Pulling salaries – Newspaper Kommersant No. 38 (7483) dated 03/06/2023

Discussions of measures taken by officials to adapt the Russian economy to the “new conditions” in which it has been for more than a year often come down to economic ressentiment – they say, remember 1998, what an import substitution boom was, we can repeat it. It is only necessary … – then arguments are used in favor of import bans, demand guarantees, cunning workarounds of WTO rules, etc. No one, however, discusses what really needs to be done to repeat 1998 – just – then approximately four times to depreciate labor. The import substitution boom of 1998 was built on the preservation of export revenues by the Russian Federation during the collapse of the ruble – a de facto drop in producers’ costs in dollar terms and allowed exporters to invest in the growth of domestic output.

The picture of 2022–2023, which we observe in statistics, shows completely different trends. Wages are rising, the exchange rate is relatively stable, unemployment is rapidly approaching zero, industry is competing for workers with agriculture, the public sector with the private sector – and all this is not accompanied by a comparable increase in productivity. As a result, the bonus received by employees at the end of 2022 with the motivation “just don’t quit, where can we find a replacement” results in a January boom in household spending (see “Kommersant” dated March 2).

This boom is characterized by an increase in prices and consumption to a greater extent of services – flights, hotels, various services: there is no increase in productivity – there is no increase in supply, as a result, data on commodity demand turn into a statistical incident: according to Rosstat statistics, the auto industry almost doubled its sales (in money), and according to the AEB, reduced (in units of cars sold) – they just doubled in price.

Sooner or later, the question of the results of employers’ spending on wage growth will apparently receive a similar answer: the same or less work for big money is not at all what it was in 1998. At the same time, for the time being, continued wage growth looks inevitable: the growing public sector must fulfill its tasks at any cost, the shrinking private sector in order to stop this contraction, not to mention the fact that in the choice offered by the state to “increase investments or voluntarily give the state the superprofits of recent years” this – a way to turn the latter into “investment in personnel.”

However, in reality, the balance is somewhere close: preliminary statistics of budget spending at the end of February show that they are returning to normal, as is demand. State reserves have not dried up yet, but the Ministry of Finance has not tired of repeating to state customers for a year now: “Buy more – buy less, decide what you need more.” We do not yet know how soon this principle will be implemented by employers, but the wage race is also limited by their profits and cannot continue forever.