Russia's minimum wage to catch up with subsistence minimum in 2019

Russia's minimum wage to catch up with subsistence minimum in 2019

Russia's State Duma adopted the government law on raising the minimum wage to the subsistence minimum of the working population in the third and final reading.

According to the law, the minimum wage from January 1 next year will be 9,489 rubles a month, or 85% of the subsistence minimum in the second quarter of this year. Since 2019, the minimum wage will be equal to the subsistence level as a whole for the second quarter of the previous year, Interfax reports.

The size of the subsistence minimum for the second quarter is determined in the manner established by the Russian Cabinet of Ministers, after which the minimum wage is established by federal law.

If the size of the subsistence minimum as a whole in Russia in the second quarter of the previous year is lower than its value for the second quarter of the year preceding the previous year, the size of the minimum wage is not reduced.

The law will come into effect on January 1, 2018.

At the moment, the minimum wage is 7800 rubles. As a result of the second quarter of this year, the subsistence minimum is 10329 rubles.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, speaking to a correspondent of Vestnik Kavkaza, noted that this law on raising the minimum wage to the subsistence minimum is extremely important for Russians. "First and foremost, it should be emphasized that this is a very correct decision that will reduce the number of working poor. On the other hand, the equality of the minimum wage and the subsistence minimum will reduce the costs of regional budgets for social assistance to those families who cannot support themselves," he said in the first place.

This law will have a strong stimulating effect on the economy. "It is important that by increasing the minimum wage to the subsistence minimum, consumer demand will expand, which will save jobs in all constituent entities of the Russian Federation," Alexander Safonov stressed.

The director of the center for research into regional reforms of the Institute of Applied Economic Research of RANEPA, Alexander Deryugin, in turn, drew attention to the risks of  part of the economy turning gray. "In principle, employers can circumvent a new law by shifting workers to part-time, in order to avoid paying more money. That is, the benefits will depend on the behavior of their employers," he warned.

"I do not think that this will have a big impact on the budgetary sphere, since most of the salaries there are clearly higher than the subsistence minimum. But the life of most disadvantaged people will be a little better. For those who hire people for the lowest salary it will be really uncomfortable, but in in general, it will not have much effect on the economy, "Alexander Deryugin expects.

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