Government gifts will backfire on Russians
The specificity of the international forum in St. Petersburg is the discussion of the business agenda. However, in 2024, the action plan was tightly tied to microeconomics — the life of an ordinary person. The government has real achievements here. From the stands, high-ranking SPIEF participants proudly announced Russia's rise to fourth place in the world in terms of purchasing power parity and rising wages. And the population takes loans from a good life, and enjoys preferential mortgages not because of poverty, but because of affordability… But the red line across the entire agenda of the forum was an alarming topic: unemployment is zero, all resources are involved, the economic flywheel is spinning to the limit of its capabilities , and further growth in labor productivity is a big question. And all the bravura speeches rolled towards one conclusion: this cannot continue like this, something needs to be changed.
The 27th St. Petersburg International Economic Forum (SPIEF-2024) was held from June 5 to 8. This year it was attended by more than 21 thousand representatives from 139 countries. More than 980 agreements were concluded for a total amount of 6.4 trillion rubles. All of these digital advances are quite impressive. But the main thing on any forum is not the statistics, but the essence. Let's dwell on some topics of SPIEF-2024 that seemed key to us.
At almost every session of the forum, speakers with undisguised pride said that, according to the World Bank (which cannot be suspected of sympathy for our country), the Russian economy has become the fourth in the world in terms of purchasing power parity. The first three places are occupied by China, the USA and India. “We have overtaken Japan,” stated officials and businessmen. But what lies behind this positive surroundings is not at all encouraging.
“Russia has become the 4th economy in the world in terms of purchasing power parity? We are already in fourth place for three years, as follows from updated World Bank data. Why didn't anyone notice this? Because it doesn't affect anything. This has nothing to do with the quality of life and the economy. We need to talk about the level of people’s well-being,” said Andrei Makarov, head of the State Duma Committee on Budget and Taxes, at a business breakfast at SPIEF.
And indeed, if you believe the statistics, Russia today is at the limit of economic growth. “Never in the country has there been such low unemployment (2.6%) and such capacity utilization (81%),” said the head of the largest state bank German Gref. “These factors indicate that we are at the limit of economic growth,” he emphasized.
Experts agreed that budget spending is growing, and this leads to enterprises raising wages. This is happening at a very fast pace. People are becoming wealthier and going to banks and getting loans to further improve their lives, even at higher rates. As a result, the economy is growing at a very good pace, 5.4%. It sounds great, but this model of economic development is very vulnerable. According to the same Gref, it is primitive. “There are no more goods. They don't start producing anymore. Prices are rising. Labor productivity is falling. Imports are limited,” he continues. But salvation seems to have been found.
The shortage of employees in Russia by 2030 will be 2.4 million people, said Russian Deputy Prime Minister Dmitry Chernyshenko during a business breakfast at SPIEF. “The main challenge is the shortage of personnel and access to technology,” he emphasized.
According to the Deputy Prime Minister, it is not entirely clear how to fill the personnel shortage. Thus, the birth rate needs to be increased from the current 1.4 to 1.8. “Labor productivity is falling, it is already lower than the countries with which we compare ourselves in terms of purchasing power parity. We now believe that artificial intelligence will save us,” said Chernyshenko.
German Gref, in turn, said that technology could add 4-6% to GDP by 2030, and if Russia does not increase its economic growth rates, Brazil and Indonesia will take our place by 2030. «In order not to lose fourth place, economic growth must be no less than 3% per annum,» the banker said.
It turns out that the main word of the 21st century is technology, life-saving artificial intelligence, which will help entrepreneurs reduce their costs and increase labor productivity in conditions of a catastrophic shortage of personnel. But what if you're a «tech nerd»? This is exactly what Andrei Makarov said about himself. According to him, those who lack their own intelligence will not be helped by artificial intelligence. “To ensure economic growth, it is necessary to change the attitude towards people, the attitude towards business, and restore trust,” the deputy believes.
SPIEF traditionally summed up the country's economic life over the past year and made plans for the future. The head of the Central Bank, Elvira Nabiullina, said that they managed to maintain confidence in the Russian financial system, deposits grew by 25%, and over the year people brought 10 trillion rubles to banks. Of course, with such attractive rates, why not take it! The growth in deposits indicates that people have something to put into their accounts. Then where does the high demand for loans come from?
“Russians take out loans both out of desperation and out of a good life, this is a paradox,” Nabiullina said. “A few years ago we saw an increase in borrowing from already over-leveraged low-income people. We fought against this so that people do not fall into credit bondage. But what happened? Citizens’ incomes began to grow, and banks began to issue loans,” she continued.
