Up again: minimum wage to rise by 9%

Kremlin today

At the moment, the minimum wage is 13,890 roubles. The authorities are considering an unscheduled increase in the minimum wage and the subsistence level by 9%. This was confirmed by a federal official taking part in the discussion. If the figures are increased, the minimum wage will be 15,140 roubles. After indexation, the minimum wage must exceed 15 thousand rubles. The 9% increase was called a balanced decision, as such indexation will not put excessive pressure on business contributions. However, the increase in payments could accelerate inflation.

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On April 27, President Vladimir Putin addressed the Legislative Council. He announced the indexation of social benefits, pensions and wages of state employees in the near future. 

From the first of January 2021, a new procedure for calculating the minimum wage came into force. Now it is 42% of the average salary for Russia for the previous year. And since January 1, 2022, the SMIC and pensions have grown by 8.6%, which exceeds last year’s inflation by 8.4%. The Cabinet estimated that the increase in the minimum wage  would contribute to an increase in the wages of about 2.7 million employees.

Despite the fact that the minimum wage, subsistence level and insurance pensions are usually indexed from January 1, this year due to acceleration of inflation against the background of the Russian-Ukrainian conflict it was decided to carry out an extraordinary indexation.

The Russian Ministry of Economic Development forecasts inflation in 2022 to be above 20%. Alexander Shirov, director of the Institute of Economic Forecasting of the Russian Academy of Sciences, considered the risks of an inflation surge insignificant due to import compression. The extra revenues will go to support domestic producers. According to the expert, additional social measures will be required during the year: for example, one-off payments, the bulk of which will fall in the second half of the year, when the dynamics of inflation will be clearer.