Who will emerge victorious in the race for high wages
“The Russian economy must become an economy of high wages,” President Vladimir Putin said most recently at the St. Petersburg Economic Forum.
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And this is not just a promise, typical of many world leaders, to rain money on the heads of their voters. In our case, we are talking about an accelerated formational shift with the goal of creating the so-called “supply economy” by 2030.
The President gave a detailed plan for the development of such a model. According to him, the supply-side economy “implies a large-scale increase in productive forces and the service sector, the widespread strengthening of the infrastructure network, the development of advanced technologies, the creation of new modern industrial capacities and entire industries, including in those areas where we have not yet shown ourselves properly” .
The key words in the last quote are «advanced technologies» and «new industries.» Because it is the breakthroughs in these areas that can only ensure the outstripping level of wages and the growth of labor productivity. By the way, the head of the Central Bank Elvira Nabiullina repeatedly warned about the danger of the opposite trend this year.
However, there are serious problems with labor productivity in Russia. The pace of its growth cannot satisfy the power structures, as well as the workers themselves, since the latter receive salaries that are mostly disproportionate to their ideas about economic well-being.
According to Rosstat, in 2021, the labor productivity index for the economy as a whole amounted to 103.7% (that is, plus 3.8% compared to 2020). It's still a success. In general, in the world — plus 2.5%. In the USA — +2.3%. True, in China labor productivity growth came close to 8%. In the previous ten years, the situation was much worse. In 2010–2018, the average annual rate did not exceed 1.5%. Moreover, in 2015 the index fell immediately by 1.3%, in 2020 it fell by 0.4%. Although at the same time in some years (for example, in 2018) the increase in the index slightly exceeded 3%.
At the same time, it should be noted that in a number of historical periods we even rapidly overtook our main Western competitor, the United States, in terms of labor productivity. This country, of course, is among the technological leaders in the global economy. But, according to various estimates, the first places in this indicator are occupied by small, but high-tech Western countries with a small number of labor forces (but highly skilled). For example, Luxembourg and Switzerland. The oil states also have higher country indicators: Norway, for example, and even Qatar. This Arab country produces expensive light oil with small forces, and also produces the second largest volumes of liquefied natural gas (LNG).
But back to our historical experience. Soviet labor productivity grew at a double-digit rate from 1928 to 1937. The advancing industrialization, built, among other things, through large-scale deliveries of advanced American technologies and equipment at that time, had an effect. According to academician Leonid Abalkin at the time of the beginning of perestroika, in 1980, despite the slowdown in economic development in the 1970s, the level of Soviet labor productivity was 54% of the American one. But already in 1983 — only 50%. And the negative processes only grew (which, according to the academician, required the start of acceleration and restructuring).
As you know, everything ended not with growth, but with collapse. As a result, in the 1990s, the level of Russian labor productivity shrank to 20% of overseas. However, in the “fat years” of the early 2000s, we again rushed to the chase. The average annual growth rate of labor productivity in the Russian Federation in 2000–2008 was 4.4%. In some years there were even higher rates. But during the global financial crisis, a new drop in one of the key macroeconomic indicators happened.
Therefore, it is no coincidence that one of Putin's May 2012 decrees was aimed at achieving an annual 5% growth in this indicator. It didn't work out. The task was repeated in May 2018. Now the long-awaited 5% must be provided no later than 2024.
However, is the game worth the candle? Are there objective grounds for catching up or at least approaching the collective West in terms of labor productivity? Based on the calculations of the Russian company «S + Consulting», then everything is meaningless. According to its analysts, labor productivity in Russia in 2022 was only $30,000 per worker. Whereas in Germany — $90 thousand, and in the USA — $150 thousand. That is, we never left the «90s» in terms of labor productivity — no more than 20% of the American indicator.
But there are other, more encouraging figures. For example, Valery Mironov, Deputy Director of the Institute for Development at the Higher School of Economics, in a publication of 2021, cited calculations according to which, already 2 years ago, our level of labor productivity was 42.6% of the American one. This inspires hope to catch up and overtake. Even with annual growth rates of at least 5% designated by the President. Although it is better, of course, to reach 10% by 2030.
Such a discrepancy in estimates and forecasts is explained by different methods of calculation, as well as, in my opinion, by the insufficient representativeness of the labor productivity indicator itself. It turns out, for example, that the economy of Qatar is much more efficient than both the Russian and the American one, only because it produces more expensive hydrocarbons per worker. Of course, this is done through advanced mining and processing technologies. But only in one industry…
As for the calculation methods, for example, in the Organization for Economic Cooperation and Development (OECD), labor productivity is calculated as GDP per hour of hours worked. But at the same time, the selection of countries also plays a role. As a result, in the OECD table, our country ranks 32nd among 37 participating countries. According to other data — 42nd place among 66 states. Or 52nd out of 142 national economies.
Rosstat now uses a methodology from the Ministry of Economic Development, according to which labor productivity is calculated as value added divided by the number of employees. At the same time, value added is understood as the amount of profit from the sale of goods, the performance of work or the provision of services, to which are added the costs of remuneration of employees and insurance premiums paid by the enterprise to off-budget funds (before taxation). It is no coincidence that domestic indicators have generally improved. They count more precisely and more completely.
However, in the end it's not about methods. The outstripping growth of labor productivity, and hence wages, can be provided by two main tools: innovative investments and highly qualified personnel. Moreover, as Prime Minister Mikhail Mishustin insists, the second is more important than the first, since innovations in themselves do not lead to revolutionary advances in production, namely: creative personnel.
And the demand for them in Russia is growing literally by leaps and bounds . According to the Ministry of Labor, in April-May, the overall demand for labor increased by 12.6%. Two thirds of vacancies are open in the industry. At the same time, they are increasingly looking for specialists with a salary exceeding 200 thousand rubles. per month. This is more than they offer even in an advanced IT field.
However, wages can be much higher without innovation breakthroughs. The fact is that in Russia the share of wages in GDP is too low — 46.9% (data from 2019). In developed economies, it reaches 70%.
It is surprisingly low, in today's realities, the level of wages in the fuel and energy complex. As a rule, a drilling worker earns about 100,000 rubles, and a surveyor generally 70,000. At the same time, the level of labor productivity in the oil and gas industry in Russia is quite competitive compared to the most developed producing countries.
However, the level average wages since 2019 in our country has risen by 50%. In 2023 by 2022 — by more than 12% and reached 71,334 rubles in March. The median salary increased by 14% year-on-year and grew to 44,237 rubles.
At the same time, the president has already made a statement about the outstripping growth of the minimum wage — in 2024, the minimum wage in the country will exceed 19 thousand rubles, and in 2030 -m — 32 thousand. And this will inevitably push up all other indicators of wages. The race for high salaries continues…