Russian President Vladimir Putin approved a number of instructions to implement his message to the Federal Assembly. In particular, the head of state ordered an accelerated increase in the minimum wage (minimum wage) in the country in the next six years.
“The Government of the Russian Federation should ensure... an increase in the minimum wage at an accelerated pace, providing (it. -
RT
) growth... by 2030 more than twice as much as the amount established for 2023, with the achievement of its value not less than 35 thousand rubles per month,” says a message on the Kremlin website.
The minimum wage sets the minimum salary that a full-time employee can receive. In addition, the parameter is used to calculate benefits for temporary disability, pregnancy and childbirth, as well as sick leave and other mandatory social insurance payments.
In 2023, the minimum wage in Russia was 16,242 rubles, and from January 1, 2024, it increased by 18.5% to 19,242 rubles. Thus, the rate of increase in the minimum wage was 2.5 times higher than inflation over the past year: its level, according to the Ministry of Economic Development, was 7.4%.
“Initially, it was planned to increase the minimum wage in 2024 by only 8.5%, but later Vladimir Putin ordered to raise the figure by an additional 10%. With a further increase in the amount at a rate higher than inflation, we will actually reach the level of 35 thousand rubles by 2030. This should contribute to a gradual increase in real incomes of the population and, as a result, a reduction in the level of poverty in the country,” Svetlana Bessarab, a member of the State Duma Committee on Labor, Social Policy and Veterans Affairs, told RT.
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In 2023, the share of the low-income population in Russia dropped to a record 9.3% (this is approximately 13.5 million). For comparison: back in 2000, 29% of Russians in the country (over 42 million citizens) were below the poverty line, according to materials from the Federal State Statistics Service.
Although the share of the poor population continues to systematically decrease, the current values still remain high, Vladimir Putin noted during his address to the Federal Assembly on February 29. In this regard, the Russian leader instructed the Cabinet of Ministers to take additional measures to improve people’s well-being.
“The problem of poverty is still acute. Now it directly affects more than 9% of the country's population, and among large families... the poverty level is about 30%. We need to set clear goals and consistently move towards achieving them: to ensure that by 2030 the poverty level in Russia falls below 7%, and among large families drops by more than half, to at least 12%,” the president urged.
As Svetlana Bessarab noted, today Russia has already built a comprehensive system of support for families with children and pregnant women. At the same time, the country’s leadership is trying to support older citizens by constantly indexing payments to non-working pensioners. In addition, the country has social contracts that allow people to open their own business with government support, the deputy added.
“We still plan to do a lot to help large families. In general, we need to support economic growth, because without this it is impossible to develop the social sphere. So I can say with confidence that through the measures being implemented and planned, we will reduce the poverty level to 7% by 2030,” Bessarab emphasized.
Extension of family benefits
Vladimir Putin also instructed the government to take additional measures to improve the living conditions of Russians with children. In particular, the Cabinet of Ministers will have to extend the validity of the family mortgage for another six years.
As the head of state previously noted, the program began working in 2018 and has since helped solve the housing problem for more than 900 thousand families. Moreover, the country’s leadership increased the availability of this support measure: at first only citizens with two or more children could use it, and then - parents with one child.
“The family mortgage program is valid until July of this year. I propose to extend it until 2030, maintaining the main basic parameters. Particular attention should be paid to families with children under six years of age inclusive, for them the preferential loan rate will remain the same - 6%,” Putin said on February 29.
According to the current terms of the initiative, Russians with one child born in 2018, as well as parents with at least two children under the age of 18, can take out a mortgage at 6% per annum. This is almost three times lower than the current market rate (about 16.8%). You can get such a loan when purchasing real estate worth up to 12 million rubles in the Moscow and St. Petersburg agglomerations and up to 6 million rubles in other regions of the country.
In addition, when a third child appears, Russian families can count on a subsidy from the state in the amount of 450 thousand rubles to repay a housing loan. Vladimir Putin also ordered that this auxiliary norm be extended until 2030. In addition, the head of state ordered the creation of special conditions for family mortgages for cities and regions with low volumes of construction of apartment buildings.
As the Ministry of Finance has already calculated, it is planned to allocate about 1.5 trillion rubles from the budget for the implementation of family mortgages until 2030, of which 260 billion will be allocated in 2024. In turn, the authorities are going to allocate 50 billion rubles to provide subsidies to parents with many children to repay housing loans this year, and in the future they are ready to increase funding even more.
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The extension of the preferential program for Russians with children was largely expected, Irina Radchenko, vice president of the International Academy of Mortgage and Real Estate, told RT. According to her, in a high-stakes environment, the initiative has a positive impact on the housing market and is currently a key driver that supports the construction industry and encourages developers to build new properties.
“At the same time, in my opinion, the family mortgage program should be made even more targeted. Preferential conditions should be applied only to large apartments from 72 sq. m. m, that is, 18 sq. m per person. For a family with two children, this is a good option. That is, we need to encourage Russians with children to buy comfortable housing for living,” added RT’s interlocutor.
Playing ahead
Along with this, Vladimir Putin instructed the government to take measures to ensure that Russia enters the four largest economies in the world in terms of gross domestic product (GDP), calculated at purchasing power parity (PPP). The country's leadership also needs to achieve this result by 2030.
Let us explain: GDP at PPP is the total value of all goods and services produced, calculated taking into account differences in price levels and exchange rates in different countries. It is believed that this indicator better reflects the real situation in the economy.
“With this calculation of GDP, the cost of all goods and services produced in the country is compared with the cost of similar goods and services in other countries. That is, the indicator shows what and in what volume can be bought in this particular country compared to other countries for the same amount,” explained Andrei Loboda, economist and director of communications at BitRiver, in a conversation with RT.
According to the World Bank, from 2016 to 2020, the five largest economies in the world in terms of PPP remained China, the USA, India, Japan and Germany, and the Russian Federation occupied only sixth place. However, in 2021, Russia overtook Germany and reached fifth place in the global ranking, and in 2022 it secured this position and is now closing the gap with Japan, the head of the Ministry of Economic Development Maxim Reshetnikov noted earlier.
“We don’t have such a big gap with them, and if the differential in growth rates remains (and the Japanese economy is growing less than 1% per year) ... then, in principle, we can say that in the medium term - within three to four years - we are quite capable of overtaking... the Japanese economy,” the minister emphasized.
According to First Deputy Prime Minister of Russia Andrei Belousov, the task set by the president can be accomplished through the use of five main mechanisms. This is, in particular, increasing labor productivity, increasing investment, increasing non-resource exports in the markets of friendly countries, supporting small and medium-sized businesses, as well as developing import substitution.
“Calculations show that Russia can become the fourth economy in the world, ahead of Japan, provided that sustainable growth of at least 2% per year is maintained, with a gradual acceleration to 3% by the end of the period. In total, over the period until 2030, the country’s GDP needs to be increased by about 20%,” Belousov noted.