Economist Zubets: “In the long run we will all die, but before that we will live happily ever after”
President Putin, after officially taking office last month, signed new May decrees. Since 2012, these decrees have become a kind of tradition that sets the country’s socio-economic course for the next presidential term. Among the main objectives formulated by the 2024 decree are reducing poverty and reducing income inequality in the country. The decree also states that the minimum wage (minimum wage) should increase to 35 thousand rubles per month by 2030. Whether it will be possible to achieve the set social goals, experts told MK: Candidate of Economic Sciences, Associate Professor of the Russian Economic University. Plekhanova Lyudmila Ivanova-Shvets, Director of the Institute of Social and Economic Research of the Financial University under the Government of the Russian Federation Alexey Zubets and Doctor of Economics, Professor of the Financial University under the Government of the Russian Federation Alexander Safonov.
— Russia is experiencing positive dynamics in most of these indicators. There is a decrease in poverty levels, a decrease in social stratification, as well as income inequality. There is an improvement in the quality of life. If we compare the indicators of our country with other countries, for example with Western countries, then in some indicators we also win. To summarize, I will say that thanks to the reasonable social policy of the state, those social problems that existed 20 and even 10 years ago are gradually being resolved.
— I would not speak so optimistically about the state of affairs in our country. Russian indicators are worse than those in the West. But at the same time, I agree that there are positive dynamics. Indeed, today we live in Russia better than ever before in its entire recent history. If we compare the indicators of socio-economic development and human capital with what they had in 2014 (this was the best pre-crisis year), by many indicators Russians live better.
— If we take the average per capita income of the population, then since 2013 it has grown 2.7 times. This is quite a big increase. Regarding cash incomes: in 2006 in Russia, 15.2% of the population lived on incomes below the poverty line. At the end of 2023, the country reached an indicator of 8.5%. As for such a sensitive social indicator as the officially registered unemployment rate, it fluctuated somewhere around 1.2–1.5 million people per year. Today we have about 300 thousand people registered as unemployed (those who receive unemployment benefits). More indicative is the dynamics of the decline in the overall unemployment rate: from 4–4.9% (10 years ago) to 1.9% (today). True, this creates a problem of personnel shortage, but nevertheless the fact remains: the reduction in unemployment is significant. Now about pensions. In Russia, payments to pensioners are indexed annually. Everything is transparent here: the last indexation was at 7.5%, two indexations are expected in 2025. By the way, for the first time in social insurance practice, income from those reserves held by the Social (Pension) Fund will be included in indexation. We had never encountered anything like this before. The amounts there are not very large, but nevertheless it is a remarkable fact that even the reserves that are placed in bank deposits that generate income will be used to increase pension provision.
— In turn, I would like to dwell on some indicators of quality of life. The first is the Human Development Index, which is considered by the UN. About 3-4 years ago, Russia became one of the countries with a very high level of human development (a group of 50 most developed countries in the world). This is the first indicator that proves that we are really progressing. The second indicator that we calculate at the Financial University is called “years of a happy life.” This is the proportion of people satisfied with their lives multiplied by life expectancy. This indicator assumes that every person's goal in life is to live as many years as possible and still be happy. According to this indicator, our result is not very good: the average happy life expectancy of a Russian is about 60 years. We are in the bottom half of the world rankings. But over the past two years, this level has begun to grow rapidly. Firstly, our average life expectancy is increasing. On the other hand, the number of people who are satisfied with their lives and who are happy has sharply increased. One can debate for a long time where such positive sentiments come from, but nevertheless it is a fact. Another indicator that is important for understanding what is really happening in the country is the size of the middle class. This is the number of people who earn their normal living through their labor. The usual size of the middle class in our country is about 15–16% of the total population. When the crisis began, after 2014, the size of the middle class in Russia decreased to 10–13%. The latest measurements we made last year show that the figure has increased to 22%. This was the case before 2014, in better times, and now the country has reached this level again.
— This is quite feasible. Another thing is what the statistical processes and calculation methods are. If the goal is to increase the minimum wage by 2030, then this will already increase the indicators of reaching the poverty line. This will reduce income inequality. We must also take into account that increasing the minimum wage and reducing poverty are things that depend on the state’s social policy. You can urge employers as much as you like to reduce the gap between citizens’ incomes, but this is still largely state policy. At the same time, let's remember what the difference in wages for production workers and managers in Russia is. It always differs significantly in favor of the latter. And if we talk about the global trend, there are countries where this gap is small. And this became possible thanks to the social responsibility of business and effective social policy of the state. By announcing an increase in the minimum wage, the state has taken an important social step, and we will certainly notice how all salaries rise to this figure. But we must take into account that business is not unlimited in its possibilities.
