Russian Ministry of Labor predicts drop in real wages

According to the Russian Minister of Labor, Maxim Topilin, there will not be a dramatic drop in real wages in the country.  “Maybe there will be a slight decline, between 3% and 4%,” Topilin was quoted as saying by TASS.

Also Topllin explained an increase of the unemployment rate of between 6% and 6.3% is not critical, and it is an acceptable percentage.

Topilin has said that the Ministry of Labor is in the process of drawing up legislation to increase the maximum amount of the unemployment benefit by up to 70%.  However, he inferred that these benefits will be distributed appropriately in favor of those who have a long service history and those who are in a difficult situation financially.

In January, the average level of wages in Russia dropped by 6.1% on a year-over-year basis.  In January 2015, it had dropped by 8.4%.  This data was provided in the report of the Center of Development of the Higher School of Economics.  In addition, there is a higher risk of further decline in real wages in times of economic recession, which takes into account the expected growth of the inflation rate.  According to a consensus forecast, the decline in real wages is expected to reach 8.9% in 2016.  

This week, the Standard & Poor’s rating agency lowered the economic growth forecast for Russia.  According to experts, Russia’s GDP is likely to drop by 1.3% this year.  However, it is expected that the economy would be able to recover after last year’s drop of -3.7%, and then grow by 0.3%.  The Fitch ratings agency is expecting a drop of up to 1%, while Moody’s expects a drop of 2.5%

  Russia, Russian Economy