Regional Subsistence Minimum and the Minimum Wage: Problems of Simplifying Approaches and Distorting the Real Needs of the Population
Authors:   Economic Policy and Business Center (Moscow, Russian Federation), Rumyantseva Elena E. , Shutov Oleg L. ,   Kuban Institute of Professional Education (Krasnodar, Russian Federation)
Published: December 2021

The subsistence minimum and the minimum wage, being basic social standards, not only formally determine the poverty threshold, but also act as the most important instruments of the state regulation of the living and poverty standard, exerting a noticeable effect on both its increase and its decrease. The discussion about the calculation methods, which has been carried out since the beginning of the 1990s, has not ended, and the subsistence minimum and the minimum wage turned out to be so underestimated and at the same time distorted that not only independent experts, relatively free in their assessments, but also the Russian Federation government analysts, previously censoring the publications, state the need to change the approaches to the establishment of the living wage and the minimum wage at the federal and regional levels. In Russia in the recent years, the number of the poor has been growing, and the phenomenon of the growing working poverty has also been noted. Since January 2021, changes in the methodology for the subsistence minimum and the minimum wage calculating have been made, but not in the direction of their more labor-intensive scientific justification, but, on the contrary, in the direction of the even greater simplification. These social standards are now tied as a percentage to the median wage. In the case of an increase between the real minimum needs of the population and the estimated ones, this can be a significant cause of social conflicts. The authors propose to change the practice of applying a simplified approach to the subsistence minimum and minimum wage calculating, the other state regulation instruments of the living and poverty standard in the country and, on the basis of an all-Russian discussion of the state regulation system of the living and poverty standard in Russia with the professional and independent experts, adopt a new methodology, based, according to the requirements of the International Labor Organization, on the sociological surveys method, which will measure the real incomes and expenditures of low-income groups, a normative method reflecting rational consumption norms corresponding to a healthy lifestyle, as well as a method of observing macroeconomic proportions adopted by the international community called relative poverty. The complex application of these methods is, according to the authors, a promising development of scientific research and a change in the content of the legislation in this area. The main result of the transition to a new methodology for establishing the living wage and the minimum wage by federal and regional legislation in Russia in the context of reducing the differentiation in wages of the state and municipal employees and the public sector employees will be a decrease in the number of the poor and a decrease in the degree of the social inequality. An increase in the number of the poverty growth problem research in Russia is also urgent.