— The decree itself provides several tools related to how this strategy will be implemented. By 2030, our minimum wage should increase to 35 thousand rubles, in fact — by 184%. Even if we assume that we have incredibly high inflation, the minimum wage will still cover its value. The minimum wage in Russia is always the basic unit of account in the wage system. All employers will have to build on it, that is, recalculate all tariff rates that are based on the minimum wage (this applies to both budgetary institutions and commercial organizations). Well, of course, we have tools laid down in the current legislation, such as the program for indexing pensions and social benefits, which is implemented annually. In this context, there will be a gradual increase in the standard of living and an increase in workers' wages — and, accordingly, family incomes will increase.
— All the goals contained in the May decree can be divided into two groups. The first is simple goals that are easily achieved if budget funds are available. The second is a group of goals that are difficult to achieve even with large budget funds. So, regarding the second group, I have serious doubts that these goals will be achieved. This is, for example, demographics. And if we are talking about reducing the level of poverty, then poverty can be overcome within one day. How? You can issue a government decree, a decree on increasing the minimum wage, public sector salaries and pensions above a certain level. Bring them to the level of the minimum wage, up to 30–40 thousand rubles, and there will be no poverty tomorrow. If only the government had money. The task of fighting poverty is very simple: if there is money, we will overcome poverty, if there is no money, we will not be able to overcome it. There is not enough money yet, but, as they say, “you hold on.” Until the time when there is money.
— In fact, supporting vulnerable segments of the population is the prerogative of the state. But this is just support, and not a solution to all the financial problems of such families. It is gratifying that these programs contain areas that encourage families with children to leave the poverty line. For example, paying for education, issuing subsidies for starting your own business, issuing funds for running a personal subsidiary plot. These are all ways to stimulate the population not just to live on benefits, but to improve their lives.
— Recently I came across a survey data: how does the birth of a child affect the standard of living of a family? It would seem that the logical answer is lower: a woman cannot work, the family lives on her husband’s salary, incomes are falling… But nevertheless, quite a large number of people in our country consider the birth of a child a factor that increases their standard of living. This means that even those small benefits provided by the state are a serious help, especially for low-income families with children.
< /p>
— Why are pensioners supported less than families with children? Because in our country, unfortunately, poverty has a baby face. What is the typical profile of those living below the poverty line? In half of the cases, this is a large family (maybe even where one of the parents is absent) with a low income. Therefore, in Russia there really is an emphasis on supporting children. And also supporting families with children is the birth rate, this is the future of the country. With all due respect to pensioners, they are definitely not the future of the country.
— The problem of indexing pensions for working pensioners is very complex; discussions on this issue have been going on for many years. So far the state has refrained from such indexation, keeping in mind that a working pensioner has two sources of income: pension and earnings. This is the basis that so far prevents anything from changing in this part. But to say that our older generation is falling out of the state support system would be wrong. For 24 years, pensions for non-working pensioners, of whom we have tens of millions, have always been indexed — either at the level of inflation, or even higher. There is a mandatory guarantee that if the pension turns out to be very low for some reason, it is brought up to the subsistence level in the Russian Federation. This, of course, is not very much money. But nevertheless, such a mechanism makes it possible to socially protect people of the older generation.
— The minimum wage, if we take official statistics, concerns about a million people who receive wages at the minimum level. It’s hard to say what else can be offered. After all, salary growth is primarily the prerogative of the employer. But, given the fact that in Russia 30% of workers have the state as their employer, we can first of all talk about indexing wages in the public sector.
— In fact, almost no one works for the minimum wage in our country. 16-18 thousand rubles — there are no such salaries. In Russia they work for salaries of 30 thousand and above. And everyone who on paper receives one minimum wage actually works in a “gray zone.” The minimum wage and, accordingly, the tax on it are paid officially, and everything else is in an envelope. Therefore, when the government increases the minimum wage, it is mainly a fight against “gray” employment, an attempt to force employers to pay more or less normal income taxes. Two tasks are being solved here at the same time: on the one hand, the fight against poverty, and on the other, moving away from “gray” employment.
— All government tasks are spelled out in the May decree. I'll tell you what I would add to the program. The first is the reduction of differentiation at the regional levels, the equalization of salaries of public sector employees in the field of education and healthcare in all regions of the country. It is probably not very correct when a teacher, relatively speaking, in Petrozavodsk receives 5 times less than a teacher in Moscow, with the same or even greater workload. It seems to me that this is worth paying attention to at the state level.
— The goals that were declared in the May presidential decree are complex and affect different aspects of human life. In addition to ensuring minimum social guarantees (that is, increasing the minimum wage, indexing pensions, benefits), an important point is structural changes in the economy and, in particular, the labor market. And one more aspect concerns the quality of life: money should be distributed evenly throughout the country, and not accumulate only in the capital. Emphasis is also placed on increasing the accessibility of education and medicine.
—I hope that a happy and prosperous future awaits us, and tomorrow we will live better than yesterday. Well, if we talk about the long term, I don’t want to upset anyone, but we are all going to die. But before that, I hope we live happily ever after.