Real wages increased by 9% in July

Real wages in July 2023 increased by 9.2% compared to the same month last year, according to Rosstat data. The average accrued salary in nominal terms amounted to RUB 71,419, an increase of 13.9% over the year.

If we compare the July data with the figures for the previous month, real wages fell by 7.7%, and nominal wages by 7.1%.

The highest salaries in July were received by oil and gas producers (RUB 197,799), employees of financial and insurance organizations (RUB 157,549) and tobacco production (RUB 137,941). Those who sew clothes (32,831 rubles), furniture manufacturers (42,538 rubles), as well as hotel and cafe workers (44,497 rubles) received the least amount.

The unemployment rate in August this year remained at the level of the previous month and amounted to 3%. This is the lowest figure on record since 1991. The previous minimum (3.1%) was recorded in June.

Russian pensioners, according to Rosstat, received an average of 19,564 rubles in August. This is 6.1% more than a year earlier and 0.5% higher than July values. In real terms, the dynamics showed +0.9% and 0.2%, respectively.

Rosstat data continues to indicate tension in the labor market, said economist, author of the Telegram channel “Hard Figures” Elena Akhmedova. The growth rate of real wages is slowing down due to the base effect – the calculation shows a “disastrous” first half of 2022 from an economic point of view. However, according to her assessment, wages will continue to grow in real terms, reflecting shortages in the labor market. “By the end of 2023, wage growth in real terms could be 5-6%,” she said.

Due to the dynamics of wages, the economy is overheating, Akhmedova noted. However, in her opinion, the tightening of monetary policy by the Bank of Russia will have a certain restraining effect. However, shortages in the labor market will disappear – “structural restructuring” of the economy requires workers, and in the medium and long term the demographic situation will exert pressure: due to the aging of the population, the labor force may be reduced by 3-5 million people by 2035 .

The month-on-month drop in wages is explained by seasonality, said Alexander Isakov, chief economist for Russia at Bloomberg. “Workers in some industries often receive regular quarterly or semi-annual bonuses in June, and wages return to salary in July,” he explained.

“In terms of wages, the July figures turned out to be worse than our estimates of 10% year on year,” he said. But the indicators are “consistent with the general trend towards a slowdown in annual growth in real wages,” Isakov added. In the future, he expects real wage growth to decline to 4-5% by the end of the first half of 2024.