Mechanisms for achieving decent wage in the Russian economy

Abstract

The article analyzes the new rules for setting minimum wage, introduced in 2020 in Russia in terms of how they contribute to achieving the decent wage in accordance with the current norms of international and Russian labour law. Minimum wage, while remaining a popular tool for regulating the wage floor, has undergone radical changes in 2020, which affected the basis for its calculation, the level and the frequency of its revision, as well as data sources. The completion of the first year cycles of the new rules for calculating the minimum wage and the stress test of 2022–2023 make it possible to assess the practice of their implementation. We assess the observed and projected effects of the new minimum wage methodology in relation to the norms of international documents (such as the Convention concerning the Minimum Wage of the International Labor Organization, the European Social Charter, the International Covenant on Economic, Social and Cultural Rights, as well as the Charter of Social Rights and Guarantees of Citizens of Independent States). The article gives special attention to the milestones in the development of legislative regulation of the minimum wage in modern Russia. Basing on positive economic analysis, we conclude that the changes in the rules for calculating the minimum wage have reduced its sensitivity to inflation and broken the link with the costs necessary to maintain the reproduction of human capital of the employee and her household. In this research, we have confirmed the hypothesis that the new rules for calculating the minimum wage are poorly favorable to the implementation of decent work as one of the declared national development goals of the country for the period up to 2030. We propose alternatives to reform the minimum wage in the direction of promoting the growth of real incomes of workers and members of their households. We stress the need to establish a stronger dialogue between the state and other stakeholders when developing effective solutions to achieve decent wages in terms of transformation of economy.