Tuesday, July 23

What indicators the new methodology for calculating the minimum wage uses

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The new method for calculating the minimum wage and its usefulness for improving the lives of Russians

The President of Russia signed a document on changes in the living wage and minimum wage. Now a new method of calculating the minimum wage based on the average wage and income of citizens will be used.
Currently, the minimum wage is 12,792 rubles, this amount is 5.5% higher than last year. According to the new calculation mechanism, the size of the living wage will be at the level of 11,653 rubles.
According to the definition, the median income is an average figure, which divides the country’s population with lower and higher incomes. According to the new law, this value will be reviewed once a year.
The subsistence minimum is calculated according to what is the smallest amount needed for the citizens of the country to live. The median income is used to determine this parameter. The index itself is set before July 1, using data from the previous year.
The ratio of the subsistence minimum per person in Russia to the median income is 44.1%. This indicator will be reviewed on average once in 5 years. According to the new document there is another condition – the minimum wage should not be less than the subsistence minimum.

 people of retirement ageIt is also necessary to take into account the level of subsistence minimum for able-bodied citizens, people of retirement age and children. For the first group it is 109%, for the second – 86%, and for the third – 97%.
There are peculiarities for different regions – local authorities can calculate the minimum wage taking into account the peculiarities of the climate and locality.
The living wage serves as an indicator for assessing the level of poverty in Russia. Every quarter Rosstat provides information about the number of people who have an income below the subsistence minimum.
Experts have been rather skeptical about the new law, especially they expressed doubts about the 44.1% ratio. According to experts, no country has a poverty line of 44.1% of the median income, and the introduction of such a value is not justified by real facts. International standards say that extreme poverty is considered to be 40% of the median income, and from 50% begins the relative poverty level of the population. The poor include people whose income is 60% of the median income. Therefore, the new system for calculating the minimum wage is unlikely to produce the results that the law’s authors originally wanted.
Various options for fixing the poverty line have no effect on improving the standard of living of the population. And in this case, the increase of the living wage will not be able to qualitatively improve the income of Russians. First of all, it is necessary to concentrate on the growth of wages.

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