Increase in Minimum Wage Approved by State Duma
On October 22, 2024, the State Duma of Russia approved a significant increase in the minimum wage, which will rise by 16.6% to 22,440 rubles per month starting January 1, 2025. This legislative move aims to benefit approximately 4.2 million working citizens and aligns with national development goals outlined in a presidential decree. The plan is to raise the minimum wage to 35,000 rubles by 2030, reflecting a commitment to improving the economic conditions for low-income workers.
Implications of the Wage Increase
The upcoming increase in the minimum wage is expected to exceed the inflation rate projected by the Ministry of Economic Development, which estimates inflation at 7.3% for 2024. President Vladimir Putin had previously emphasized the need for accelerated wage growth as a means to reduce economic inequality. He noted that the minimum wage will be adjusted to 48% of the median wage, which is currently set at 46,751 rubles per month.
Currently, the minimum wage in Russia stands at 19,242 rubles, and the change will also impact calculations for temporary disability benefits, maternity benefits, and other social insurance payments. The constitutional requirement states that the minimum wage cannot fall below the subsistence minimum, which will also see an increase from 16,844 rubles to 19,329 rubles in 2025.
Economic Perspectives on Wage Growth
Economists view the increase as a positive step towards strengthening social policy. Andrey Loboda, an economist, pointed out that the current labor market dynamics, characterized by personnel shortages, compel employers to raise salaries to attract job seekers. While the immediate impact of the wage hike will benefit around 4 million workers, it is anticipated that the ripple effects could lead to salary increases for an additional 15-20 million employees, particularly in sectors where low-wage workers are prevalent. Georgy Ostapkovich, a director at the National Research University Higher School of Economics, noted that employers may need to adjust wages for more productive employees to maintain workforce balance.
