«It's a pity for money, but the economy needs workers»
From February 1, 2025, the state will begin indexing pensions for working pensioners. It would seem that perhaps the most pressing and pressing social issue of the last nine years will be closed forever. However, reality, primarily in a purely financial sense, may ultimately turn out to be not as benign as many people see today. Alexey Zubets, Doctor of Economics, Professor at the Financial University under the Government of the Russian Federation, spoke about the pros and cons of the upcoming indexation of MK.
Let us recall that the indexation of pensions for working people has been frozen since 2016. Over the past years, individual senators, deputy groups, and trade unions have repeatedly tried at the legislative level to cancel this decision and return the indexation due to the social group of working pensioners. But each attempt ran into a decisive veto by the government, which motivated its refusal by the fact that working pensioners are definitely not among the poor, whom the state budget should primarily help.
And now the situation has changed, as President Putin announced at the beginning of June at the St. Petersburg Economic Forum: there will be indexation starting next February! According to Prime Minister Mikhail Mishustin, pension payments will be increased by actual inflation in 2024. The Ministry of Economic Development forecasts it at 5.1%. Taking into account the current number of working pensioners (7.8 million) and the average size of their pension of 17.9 thousand rubles, the monthly increase will be about 900 rubles. In terms of 12 months, this will require approximately 84 billion budget rubles for all recipients.
The authorities decided to take this step clearly not out of their own generosity (the federal budget remains deficit), but due to the prevailing circumstances. The labor market is experiencing enormous personnel problems, and there is nowhere to get labor. Almost 8 million workers are an invaluable resource for the economy, and if it suddenly loses them for some reason, the situation will turn from acute to catastrophic. Working pensioners remain in demand as specialists because they have “considerable experience,” Mishustin diplomatically noted.
“The motives for the current decision are absolutely clear — this is a shortage of workers and, accordingly, the task of keeping pensioners in production,” Professor Zubets said in an interview with MK. — First of all, there are not enough specialists capable of performing complex tasks. In order for a person to acquire the qualifications an employer needs as, for example, an engineer, he must be trained for four to five years. There is simply no such time. Accordingly, we must try to retain those who exist. And for this purpose, create a material incentive, which is what the indexation of pensions for older workers is supposed to be.
— It was a pity for the money, as I understand it. The logic of officials is simple: a working pensioner is already doing well — he receives, firstly, a salary of no less than the minimum wage (from January 1, 2024, 19,242 rubles -); secondly, a pension, on average 17–18 thousand rubles. This is much better than receiving a “naked” insurance pension. It was assumed that this amount was sufficient to keep people in their jobs. But as the events of 2016 showed, after the abolition of indexation, several million people moved to the shadow sector, deciding to be content with a social pension; the economy has actually lost them. Subsequently, the outflow continued: in 2022, the number of working pensioners decreased by 600 thousand, in 2023 — by more than 700 thousand.
— Indeed, compared to other expenses for indexation, workers will not need that much money. Today, the need for personnel is much higher than any potential costs. In addition, the budget is no longer deficit — this is facilitated by good foreign trade dynamics and relatively high prices for Russian export goods. There are several important points in the indexing story. To some extent, we are talking about restoring social justice: working pensioners should not receive “kopecks.” However, I think it was not thoughts about justice that prompted the state to make a decision. The main incentive is not to lose employees. It is also necessary to support production, including in the manufacturing sectors of the war economy, where there is a physical shortage of people. And then you need to understand: in our country few people work after 65 years old — simply due to physical and mental deterioration, poor health. Even money does not attract in this case. In Russia there is no culture of happy, healthy old age; people wear out quickly. Accordingly, the increase must be quite significant in order to keep them at work.
— According to the law, pensions of non-working pensioners must grow faster than inflation. It is unclear whether this rule will apply to payments to working pensioners. If the state wants to prevent valuable specialists from retiring, it must comply with it. Let's wait until 2025 and we'll see. Of course, rising inflation is a big problem. And it is clear that prices are not going to stop. The development of the situation depends on the state of the budget, and not on the monetary policy of the Central Bank. Today, the source of money in the economy is not loans from the Central Bank, but expenditures from the state treasury. Nabiullina’s department, no matter how much it wants, will not be able to do anything, no matter how much it changes the key interest rate.
— No, it won’t help. If working older citizens receive a salary “in an envelope” and at the same time an insurance pension, then their basic income in no way depends on social benefits. Only by agreement with the employer. It is much more profitable for all these concierges, nurses, and cleaners to stay in an area not controlled by the state, where they do not have to pay taxes. For them, the indexation of pensions for working pensioners is an insignificant event.
— It’s unlikely, the importance of this resource should not be exaggerated. People over 65 years old cannot be lured with any money or forced to work. They will say: it is, of course, wonderful that workers’ pensions will be indexed from now on, but, firstly, we don’t have health and strength, and secondly, we need to take care of our grandchildren and our dacha. It would be great if, with the help of indexation, it would be possible to at least reduce the rate of outflow of older workers. The Russian economy requires 200 thousand new workers every year to continue to grow and develop. The problem is that a pensioner will not go to construction and will not carry sacks. For example, he can sharpen the blades of gas turbine engines, and only migrant workers will agree to do hard physical work.
— No, because no one wants to put such a burden on the budget. These are serious potential costs. Let's do the math: the average old-age insurance pension for non-working pensioners today is 23.4 thousand rubles, the average accrued salary is 75 thousand. 40% of it is approximately 30 thousand. Accordingly, absolutely all pensioners, of whom there are over 41 million today, need to increase their pension size to this amount. Social Fund expenses will increase by one and a half times. There is no money for this in the country. Only if you increase the public debt… As for the minimum wage, under any circumstances it must be brought to at least 40 thousand rubles (currently 19.2 thousand) — this is the lower limit, which is comparable to the median salary and provides a person in Russia with relatively a tolerable existence. Our poverty line is around 30-35 thousand. People should have money not only for food, but also to satisfy cultural needs: go to the theater, buy a book, go on an excursion.
— No, this is not serious. The state will not pay people extra retroactively. There is absolutely nothing to talk about here.