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Russians might face a noticeable decrease in wages next year

November 07, 2013, 10:53 UTC+3

Cuts in expenditure will vary by budget item

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In 2014, Russia will probably have the scantest budget during all the years of Vladimir Putin's rule. An increase in federal budget expenditure will be nominal, as in real terms, i.e. adjusted for inflation, the budget will be smaller compared with a year ago.

However, cuts in expenditure will vary by budget item. For example, defense spending and public sector salaries will grow. In civil service, real incomes are to decrease by approximately 5%.

In 2013, federal budget expenditure's total is set at 13.39 trillion rubles, while next year, it will increase to 13.96 trillion /4.2%/. However, due to the expected inflation of 5%, it actually implies a cut in aggregate federal budget expenditure in 2014. No such things happened even during the most acute phase of the 2008-2009 crisis.

"In next year's budget maneuver, officials at federal bodies, servicemen and police will not see the usual wage indexation. The measure will apply to all civil servants whose wages are regulated by government and presidential decisions. A lack of indexation will decrease the purchasing power of wages by the actual inflation rate. According to economic forecasts, price hikes might reach 4.5 to 5.5% next year, the Nezavisimaya Gazeta quotes UFS IC macro-economics analyst Stantislav Savinov as saying.

"As a rule, austerity measures impact public sector workers, especially in education, culture and medicine. But the issue of a sharp decrease in wages in Russia is not as acute as in 1998 or 2008, director of the CIMA regional company Fiona Harvey noted.

The Russian government hopes that there will be no wage cuts in 2014. "The Ministry of Economic Development expects a 4-percent average increase in real wages in the economy in 2014, and wages of workers on the state payroll will also grow," the Labor Ministry said.

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