The most common tool for protecting the least well-off working population is fixing the minimum wage (hereinafter MZP). In many countries of the world, a single indicator is set, but in some of them the MWs are determined by region, as in China, or industry, as in Japan. In Greece, the government only approves the agreement, and in the most developed and richest countries (Finland, Denmark) they have already refused it with strong unions, where employers should not pay less than in collective agreements.
The leaders in terms of salary are Australia ($ 9.54), Luxembourg ($ 9.24) and Belgium ($ 8.57).
What is the minimum wage in the Russian Federation?
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 determines on the basis of the fact that it can "pull" the budget, and not what amount workers need.
In the first few years, the minimum wage (officially used in Russia, the term "minimum wage" or minimum wage) 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 level 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 are introducing a minimum wage indicator when the level of economic development protects the lowest-income groups of workers. The skill level and productivity of these people is rated low by the market and the state.
The introduction of a minimum wage mechanism makes employers pay an amount that allows them to live on it (according to the government). Sometimes this even allows you to overcome the "poverty line", and on the other hand, it works to reduce the income stratification between the working population. In richer countries, raising minimum wages is also used to increase consumption.
The minimum wage is used for:
- regulation of remuneration;
- calculation of the size of benefits for temporary disability, pregnancy and childbirth;
- calculations of fees, payments, fines.
What is included
All that an employee receives per month - wages, bonuses, surcharges, with the exception of those associated with the climatic conditions of the region, and all types of payments are included in the minimum wage.
Minimum wage includes:
- remuneration in accordance with an employment contract;
- incentive payments (bonuses, interest on sales and other incentive payments);
- compensation payments (allowances, surcharges 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 district coefficient, which ranged from 1.2 to 2 and already less than this amount, employers could not pay workers in the region.
The inclusion of all additional payments in the minimum wage significantly reduced the income of workers in the regions of Siberia and the Far East. However, since December 2017, the district allowances and surcharges for work in difficult climatic conditions were again withdrawn from the minimum wage.
How it affects the economy
The adoption by the state of the minimum wage indicator primarily serves to reduce social tensions 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 small and medium-sized businesses, are not always able to provide increased wages and are forced to dismiss or transfer staff on a part-time basis, and sometimes even issue wages in an “envelope”.
In addition, by increasing the wages of the lowest paid workers, the employer will have to review the earnings of "related" employees to approximately maintain proportions between different categories of workers.
The costs of creating new places are growing and prices are rising slightly, especially in the retail and services sectors, where the developed countries mainly use low-skilled labor. In order to reduce the costs associated with raising the minimum wage, developed countries provide funds for compensation payments mainly to the small and medium business sector.
How has changed over the years
Economic conditions allowed the introduction of the minimum wage mechanism only in 2000, then the minimum wage was taken to be 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 in fact was a purely formal indicator that do not provide income protection for the lowest paid workers.
Over the next eight years, the minimum wage in nominal terms grew more than thirty times, which was ensured 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 from 20 to 50 percent.
The table shows the change in the minimum wage by years in Russia from 2000 to 2015. It shows that the increase in the size of the minimum wage did not always follow the economic logic, and also showed a significant difference between the smallest and largest.
This is the dynamics of the minimum wage in Russia from 2000-2015. The ratio of the smallest and the highest pay indicates a division of the layers of society by income level, which was not so noticeable at the end of the last century.
Recent significant increases in the minimum wage in Russia:
- in 2007, 109.09 percent is largely associated with the inclusion in the minimum wage of all premiums and supplements, as well as district coefficients;
- in 2009, 88.29 percent was caused by a significant devaluation of the ruble due to the economic crisis.
The more than twofold increase in the minimum wage in 2007 for most workers was not such a significant increase in income, but a simple redistribution between the main and additional payments and all additional payments were now included in the indicator.
Most of all, workers with low additional earnings and compensation, mainly in the regions of the European part of Russia, benefited the most from this increase; workers of Siberia and the Far East received the least, where more than the national average, additional payments and district coefficients.
