Former Minister of Finance, the head of the Foundation Council of the Center for strategic development Alexey Kudrin proposed to postpone indefinitely the implementation of the may decrees of the President of the Russian Federation. At least, parts thereof relating to wages of state employees, which the economist has called a “dangerous maneuver”. This opinion Kudrin stated during a speech at the investment forum “Sochi-2016”. According to the former Minister, to increase salaries only with the growth of income, now it will be too heavy a burden for the economy.
“I could’ve done a longer period for the execution of this decree, postponed to optimally perform in a compressed budget, these obligations,” he said. According to the expert, this goal should be left for the longer term, but right now, given the fact that the economy is experiencing difficulties and rising incomes will not be so fast, you need to increase the wages only by increasing income,” — said Kudrin.
The former Minister added that if the cost of labor in the public sector will grow too fast, it will create an imbalance in the real sector, which will not be able to keep up with such high rates. In order that the state could afford to raise salaries to state employees, you first need to increase the budget pie”, what can be achieved through the maneuver in favor of productive sectors.
The head of the Ministry of Finance of the Russian Federation Anton Siluanov about the freezing of indexation of public sector wages did not speak, but acknowledged that this pie has become more diet, and that without fiscal consolidation is not enough. The head of the budget Committee of the state Duma of the previous (and possible present) convocation Andrey Makarov, joined the debate with Kudrin and Siluanov and continuing with the bakery analogy, noted that the budget pie “without a sufficient quantity of flour and other ingredients, it will be difficult not only to cut, but is.”
On 3 September the head of the Ministry of labor and social protection of Russia Maxim Topilin promised to public sector workers getting a raise in 2017, although we previously discussed the issue of indexation, from 1 July 2016. According to the Minister, the specific amount needed for indexing has not yet been determined, “the budget process”. But Vnesheconombank in its medium-term forecast of development of Russia calculated that the cost of indexation of public sector wages and payments to pensioners for increased budgets for the years 2017-2020 will amount to 5.3 trillion rubles, including 3.5 trillion rubles from the Federal budget.
Recall that public sector wages have been frozen in 2015. In may 2016, Prime Minister Dmitry Medvedev promised that the fulfillment of the may decrees of the President will continue, although the conditions for this complex. He added that the priorities remain social services, affordable housing and wage increases in the public sector.
The financial Ombudsman, Deputy of the state Duma of the first-the fourth convocations Pavel Medvedev believes that Kudrin about the need to postpone the execution of the may decrees — this is not a recommendation, but a statement of the status quo.
— In school my old teacher of military science always told us: “don’t lie to yourself”. Kudrin, I do not know from whom, too, have internalized this message. May decrees are not implemented now. And regardless of the calls they will fail. There is no money. Today, and in the centre and in the regions, the salary of teachers and doctors can be enhanced only if they are transferred to a half-two rates. In fact they, in contrast, are cutting rates and, therefore, wages. So I, like Kudrin, believe that it is better to speak the bitter truth, than to deceive ourselves. The failure of the may decrees — this is a fact.
“SP”: — However, in may Dmitry Medvedev has promised that the may decrees will be executed…
— You know, in the years of my youth when we were building communism. Each year, we summed up, every year was another victory and we walked with a firm step to the top. That’s just to communism never came. And now we have a continuous success, and salaries have been reduced.
I like the financial Ombudsman regularly receive letters of indebted people with a paltry income. Can’t exactly say how to change the salary of doctors. But can provide data on nurses. I have a few letters as a blueprint, from Vladivostok and Kaliningrad. If earlier the salary was 25 thousand rubles, now — 12 thousand. Here is the implementation of the may decrees. Yes, this is a translation of part-time, with the papers full rate remains at 25 or even 26 thousand, but at the expense of some of the exemptions could reduce payments up to 12 thousand. And this situation with the public sector almost everywhere.
“SP”: — You said that there is no money. But the same story with the Colonel Zakharchenko and his billions have shown that money is still there. Maybe we can find some provisions for the indexation of wages?
