Russia’s wartime labor crunch is boosting salaries so much that wage gains are beating inflation.
In the first 11 months of 2023, real wages in Russia — which excludes inflation — rose 7.6% from a year ago, said Anton Kotyakov, Russia’s Minister of Labor and Social Protection, TASS state news agency reported on Friday. Real wages have risen 33.2% over six years, he added.
Russia’s official wage statistics are in line with a Bloomberg analysis, published in January, that showed wages in the private sector rose by 8% to 20% in Russia last year.
The strong gains were supported by a labor crunch in Russia following the war due to a brain drain and as men head to the front.
The wage data came nearly two years after Russia invaded Ukraine, triggering sweeping Western sanctions against President Vladimir Putin’s regime.
As the war Ukraine heads into its third year, Russia’s economy appears resilient. Experts say it’s due to a combination of wartime spending and government subsidies.
Meanwhile, Russia’s economic growth has spurred inflation — which hit nearly 12% in 2022 and 7.4% in 2023 — but it may just be running too hot.
In particular, egg prices soared over 40% in the year leading up to November, prompting a rare apology from Putin, who is seeking election in March.
Elvira Nabiullina, Russia’s top central banker, warned in December that the country’s economy runs the risk of overheating. She has hiked interest rates to 16% to cool the economy.
“Imagine the economy as a car. If you try to drive faster than allowed by car specifications, the engine will overheat sooner or later, and we will not be able to travel a long distance. Possibly, we will be driving fast, but for a short period,” Nabiullina explained at the time.
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