Slow economic recovery has not made it possible to significantly increase the minimum wage in recent years. And only Russia’s exit from the crisis last year, which showed an increase in gross domestic product by 1.5 percent and low inflation of 2.5 percent, made it possible for the first time since 2009 to significantly increase the figure from 7800 to 9489 rubles, which represents an increase of 21.7 percent.
And what about the regions?
Since 2006, Russian regions have been able to set a minimum wage; most importantly, it cannot be lower than the federal indicator. The minimum wage in such areas is established by consensus between the main participants shaping the rules on the labor market: representatives of the state (government of the region), authorized by workers (trade unions) and associations of employers (unions of industrialists and entrepreneurs).
All employers in the region must pay wages not lower than 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 with difficulties with labor resources. In some years, from 30 to 45 constituent entities of the Federation set higher minimum wages.
Divide further
Many regions did not stop at the adoption of one minimum wage level, but determined various parameters for individual regions, 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. Acceptance within the regional minimum wage is typical for areas with a large territory and difficult climatic conditions, mainly these are the regions of Siberia and the Far East.
In the same Krasnoyarsk Territory, thirteen values of the minimum wage are accepted, in the Sakhalin Region six, in the Tomsk - five. Some regions made some discrimination against business, and set a higher minimum wage for them than in budget organizations that received federal minimum wages, which is more typical for the 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 is in Russia and how it can vary by region depends, first of all, 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 situation with the workforce.
In general, in the country in 14 regions of Russia, the minimum wage is set at a level not lower than the living wage. Some regions set the minimum wage in proportion to the cost of living, for example, in the Kemerovo region it is 1.5 times the cost of living of the able-bodied 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 regions of the Krasnoyarsk and Kamchatka Territories, and was established from January 1 in the amount of 18,742 rubles.
The minimum wage in the Russian regions varies more than twice 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 accepted increased minimum wage obligations in 2018 decreased significantly, 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
Despite the fact that Moscow did not fall into the top three winners in terms of the minimum wage, the working and living conditions of the lowest paid groups of the working population are much better than in other regions of the country, despite the fact that the cost of living in the capital is also one of the highest. In Moscow, there is a single minimum wage for all workers, which is asserted equal to the size of the living wage for the able-bodied population and lasts one quarter.
In the third quarter of 2017, due to low inflation, there was a decrease in the subsistence level in Moscow compared to the second quarter, the minimum wage, however, remained at the same level. Starting January 1, a minimum wage of 18,742 rubles was adopted. For comparison, in the Moscow region this figure is 13 750 rubles for commercial enterprises, 9489 rubles for budgetary organizations.
We go to the cost of living
In Russia, the minimum wage should be equal to the cost of living of the working population, as defined in the Labor Code of the Russian Federation, which should include automatic indexation, but the mechanism does not work yet. At the beginning of 2000, the minimum wage was only about 10% of the subsistence level, the gap was gradually narrowing due to higher indexation of the minimum wage. In 2009, the minimum wage reached 80 percent of the subsistence level, and by 2020 it was planned in two stages to level the two minimums - subsistence and salary percentages. Finally, the government decided to comply with the Labor Code of the Russian Federation.
Starting from January 1, 2018, the cost of living in Russia, according to the Decree of the Government of the Russian Federation of 08.12.17 No. 1490, based on data for the 3rd quarter of 2017, is:
- per capita - 10 328 rubles;
- for the able-bodied population - 11 160 rubles;
- for pensioners - 8 496 rubles;
- for children - 10 181 rubles.
What we will live for in 2018
The government decided to pay the minimum wage in Russia in 2018 in the amount of 9489 rubles, adding for the first time in eight years more than 20 percent. The minimum wage reached 85 percent of the subsistence level and it was promised to further increase 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, Putin V.V. promised that it would be possible to live on the smallest wage.
“We have positive dynamics in the Russian economy. "We have the opportunity from May 1 of this year to equalize the minimum wage and the cost of living, we will do it."
V.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 cost of living, 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 also became more than 20%, approximately at the level of Eastern European countries.
According to the Ministry of Labor, a change in the minimum wage in Russia as a whole will affect 1.5 million employees, including 0.9 million state employees.
These are the forecasts for the future in the country.