Millions of public sector employees will remain without salary indexation: experts explained the reason

Last week, the Federation Council adopted a law according to which the salaries of civil servants, assistants to deputies and senators, and judges will not be indexed for the entire next year, until January 1, 2025. The wage freeze will, according to some sources, affect almost 2.5 million state employees, for whom the budget will save about 36 billion rubles. Experts told MK about the reasons for this decision.

A document freezing the indexation of civil servants’ salaries for the next year was proposed by the Russian government and submitted to the State Duma back in September. During the second reading, amendments were approved, according to which salary indexation will remain for military personnel, as well as employees of internal affairs bodies, the Federal Penitentiary Service, the Federal Bailiff Service, the Federal Customs Service and the State Fire Service. The law was adopted in the third reading by the lower house of parliament on November 16. It will come into force on January 1, 2024.

Well, it seems that the times when it was profitable for young (and not only) people to join the civil service – because there, in any case, salaries were indexed at the expense of the budget – are a thing of the past. The country currently has a budget deficit, and, as they say, there is not enough money for everyone. Next year, they were not enough to index the salaries of civil servants – at least those of them who do not belong to the security forces and do not wear shoulder straps. No one will compensate them for the loss of real income from rising inflation.

Civil servants are considered to be persons who perform certain functions in government positions and organize the work of society. Civil servants include police officers, the Ministry of Emergency Situations, medical personnel of government departments, military personnel of various troops, employees of the judicial system and officials of the government apparatus and other executive authorities. Let us recall that in modern Russia there are six categories of positions in government organizations. Firstly, these are employees of state-owned enterprises and institutions, secondly, employees of law enforcement agencies and, thirdly, technical performers in government bodies. In total there are 2.4 million civil servants in Russia.

It is noteworthy that previously Russian legislation provided for the indexation of civil servants’ salaries in 2024 by 4%. But now they are facing a “freeze”, which, according to preliminary calculations, should save the budget 36 billion rubles.

Andrey Loboda, economist, director of communications at BitRiver, comments:

“In conditions of a budget deficit, the state can temporarily reduce the burden on its expenses by suspending the indexation of wages for certain categories of citizens. This allows you to save money, and we are talking about 36 billion rubles, and redirect it to higher priority sectors, such as healthcare, education or social protection. Moreover, now a large item in the budget is expenditures in the military-industrial complex, so this sector of the economy also needs expanded funding.

Also, such measures may pursue the goal of balancing the budget. Maintaining a balanced budget is important for the sustainable development of a country. A cost-cutting measure can help effectively balance income and expenses.

We do not exclude the possibility that this could serve as an example of responsible management of public resources in order to improve public trust.

However, the important thing here is that such measures will obviously be temporary, and this is quite logical. Saving on government employees is not a good idea; the incomes of all citizens should grow confidently. It is not worth punishing with the ruble even those who allow its depreciation. It is important to ensure a decent life for all citizens of the country, without exception.”

Alexey Krichevsky, financial analyst, author of the economic telegram channel, comments:

“It’s okay that civil servants’ salaries won’t be indexed once, no – tens of millions of our fellow citizens have been living without any indexation for decades. In addition, de facto the state has where to spend the saved money – from social budget expenditures to payments to military personnel. In addition, we must not forget that we are only talking about indexation, and no one plans to freeze other allowances – length of service, length of service, children’s money, and so on. If anything, there are always options with a bonus – the bonus can simply be presented as some kind of “compensation” for the lack of indexation. That is, the state apparatus will still get its own. And the law itself is not specifically populist, but it is perfect for information noise. In practice, it won’t be difficult to get around it – through the same bonuses.”