— Certainly, it makes sense to find reserves. But the problem with Zakharchenko is not that in one room was a lot of money. The trouble is that the money withdrawn from the business with pressure on it. For 22 years, I was the deputies, and all the time a lot of contact with businessmen who complained about how hard it is to do business. While you’re quite the little entrepreneur, you are “milking” the local policeman and impose feasible tribute. But as soon as you from a small businessman become at least average, you start to “milk” the firefighter, the district head and so on. That Zakharchenko withdraw money from business, soul, and killing it. The President some time ago recognized that the country in recent years has closed 200 thousand enterprises. The problem is the method of extracting this money from the economy and transfer that same apartment.
As for higher wages, sometimes it really gives a positive effect. This tool need to be very careful. If the economy is good investment climate, and the emergence of new money stimulates the creation of new enterprises, then you can get slightly better wages. People will come with additional money and businessmen it will begin to produce new products — cheese, butter, chairs and so on.
But our conditions, new money is very dangerous. When they come on the market, which does not appear to be new products, this leads to the fact that the old goods start to go up. Because more money is brought against the same amount of goods. Each good begins to cost more than what we are seeing today.
Professor of economic faculty of Moscow state University Alexander Buzgalin believes that talk about the freezing of salaries is an attempt to shift onto the shoulders of public sector cargo which is lying on a large capital.
— Increase in wages in conditions of continuous inflation and undervalued labor is the obligation of the state and owners of capital. Labor is indeed a commodity like any other, and must be paid and indexed. But in terms of non-market capitalism can not pay in full, thus breaking the laws of the market in respect of the goods “labor force”. Due to the depreciation of the nominal wage can be paid for the work the price lower than the stipulated obligations, in some cases, does not pay wages you can not give the workers ‘ organizations to fight for their interests and so on.
Offer Kudrin and his supporters is a proposal to solve the problem of the deficit of the state budget and the Russian economy at the expense of violation of the rules of market transactions with respect to the exploited class of wage workers. I stress that this is not a question of macroeconomic equilibrium, and the question of violation of the rules of equivalent exchange market.
Not increasing the salaries of state employees almost always leads to an increase in wages and in the commercial sector, inflation applies to the whole economy.
“SP”: — But Kudrin said that in a crisis the increase in wages can have a negative effect…
— There is an alternative exit from the crisis. This replenishment of the budget at the expense of a class of owners of capital and those who serve this class of financial intermediaries, manufacturers of luxury and other. This is a complex approach, which assumes a strict inheritance tax, effective income tax, luxury tax and a series of other steps that are well known. Plus, the efficient regulation of the economy, which will direct capital towards investment in the sector required for the country and not for consumption and areas where you can use speculation to get more profit in short time.
Under the guise of providing the problem of macroeconomic equilibrium and the need to live within their means, the authorities have a policy in the interests of big capital.
“SP”: — But many economists and politicians say that indexing isn’t possible because “no money”.
— The question about where to get the money is repeated since 1991, if not earlier. Kudrin offers to repeat the model implemented Gaidar, when largely due to savings on salaries and pensions was provided the primitive accumulation of capital. Now all I propose to do in the same vein but a bit more civilized and on a smaller scale.
To the question “How to get money” there is a clear answer, which repeats the last 25 years. First, you need to utilize the funds available in the budget, not stealing from and not squandering them, as well as investing in investments that will bring profit, not just handing them out on social needs. This requires transparency, public control and a number of other tools.
Second, this budget due to sources relating to revenue and capital owners. In particular, the full withdrawal of natural rent, and not only in the oil and gas sector, a progressive income tax and other measures, which I already talked allowing you to withdraw the income used for the development and progress of the economy, and for parasitic consumption.
Third, this restriction or prohibition is not state-controlled export of capital from the country. If you want to invest the earned money in Russia is not my country, offshore, or even in the American economy, kindly pay a huge tax. If these measures were implemented, the question of how to get money for the indexation of wages and pensions, would not occur.
