The Problem of the Working Poor Needs to Be Solved

31 october 2017

The Analytical Center has published a bulletin titled The Working Poor in Russia and Abroad that analyzes the social and economic aspects of this phenomenon. The problem of working poor is common to Russia and foreign countries, including the developed economies, and has been maintained for a long time, write the authors of the bulletin. Once again, as in the 1990s, Russian politicians, experts and the media drew attention to the downward trend in the income of the population in recent years.

In the Russian Federation, the minimum wage is lower than the living wage for the working-age population and it needs to be corrected since it's one of the main reason for the emergence and persistence of the working poor problem.  

The poverty of workers creates a number of negative economic and social consequences affecting productivity and quality of labor, personnel deficiency in the sphere of production, health of the population and educational opportunities. The increase in the employment of poor households does not allow them to escape from poverty, but it can hold back the overall productivity in the economy, which inevitably involves a reduction in the number of working people.

Experts estimated that the percentage of the working poor employed by state and municipal organizations is several times higher than that in the private sector. As time goes by this gap increases, which inevitably leads to acute shortages of labor in industries financed by state and municipal funds. It is clear that there is a merit in improving approaches to the organization of remuneration in public (municipal) institutions to improve their efficiency.

The analysis carried out by the Analytical Center experts leads to the conclusion that closer attention needs to be paid to the working poor in Russia. This requires, inter alia, the reflection of this problem in the strategic and program documents of the Russian Federation, as well as the inclusion of relevant targets/indicators therein. The experts believe that the methodologies used for assessing the poverty of the working population needs to be improved to take into account the international practices, including the approaches used in the EU and the OECD, as well as the methodologies used for estimating the living wage and minimum wage taking into account the conventions and recommendations of the International Labor Organization.

For more information see the Working Poor in Russia and Abroad bulletin.

For other reviews on social issues see Publications.