Consideration of legislation mandating periodic adjustments of wages each quarter by the Russian administration
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A Fresh Spin on Wage Adjustments:
Deputies from the "Fair Russia - For Truth" (SRZP) party are cooking up a plan to tweak the Russian Labor Code (RFC) wage-indexing norm. As shared by "RIA Novosti," the proposal is currently under review by the Russian government. This proposal aims to link wages to inflation and increase them quarterly by the corresponding amount.
Let's break it down: SRZP suggests that state bodies, local self-governments, and other employers should give pay bumps every three months in sync with inflation rates. But, hold on, there's a catch! As pointed out by SRZP chief, Sergei Mironov, the current RFC doesn't enforce employers to implement such adjustments, making it more of a suggestion than a rule. And, guess who's in charge of setting the size, frequency, and feasibility of these wage hikes? Yep, you guessed it—private companies.
Mironov spilled the beans that real earnings for able-bodied Russians have plummeted for two consecutive years. So, SRZP is rolling out this bill to boost the well-being of citizens and curb these falling income trends.
Mironov explained further that the proposed rule will mandate wage compensation for both state and private entities regularly, every three months, according to the previous inflation level.
Interesting fact: According to Rosstat data, the average monthly wage in Russia in 2024 (including bonuses, but not taxes) was 87,952 rubles, representing an increase of 17%, more than the inflation rate of 8.4%. So, it seems like workers are digging deeper into their pockets to cover the rising cost of living, despite the hike.
It's worth mentioning that the Bank of Russia aims for an inflation rate of 4%, but we're far from hitting that target. By the end of 2024, inflation got as high as 9.52%, according to our sources. The main tool used by the Bank of Russia to keep the inflation rate in check is maintaining a high key rate (currently 21%).
Fun Fact: Prices in Russia have skyrocketed eight times since the start of the 2000s, increasing by a whopping 700%.
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- I'm not sure if this new proposal will significantly improve the general news of falling income trends for Russian citizens, as it seems private companies will still have a significant amount of control over the size, frequency, and feasibility of the wage hikes based on the current RFC.
- The inflation indexing policy-and-legislation being proposed by SRZP to link wages to inflation and increase them quarterly by the corresponding amount might help in keeping up with the rising cost of living, but it's important to note that the Bank of Russia aims for an inflation rate of 4%, and we're currently far from hitting that target.
- It's crucial to consider the impact of politics on this proposed change, as Sergei Mironov, the SRZP chief, has pointed out that the current RFC doesn't enforce employers to implement such adjustments, making it more of a suggestion than a rule.
- Unfortunately, despite the accrued wages increases over the years, real earnings for able-bodied Russians have plummeted for two consecutive years, prompting the need for policies like inflation indexing and the proposed wage adjustments being discussed by SRZP.
