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- Price request: the State Duma wants to force businesses to index salaries by inflation
Price request: the State Duma wants to force businesses to index salaries by inflation
A bill has been submitted to the State Duma obliging all employers to index salaries annually to a level not lower than the official inflation for the previous year. This addition to Article 134 of the Labor Code of the Russian Federation eliminates the gaps in current regulation, where the timing and frequency of indexing are at the discretion of companies. The authors are confident that the innovation will create a transparent mechanism, eliminating arbitrariness and strengthening the protection of labor rights. However, critics of this initiative see risks for businesses and the economy, where official inflation is at odds with real prices on the shelves. Details can be found in the Izvestia article.
Rising costs and the shadow threat
The labor market in conditions of personnel shortage is already forcing companies to compete for specialists, offering not only salaries, but also social packages with training. The current flexibility of the Labor Code makes it possible to raise salaries through bonuses, but without regulating deadlines, this often leads to legal disputes.
Preserving the purchasing power of citizens is of fundamental importance for the economy. If salaries are not indexed, this leads to a decrease in the quality of life of the population and negatively affects the economic situation as a whole, says State Duma deputy, one of the authors of the initiative, Yaroslav Nilov.
However, when introducing the changes proposed by the bill, it is necessary to make a balanced decision, taking into account the views of all parties to the social partnership, ensuring and maintaining a balance of interests of both employees and employers, Senator Elena Perminova said in a conversation with Izvestia.
— The proposal to consolidate the obligation for organizations to index employee salaries annually at the level of official inflation is certainly intended to protect employees from a decrease in the purchasing power of income. — warns Dmitry Panov, coordinator of Delovaya Rossiya for the Northwestern Federal District. — However, such regulation can be perceived by entrepreneurs as government interference in market relations between employees and employers.
Any new norm requires a balance of interests in order not to undermine the flexibility of the private sector, believes Elena Razumovskaya, Doctor of Economics, Professor at USUE.
— Expenses will certainly increase, wages will increase, and so will all deductions. This will affect the entire business, not just small and medium-sized businesses, which will have a harder time than large ones. Given the growing tax burden, such a measure seems even more difficult," the expert believes.
From formalities to actual fines
Existing fines for violations of labor laws already reach 50 thousand rubles for organizations, but their effectiveness is questionable, especially in the presence of bonuses that generate up to 80% of income.
"It is important that indexing is realistic and possible for businesses, taking into account the recent increase in other costs, for example, due to the high key interest rate, as well as sanctions restrictions," emphasizes Petr Shcherbachenko, associate professor at the Financial University under the Government of the Russian Federation. — It is necessary that the draft law includes transparent and understandable tools for assessing the necessary levels of employee salary indexation, so that businesses can plan their expenses and employees understand the level and growth of their income.
The low effectiveness of inspections increases informal employment, especially in regions like the North Caucasus, says Irina Svetlova, a leading analyst at the Center for Market Economics. In her opinion, the main institutional factor should be the low effectiveness of state supervision of compliance with labor legislation, including the poor effectiveness of responding to workers' complaints about labor violations.
Myth and reality in the price chaos
According to the HSE, official inflation in 2025 is below 10%, but real prices for goods are rising faster, and real incomes of Russians have fallen by 3% in five years.
Shifting responsibility to business will not solve the gap between the consumer basket and everyday spending, some experts interviewed by Izvestia believe.
— When we are told that inflation by the end of 2025 amounted to 6.5–7% (that is, indexation will be carried out by this amount), and people say that a number of goods have risen in price significantly, will a salary increase be equivalent to a price increase? Inflation is measured using a unified consumer basket, and the actual basket is different for everyone, so the population may not feel the indexation in some cases," notes Elena Razumovskaya.
Flexibility or rigidity
The current Article 134 of the Labor Code of the Russian Federation allows you to increase the real salary through bonuses or salaries, but without deadlines, this leads to legal disputes in favor of employers.
Employers are interested in motivating staff, especially effective ones, without unnecessary regulation, experts say.
— The same commercial organizations are interested in preserving employees and their financial motivation through changing the terms of payment, so strict regulation of salary indexation issues, in my opinion, is not required, — says Elena Arkhangelskaya, General Director of JSC Deacon.
Real protection
The Federation of Independent Trade Unions of Russia (FNPR) insists on clarifying the mechanism in order to avoid formal unsubscriptions and strengthen the role of collective agreements.
"Due to the lack of a procedure for implementing such an increase — that is, a specific date, from what date and by what amount — employers do not comply with this rule, and the courts do not decide in favor of the employee," emphasizes Elena Kosakovskaya, deputy head of the Department of Social and Labor Relations and Social Partnership of the FNPR.
Entrepreneurs see the risks of circumventing regulations through bonuses and self-employment. According to Vladimir Vinogradov, CEO of Pro-Vision Communications, when implementing this initiative, businesses would begin to change the salary structure: they would fix salaries at the minimum wage, and transfer part of them to bonuses, which are not covered by the indexing mechanism. On the formal side, this would allow businesses to claim that the indexation is being carried out in connection with an increase in the minimum wage.
Alexander Safonov, ex-Deputy Minister of Health and Social Development of the Russian Federation, professor at the Financial University, adds that small and medium-sized businesses will also transfer part of their salaries to cash payments. In addition, according to the expert, there is a possibility that this will accelerate the process of forced transition of workers to self-employment.
Izvestia sent a request to the Ministry of Labor, but no response had been received at the time of publication.
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