Salaries formally increased, Russians actually became poorer: a social paradox

Still an amazing thing – statistics. How many paradoxes and shades of meaning there are in it, how many unanswered questions it gives rise to! The contrast is especially great – factual, mental, moral – between the figures from Rosstat and the data of independent opinion polls. For example, a government agency reported that the real disposable income of citizens in the third quarter (less mandatory payments) increased by 3% on an annual basis. And the nominal average monthly salary increased by 8.4%, to 72.8 thousand rubles.

But how do we reconcile the results of a popular online recruiting survey with these remarkable indicators? As it turned out, 45% of Russians do not have enough income to meet basic needs, and another 36% of respondents have wages that barely cover basic needs. It turns out that people formally have more money, but for some reason their life is becoming more and more difficult. In principle, if we proceed from the well-known thesis that every unhappy family is unhappy in its own way, the picture emerges even more ambiguous.

According to a study by FinExpertiza, over half of Russians receive from 19 thousand to 75 thousand rubles per month, that is, the spread of earnings is very wide. The median salary (an indicator of earnings that has the same number of workers: 50% is above this level, 50% is below) amounted to only 52 thousand rubles and kopecks in 2023.

Meanwhile, in order to get at least a little closer to understanding what is happening, it is worth taking a closer look not at current statistics, but at trends stretched over time. There is no doubt about one thing: sustainable growth of wages is possible only with sustainable economic growth.

For example, in 2007, Russia’s GDP accelerated at a rate of 8.5% per year, and by the end of 2023 (according to the latest IMF forecasts), its growth will not exceed 0.7%. In October 2013, the nominal average monthly salary in the country was 29.7 thousand rubles. At the then dollar exchange rate of 32.1 rubles, this is $925. Today’s nominal salary (72.8 thousand according to Rosstat) is equivalent to $759 (according to the official Central Bank exchange rate of 95.9). That is, in foreign currency, the average income has fallen significantly over ten years.

If salaries were increased anywhere, it was mainly in the public sector – for civil servants, security forces, and doctors. And today, defense enterprises in large cities offer the same turners up to 200 thousand rubles per month.

Further, over ten years, domestically produced cars have risen in price from approximately 330 thousand to 1.2 million rubles, washing machines and vacuum cleaners have increased in price by 102% and 108%, respectively, butter – by 171% (from 309 to 824 rubles per kilogram). As for real estate, the average cost of one square meter increased from 58.8 thousand to 104.4 thousand rubles (by 78.6%).

A decent ruble-dollar exchange rate made foreign tourism accessible, even for the lower segment of the middle class. It was possible to buy a trip to Pattaya for eight days (flight plus accommodation) for 18 thousand rubles, another 10 thousand would be more than enough for food, several excursions and souvenirs. Today one cannot even dream of such a check.

Today in Russia literally everything is becoming more expensive – utilities, public transport, cars and maintenance costs, air tickets, tour packages. The employer faces a tough choice: either try to retain the employee by providing him with acceptable salary conditions, or accept another personnel loss. So the head of the Ministry of Economic Development, Maxim Reshetnikov, admitted: “The main problem is human resources. The shortage of personnel – both quantitative and qualitative – is a serious systemic challenge.”

Structural imbalances are growing in the labor market: on the one hand, companies require specific professional skills, and on the other, supply absolutely does not correspond to demand. People either don’t know how to work or don’t want to.

By the way, the Central Bank warns about the danger of rising wages “regardless of work results and in conditions of labor shortage” in the bulletin “What Trends Are Saying.”

The regulator sees this growth as a serious pro-inflationary factor. In addition, at the end of 2022, a decrease in labor productivity of 3.6% was recorded (in wholesale and retail trade – by 13%), the largest since the crisis of 2009, when the figure dropped by 4.1%.

The topic of salaries is inseparable from the entire complex of systemic circumstances – frankly unfavorable ones. Such as the aging population, the inefficiency of enterprises and government institutions, the absolute dominance of the state in the economy, the legal insecurity of small and medium-sized businesses, the lack of competition, the lack of hard currency, the chronic weakness of the ruble, the fall in export volumes, the prohibitive debt burden of citizens. And this leads to sad conclusions: wages may rise, but Russians will continue to get poorer.