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Wednesday, December 13, 2006

The Minimum Wage Sham in Putin's Russia

Kommersant reported yesterday that the Duma voted to raise the minimum wage.

Good news for the poor? Not really.

Right now, the "minimum wage" (the lowest amount you can pay a worker for a month's full-time labor) stands at 1,100 rubles or about $45 per month. That's roughly $2 per eight-hour shift, or 25 cents per hour.

The problem is, you see, that according to the government's own data over 4,000 rubles (about $5 per day) is required to sustain a person's life in Russia today. The average Russian salary is about 8,500 rubles.

The Duma voted to raise the minimum wage to 2,000 rubles -- not even half what is needed for subsistence. This will impact about 6.5 million Russian workers. The Duma's plan is to raise it further during the course of the next year to 3,200 rubles, about 75% of the current subsistence level. But this takes no account of Russia's double-digit consumer price inflation, which will raise the susistence leve to at least 4,500 rubles by the time the 3,200 level is reached (assuming the Duma keeps its promise). In other words, the minimum wage, which really should be called the starvation wage, will never catch up with the subsistence level.

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