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It’s important to protect people. Mishustin says cabinet plans to index minimum wage and social pensions

Photo by Christopher Campbell on Unsplash

On January 1, 2024, the Russian government will index the minimum wage by 18.5% on the instruction of President Vladimir Putin. This was announced by Prime Minister Mikhail Mishustin on Thursday, March 23, during his annual report to the State Duma on the work of the Cabinet.

According to him, improving the welfare of citizens remains one of the priorities of the Russian authorities. The Prime Minister stressed that it is planned to achieve the planned results, including by consistent increase in the minimum wage at a rate above inflation.

“Particular attention is paid to public sector employees. Our teachers, university professors, doctors and other medical personnel, employees of social and cultural spheres, science should receive decent pay for their difficult work, for which we help the regions to bring their salaries in line with the May decree of the President”, – added Mishustin.

It should be noted that the minimum wage establishes the minimum wage level, which an employee working full-time can receive. In addition, the indicator is used to calculate benefits for temporary disability, as well as for maternity.

Today the minimum wage in Russia is 16.2 thousand rubles, but as a result of the planned indexation it will increase to 19.2 thousand rubles. It is assumed that the initiative will affect about 15 million Russians and will increase salaries not only public sector employees, but also many employees in the real economy. About this told a member of the State Duma Committee on Labor, Social Policy and Veterans Affairs Svetlana Bessarab.

“Initially it was planned that the minimum wage would only be raised by 10%, but the president said that it was necessary to raise the bar even further by 8.5%. This is exactly the amount that will ensure the growth of real income and achieve further reduction of poverty by increasing social benefits,” the MP stressed.

In addition, according to Mikhail Mishustin, it is planned to increase social pensions in Russia on April 1, 2023. As noted by Svetlana Bessarab, payments will increase by 3.3%, and taking into account the indexation already conducted in June 2022, the increase will be 13.5%.

“It is important to emphasize that the pension of non-working pensioners has already reached the level planned for 2024. The state will not leave pensioners alone with financial difficulties”, – added Bessarab.

During his speech Mikhail Mishustin focused on the situation in Russia’s economy. According to him, in 2022 the country experienced the strongest in modern history sanctions. Moreover, if the Western countries initially declared their unwillingness to harm ordinary citizens with their restrictions, in fact, the main target of the restrictions was the Russian people, the Prime Minister stressed.

“They tried to collapse our financial system so that people could not use bank cards. To disrupt economic and economic ties. They forced their own companies to withdraw from the Russian market, recording huge losses, so that familiar goods disappeared from store shelves. And at the same time to throw on the street and deprive Russian employees of income of these organizations… They wanted to provoke mass unemployment in our country, radically reduce the quality of life,” said the chairman of the government.

Nevertheless, under unprecedented external pressure the Russian economic system showed flexibility and showed itself more stable than expected, said the head of the Cabinet. So, in the spring of 2022 a number of analysts predicted the collapse of the Russian GDP by the end of the year at a double-digit rate. Meanwhile, in reality the figure for the 12 months decreased only by 2.1%. This is even less than in the pandemic year of 2020 (2.7%) and the crisis year of 2009 (7.8%).

“We made it through. Yes, it wasn’t easy. The decline, inevitable in such conditions, was quite moderate. However, we (already. – ) returned the economy to the growth trajectory. Now, even some international organizations are predicting us positive dynamics by the end of 2023 and reaching gross domestic product growth rates higher than those of developed countries in 2024,” Mishustin noted.

According to him, serious problems were avoided due to the joint efforts of the authorities under the leadership of the president. Thus, to normalize the situation in the economy a priority plan of more than 300 different initiatives was approved. The government allocated 12.5 trillion rubles for its implementation.

In particular, entrepreneurs received substantial support. For example, profit tax rates were lowered for companies in a number of industries. Businesses were also provided with soft loans and deferrals on payment of insurance premiums. At the same time, the authorities continue to reduce the administrative burden.

“We have considerably eased business activities… Thanks to these steps, business was able to free up resources and channel them into restructuring its product and logistics chains and adapting to the changed conditions,” Mikhail Mishustin said.

In addition, significant assistance is provided to citizens, the head of the Cabinet added. So, in 2022 in Russia, pensions, the minimum wage and the minimum subsistence level were indexed twice. In addition, the government extended the terms of maternity capital and monthly benefits for families with children, as well as providing preferential mortgages.

“For us, as in all previous years, it was important to protect people, their income and employment. On behalf of the president we took a set of measures … Due to the support the unemployment rate decreased and in December it was fixed at a historic low – 3.7%, and in January of this year – 3.6%,” – said the Prime Minister.

According to him, the actions of the Cabinet and the Central Bank helped to cope with inflation. Last spring, against the backdrop of sanctions, the annual growth rate of consumer prices was close to 18% – for the first time in the past 20 years. However, at the end of 2022, the rate decreased to 11.9%, and now it is less than 6%, as evidenced by the materials of the Ministry of Economic Development.

Along with reducing inflationary pressures, the government has managed to maintain the stability of the banking sector, Mishustin said. Thus, due to the rapid actions of the Central Bank the work of credit institutions, foreign exchange and stock markets was normalized.

“We avoided external blocking of trade operations inside the country. Largely due to the previously built national payment and settlement infrastructure. And the replacement of the dollar and euro in our foreign trade allowed us to expand operations with friendly nations. Payments for goods, services and transfers are made as before. All bank cards used in Russia work,” Mishustin said.

It should be noted that over the last year, the West has imposed about 11.5 thousand different anti-Russian sanctions. Moreover, there are about 14,200 sanctions against Russia, which is more than the total number of sanctions against Iran, Syria, North Korea, Belarus, Venezuela, Myanmar, and Cuba taken together. This is evidenced by Castellum.AI, a global sanctions tracking database.

In addition to the anti-crisis measures adopted in 2022, the damage from Western restrictions has been minimized by a responsible macroeconomic policy of recent years, among other things. Russian Finance Minister Anton Siluanov told earlier.

“We had a balanced policy in the area of expenditures and the budget deficit… Also, Russia has a low national debt, which at the beginning of this year was 15.1% of GDP. This is our advantage… We have created an independent system of financial transactions and the functioning of the financial market as a whole… Therefore, all the decisions of the West… had absolutely no impact on our domestic operations and payments,” said the head of the Ministry of Finance.

In addition, according to Siluanov, even during the pandemic the authorities have learned to respond to a number of challenges and now they understand exactly how to act in such difficult times. All this eventually had a positive effect on the economic dynamics, the Minister believes.

“We hope that the measures, which were taken in 2022 and are being taken now, will make it possible to finally stabilize the macroeconomic and financial situation this year. We see that so far everything is going according to plan,” Anton Siluanov added.

According to him, given the external constraints and the withdrawal of many Western companies from Russia, now the main emphasis should be placed on import substitution and development of industrial and technological competencies. Georgy Ostapkovich, Director of the Center for Conjunctural Research at the Institute of Statistical Research and Knowledge Economy at the National Research University Higher School of Economics, expressed a similar point of view in his conversation with .

“The main difficulty now is related to access to technology. Earlier we were focused on the supply of Western equipment, but now we are cut off from it. We need to develop import substitution and enter East Asian markets to get the missing technology. In the future we must also develop educational programs, train personnel, and increase investment in human capital. Then the economy will not only grow, but also qualitatively develop, “- concluded Ostapkovich.

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