Saturday, July 13

The new calculation will speed up the growth of the minimum wage: details of the innovation

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The government decided to increase the growth of the minimum wage by revising the method of its calculation

The government has presented a new method for calculating the minimum wage. Thanks to this scheme, the growth of the minimum wage will be faster than the minimum subsistence level. According to the profile minister, the method of calculation, which was used earlier, is outdated and does not reflect the real situation.
For example, the size of the minimum subsistence level is determined on the basis of the components of the consumer basket. However, its value is controlled by laws that were developed back in the 90s. In addition, the basket itself has not been revised for about 12 years. Indexation of minimum wage that is carried out every year, and the minimum subsistence level is markedly lower than inflation and a number of other factors that affect the formation of wages. For example, the cost of living increases by about 3%, while inflation and average and median wages over the past few years show an increase of 6-7%. This situation leads to a growing gap between the incomes of rich and poor people.
In the process of developing the new methodology, other negative factors have been identified that need to be corrected. Among them is subsistence level, which is calculated for different population groups. The size of the minimum for children is more realistic than indicators for people of retirement age. In addition, there are discrepancies in the regional level. In 61 regions of the country, the size of the subsistence level is underestimated by 5-36%, exacerbating social inequality between different population groups. In some regions, the minimum subsistence level is so low that people are unable to support themselves.

Therefore, the new methodology of the minimum wage excludes the option of calculating the minimum subsistence level as a non-changeable price of the basket for consumers and interprets it as one of the components of the average income per person. Its part in this case will be 44.2%. The subsistence minimum level for people who work is set at 109% of this indicator, for children at 97%, and for pensioners at 86%. In addition, the authorities decided that by 2026 the minimum wage will be fixed at 42% of the median wage.
The new method of calculation will increase the minimum wage this year to 12792 rubles, the minimum subsistence level will be 12702 rubles. The Ministry states that from 2021 these values will have a gap, the size of the minimum wage more than minimum subsistence level. By the end of this period, the difference will be about 90 rubles, and in 2022 – 500 rubles.
According to the authorities, the decision to make the minimum wage higher than the minimum subsistence level is one of the mechanisms to overcome poverty in the country.


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