Russia’s minimum wage to raise by 21.7% to RUB 9,489 from Jan 2018

The minimum wage will be raised by 21.7% to RUB 9,489, effective Jan 2018, the labour ministry said on Tuesday. The previous hike was in July when the minimum wage grew by 4.0% to RUB 7,800, affecting 890,000 people employed across the country (1.2% of total employment), of which 640,800 are employed in the state and municipal administrations. The latest hike seems in line with the government’s commitment to put the minimum wage on par with the subsistence minimum, which was raised by 1.4% to RUB 9,909 in Q1, in the next two years. More specifically, the government plans to raise the minimum wage to 85% of the subsistence minimum as of Jan 1, 2018 and 100% of it as of Jan 1, 2019. Overall, the plan is obviously an attempt to boost average wages and ultimately household consumption in the short run as we approach the Mar 2018 presidential elections. This could create some inflation pressures at a time when domestic demand is expected to gain momentum, aided by higher credit activity amid more accommodative monetary policy stance and tight labour market conditions.

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