Impact of the minimum wage on wages and wage inequality in 2019

The Object of the Study. Wages in Russiya and in its regions The Subject of the Study. Levels and differentiation of wages The Purpose of the Study is examining the impact of raising the minimum wage up to the subsistence minimum level of the able-bodied population in 2018-2019 on the dynamics of the main characteristics of wages at the federal and regional levels. The Main Propositions of the Article. The problem of spatial inequality includes socioeconomic inequality of the population which primarily depends on work remuneration as the main source of monetary income of households. The problems of work remuneration in the post-Soviet period are well-known - low levels, relatively high wage differentiation including cross-sectoral and cross-regional disparities. These were caused to a large extent by the low level of the minimum wage in the country. In May 2018 the minimum wage was raised up to the subsistence minimum level (poverty line) of the able-bodied population. Using the data from the wage surveys conducted by Rosstat in 2017 and 2019 the authors analyse the shifts in wage distribution of workers in Russiya and in its regions. The increase in the minimum wage resulted in a decline in the general differentiation of wages across the country and in the vast majority of regions, in reduction of the intra-industry and cross-regional differences. In 2019 the funds ratio (ratio of mean wages of the upper and the bottom deciles) exceeded 10 only in six regions, while in 2017 there were 29 such regions. In 2017 that ratio was below 8 only in 6 regions, in 2019 - in 45 regions, and in most of them (26) the average wage was 3 times below the subsistence minimum level of the able-bodied population. The analysis has shown that the low level of wages of most employees still remains an urgent problem, and reduction in wage inequality also has the reverse aspect. We know from the Soviet experience that low (as well as high) level of wage inequality does not promote work incentives and socioeconomic development of territories.