "It is clear that the initiative is of largely pre-election nature, but it is important that it will improve people's lives. The implementation of the idea cannot be doubted. Of course, an increase in public spending will be required. Since we have a very good ratio of the debt and the GDP, it is possible without losing economic stability," Ruslan Grinberg noted.

The vice-rector at RANEPA Alexander Safonov, in turn, recalled that the correspondence between the minimum wage and the subsistence minimum has already been determined by the Labor Code, but it has not been fully implemented. "To date, we have a situation in which wages may be lower than the subsistence minimum, which, first of all, leads to the fact that a person is forced to apply for material assistance to social protection agencies. According to statistics, the number of such people is about 5 million - and there is no economic sense to put working citizens in line for social benefits," the economist drew attention.

"If one builds a system competently and pays people wages not lower than the subsistence minimum, they will not apply for social benefits. it is very important to see in the long term that jobs with wages below the subsistence minimum are in fact subsidized by the state and not effective, because they do not provide a decent pension for a person. The increase in the minimum wage to the minimum subsistence level also allows reducing the amount of shadow money," Alexander Safonov pointed out.

"Thus, bringing the minimum wage to the subsistence minimum level is absolutely right, since it will solve many current and future problems. Through the redeployment of funds, it is easy to collect this money in favor of those who are currently in the most difficult situation due to the rapid fall in real incomes of the population," the vice-rector at RANEPA concluded.