When there is enough money in the budget, employers can pay more

12 january 2018 | RBC-TV

Vladislav Onischenko, the first deputy head of the Analytical Center, talked about increasing the minimum wage to the level of the living wage on RBC-TV.

Vladislav Onishchenko
Vladislav Onishchenko
Deputy Head

"Our country is not the only one where the official minimum wage is below the living wage level. It's a complex problem that has to do with the fact that a typical household income pays not just for the needs of the working members of the family but also goes on paying the needs of the children, the elderly or those members of the household that cannot earn a living for whatever reason," Mr. Onischenko said. Even though the number of working family members in Russia's poor households has increased, these households still remain below the poverty line, the expert noted.

Currently, the living wage is RUB 10,000 per month. Polls show that less than 17% of Russians are willing to work for RUB 10,000 - RUB 20,000 per month. The rest don't think they would be able to survive on that kind of money. "If you look at it from the perspective of an employer, and the biggest employer in Russia is the state, there are some major problems. The thing is that the state must ensure people get decent pay, but given the number of state employees we have at the moment, especially at the regional and municipal levels, it's very hard to do, because the state doesn't really have that many sources of revenue. The situation is very similar for small business," Mr. Onischenko said. But if we look at it from the point of view of employees, then it's not just groceries we should be talking about. "Low pay means employees don't have enough to afford professional development training, good healthcare, and if they can't improve their skills they have no motivation to work harder. Everybody knows the old saying: you pretend to pay us and we pretend to work," the expert said.

According to Mr. Onischenko, when there is enough money in the budget, as is the case at the moment, and when there is sustainable economic growth, employers can pay more. When a country is going through an economic crisis or stagnation, employers can't afford to pay more, or rather, they can't afford to give their workers sizable raises.

"Russia does have some profitable sectors in the economy where the salary could be raised significantly, but a problem that has been getting worse for decades cannot be solved in one year," Mr. Onischenko believes. It should be said that in those regions where the salary is already pretty high, the effect from increasing the minimum wage will largely go unnoticed. In regions where people generally get paid little, the raise in the minimum wage will be felt significantly and business will have to raise the salary significantly, which is going to bring about other problems.

As for the younger generation, some of them are following a fairly successful strategy of trying to meet the modern needs of the labor market such as skills in foreign languages and information technologies. What that means is that they naturally gravitate to sectors that pay more and, according to the expert, in the future they are bound to have a higher productivity, which is going to allow them to comfortably pay for the needs of their families.

If we look at the experience of other countries, we should compare the minimum wage with per capita GDP and productivity, Mr. Onischenko stressed. "We are hovering at a level where we manage to provide more jobs for the people and one way that we all have to pay for that is through lower average salary," he summed up.

Source: RBC (beginning, continued).