"Russian parliament planning to propose legislation, aiming to bump up the minimum wage to 50,000 rubles."
In a move aimed at addressing rising consumer prices, growing inflation, and the current Minimum Wage for Unskilled Workers (MROT) not meeting citizens' real needs, Sergei Mirnov, leader of the "Fair Russia" party, has spearheaded an initiative to significantly increase the MROT. The proposed increase would see the MROT rise more than 2.5 times, potentially reaching 50 thousand rubles per month.
From a business perspective, this sharp increase could intensify existing financial pressures on companies. Russian businesses are already grappling with wage arrears, which surged significantly in early 2025, signalling liquidity constraints and difficulty meeting payroll obligations across various sectors. A rise in the legal minimum wage to 50 thousand rubles could exacerbate these challenges by raising labor costs substantially, potentially leading to higher operational costs, increased layoffs or slower hiring, especially among older workers who already face employment difficulties, and higher prices for goods and services as businesses pass on increased labor costs to consumers. There is also a possibility of contraction in manufacturing and other key industries, which already show signs of slowdown.
From the budget system perspective, while workers may have more disposable income, the state could face mixed outcomes. The increased minimum wages could potentially raise tax revenues through higher income and social contributions. However, the higher wage floor might increase social benefit outlays if inflation rises due to cost-push effects. The government’s budget balance could be strained if state-owned enterprises, which are significant employers, experience higher wage bills amid revenue pressures, such as declining export revenues in 2025, weakening the ruble and state income. The complexity of Russia’s current economic environment, including sanctions, inflation, and a shrinking civilian economy segment amid military spending, could limit the budgetary benefits from any wage hike.
Economist Balynin predicts that the average wage in Russia will reach 130 thousand rubles by 2027. The draft law, which will be submitted to the State Duma on Wednesday, proposes to set the MROT at 50 thousand rubles per month. The bill, if passed, is expected to take effect from January 1, 2026.
While the intent of raising the minimum wage to 50,000 rubles is to align wages more closely with inflation and provide a better living standard for workers, the economic consequences are likely to pose significant challenges to businesses through increased labor costs and to the budget system through complex revenue and expenditure dynamics in a context of economic contraction and inflationary pressures.
- In light of the proposed MROT increase to 50 thousand rubles, businesses may encounter escalated financial pressures due to heightened labor costs, potentially leading to increased operational costs, greater layoffs, and more expensive goods and services.
- From a budget system viewpoint, a bureaucratic hike in the minimum wage to 50 thousand rubles could yield higher tax revenues based on increased income and social contributions; however, it might also escalate social benefit outlays due to rising inflation, pressure on state budget balance, especially when considering revenue pressures and declining export revenues in 2025.