Andrei Makarov reacted with his usual sarcasm: “As I understand it, it doesn’t matter whether people’s incomes are low or high, banks will always They’ll find a way to get a loan.” Well, where is he wrong, I would like to ask.
At the same time, the head of the Bank of Russia opposed the expansion of preferential lending programs. “Don't get me wrong, I am not calling for the expansion of benefit programs. On the contrary, if we expand them, loans will become more expensive,” Nabiullina said at SPIEF. — The budget can now increase preferential programs, but then it will work for a narrow circle of people. Then loans will become unavailable to everyone else. If the volume of preferential programs is reduced and strictly prioritized, then the loan will be more accessible to everyone else. This is a very important choice to make now, in my opinion.”
Let us note that, for example, due to preferential mortgages, the rise in prices for apartments greatly outpaced the growth in people’s incomes, and the terms of the loans increased so much that they actually became lifelong.
Before the head of the Central Bank had time to speak out, President Putin, at a key session of SPIEF, proposed expanding the family mortgage program at a rate of 6% for the purchase of housing in small towns, regardless of the age of the children. In this case, at least one of the children must be a minor at the time of registration of the mortgage. Now families with children under 6 years of age can receive a preferential loan.
If we interpret the situation based on Nabiullina’s speech, then such an expansion of preferential programs will make loans less accessible to other citizens.
The government’s proposal to introduce a five-level personal income tax scale in Russia is supported and considered fair by 76% of Russians, said the head of VTsIOM Valery Fedorov at a SPIEF session where changes to tax legislation were discussed. “And the demand for justice is primary, priority, even much more important than balance and stability,” he added.
Second figure: 85%. So many respondents consider “social cashback” (refund of overpaid taxes for families with two or more children with certain incomes) correct, timely and fair, Fedorov said. “These two adjustment elements (a five-step personal income tax scale and cashback) of the current tax changes are the most important for people in general,” he noted.
At the same time, Andrei Makarov noted that justice is primarily determined by the wisdom of the tax system itself. According to him, no one has come up with anything better over the past two thousand years than Emperor Tiberius. “Two thousand years ago he said that a good shepherd shears his sheep, not skins them. It seems to me that when adopting tax laws, and during their subsequent revision, if we are guided by this thought, we will succeed,” concluded the deputy.
The president of Opora Rossii, Alexander Kalinin, also spoke on the tax issue. “The rich pay more, the poor pay less,” he noted. “This is fair. Those who invest more receive a larger deduction. This is fair. The majority of Russian taxpayers, as well as 97% of microbusinesses, were not affected by the changes. The self-employed were promised that nothing would change for ten years, and nothing has changed.”
Vladimir Putin, speaking at SPIEF, promised to increase the minimum wage to 35 thousand rubles by 2030. Now it is just over 19 thousand. But will this help overcome labor market problems? Let us remind you that in fact almost no one works for the minimum wage in our country. 16-19 thousand rubles — there are no such salaries. In Russia they work for salaries of 30 thousand and above, experts say.
Meanwhile, according to the president, already in 2025 the minimum wage will be 48% of the average salary. The minimum wage in Russia has been effectively tied to the government's minimum subsistence level since 2017, when Putin signed a law prohibiting minimum wages from being set below that level. However, in 2021, the minimum wage exceeded the subsistence level for the first time, and since then the gap between them has remained. From January 2024, the cost of living is 15,453 rubles, and the minimum wage is 19,242 rubles.
The President also did not forget about pensioners. Obviously, with the lack of workers in the country, letting the older generation retire has become an unaffordable luxury. Putin promised that indexation of pensions for working pensioners would resume in 2025. At the end of 2015, Putin, by decree, suspended the indexation of the fixed part of pensions for working pensioners.
According to Deputy Prime Minister Tatyana Golikova, 100 billion rubles will be needed to index pensions for working pensioners from 2025. “We need, of course, to further clarify taking into account the level of indexation that will be from February 1, because the level of indexation from February 1 will be determined by the inflation of the year in which we now live,” she said. But, according to her information, the Social Fund has enough funds to ensure the indexation of pensions, Golikova noted.
As for inflation, at the forum the Chairman of the Central Bank of the Russian Federation Elvira Nabiullina set herself a KPI — a goal for the next year: achieving and maintaining inflation at 4%. Andrei Makarov did not believe it (which is not surprising — today inflation is above 8%) and decided to clarify: “Did you think well?” The head of the Bank of Russia did not change the forecast and answered affirmatively: “Good.”