Alexei Vedev: “To enter the trajectory of economic growth, it is necessary to solve the problem of salary inequality in the RF”

Alexei Vedev, Head of the Financial Studies Department of the Gaidar Institute commented on Rosstat’s data on the growing gap in average salaries between Russian regions. The expert’s opinion is presented by MK.RU.

The level of wages inequality in Russia remains extremely high, both across regions and sectors. This is evidenced by Rosstat data for 2023. According to the presented information, the highest salaries are paid to oil and gas workers, while public sector experts belong to the most disadvantaged category. As stated by the Central Bank of Russia, a growing gap in household incomes leads to a slowdown in GDP growth rates. On the contrary, economic acceleration reduces inequality in income distribution. High inequality brings about a lot of negative effects: a decrease in investment and business activity and consumer demand, as well as high social and political instability in the country, which reduces the quality of human capital and labor efficiency.

Alexei Vedev reminded about the Executive Orders of May 2012 of the President of the Russian Federation envisaging an increase in salaries for doctors, teachers and other public sector experts, as well as leveling the salary inequality across regions. “These executive orders have not been implemented so far, nor canceled and still remain the targets for the budget. It is clear that in real terms, public sector workers will become poorer because their salaries are indexed below inflation, and the government is mainly concerned about how to maintain the financial stability, limit expenses and avoid a high level of budget deficit,” the expert said.

As for highly paid professions, less than 10% of the economically active population works in the extractive industry, although its contribution to the budget and GDP is very considerable. High added value creates conditions for high salaries. According to Alexei Vedev, the higher the social stratification, the lower the potential economic growth rates. “If we want to embark on a sustainable growth trajectory, we need to solve this problem one way or another. For example, increase salaries for public sector experts and at the same time limit them at state-owned mining companies,” to Alexei Vedev sums it up.