Professor Safonov appreciated the promise of the Ministry of Labor to double the minimum wage: is there enough money

Make plans for the long term in the traditions of our state. Perhaps that is why the Ministry of Labor of the Russian Federation has developed a bill according to which by 2030 the level of the minimum wage in the country will double. Sounds good from today’s point of view, but how will it be in practice in 7 years?

Recall that this year the minimum wage (minimum wage) in the country is 16,242 rubles. This means that in 7 years the “minimum wage” will be 32.5 thousand. Today, this amount seems more or less worthy for living. And what will happen to her in 2030?

The authors of the bill write that social stratification in Russia is a threat to national security and the reason for the decline in the birth rate. Government actions are aimed at further improving the standard of living of Russians and reducing the number of poor people. The increase in the minimum wage will increase the purchasing power of the population, and will give impetus to the development of their own economy.

It has already been calculated that an additional 2.4 trillion rubles will be needed to implement these plans. Today, with the current budget deficit of 2.6 trillion, the state obviously does not have such funds. It seems that the drafters of the bill do not particularly hope that free money will appear even after seven years. Therefore, progressive taxation and funds from the National Welfare Fund (NWF) are seen as a source of additional income.

Both sources appear to be unreliable at the moment. At the expense of the National Welfare Fund, we are trying to patch up holes in the federal budget – it may not be enough for 7 years. Well, a progressive taxation scale is just talk about it …

Note that the minimum wage, by and large, has an indirect impact on the standard of living of most Russians – about 4 million people live on it (or, more correctly, exist). In 2022, this indicator rose twice in Russia: first by 8.6%, and then by 10%. As is known, this did not particularly affect the incomes of the majority of the population.

And here the question involuntarily arises: why does our authorities announce the indexation of the minimum wage long before it takes place? At the beginning of this year, Mikhail Mishustin announced that in 2024 the minimum wage would be indexed by 18.5% and it would be 19,242 rubles. And now we learned about the draft law of the Ministry of Labor and the two-fold increase in the minimum wage seven years before this happens.

– A clarification is required here, – says Alexander Safonov, professor at the Financial University under the Government of the Russian Federation. – The Ministry of Labor has developed a bill to increase the minimum wage in 2024 to 19,242 rubles. And already CEMI RAS – the central economic and mathematical institute – calculated how much money would be needed in order to double the minimum wage in 2030. About 2.4 trillion rubles.

– How objective are such calculations, because anything can happen in seven years …

– Of course, the “minimum wage” must be increased. At least up to a factor of 1.63 of the subsistence minimum (PM). This indicator takes into account the dependency burden: when two young parents receiving the minimum wage can support one child. Otherwise, the family falls not just into poverty, but into poverty.

– And what needs to be done to increase the minimum wage in relation to the PM?

– We need a comprehensive program of the government, which should solve a number of issues. In particular, the increase in the “minimum wage” should take place in proportion to the increase in the wage fund for public sector employees. 2.4 trillion rubles is not the amount that can solve this problem. Raising the minimum wage will require the nationalization of the money that will flow into the economy…

– What do you have in mind?

– The increased incomes of the population must be spent somewhere. If domestic output is not proportionally increased, inflation will begin to unwind. Imports from other countries will increase, the cost of these goods will rise. As a result, with our money we will pay for the development of foreign economies.

– One of the sources of income is called a progressive scale of taxation. But we don’t really have one, do we?

– Agree. And if we introduce it, then for whom? If we increase taxes for those who receive the average salary in the country, then we will worsen their financial situation. The tax burden on the poor population will increase – which cannot be allowed.

And then, what about the countries of the EAEU, with which we have a common economic space? For example, in Kazakhstan the income tax is 10%. Capital from Russia will flow to Kazakhstan, our business will change jurisdiction, and we will finance the development of other countries with our taxes.

– So many difficulties and risks… Maybe then not to increase the minimum wage at all?

– It is necessary to increase, but there are not enough sources of financing for the implementation of such goals.

– But in 2024, the minimum wage will be raised, as they promise, to 19 thousand rubles?

– It’s real. Although the risks that I spoke about are not going anywhere.