Russia Raises Minimum Wage Level, Comparable to South-East Asia

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russian-workersRussia has raised the monthly minimum wage level from January 1 to 9,489 rubles (US$165).
In Russia, the minimum wage is the monetary value of monthly wages, below which workers may not be offered or accept a job. The minimum wage is guaranteed by the Constitution of the Russian Federation (Article 7).

On September 29, 2017, the cabinet submitted the draft law “On Amendments to Certain Legislative Acts of the Russian Federation Regarding Raising the Minimum Wage to the Subsistence Level of the Working Population” to the State Duma, which is the lower house of parliament. The State Duma adopted the draft law on December 15, and on December 26, it was approved by the Federation Council, the upper house of parliament.

Russia has a competitive wage level when compared with many Asian countries. Although the minimum wage is somewhat irrelevant when it comes to primary cities, such as Moscow and St. Petersburg, it can be of use to measure wage demands in rural factory areas, many of which are within easy reach of Russian cities, and especially so in Siberia, which Russia wishes to develop and make productive. Arguably, Siberia is part of Asia, so comparing wages with other Asian nations makes sense. It should be noted, however, that Russia’s minimum wage is based upon the ‘subsistence level’, meaning the minimum amount needed to live, and should not be taken as a base for workers’ salaries. Nonetheless, it does provide a useful benchmark.

 

Country Minimum Monthly Wage (US$)
Malaysia (1) 248
China (2) 231
Thailand (3) 180
Vietnam (4) 168
Russia 165
India (5) 100

(1) Figure applies to Peninsular Malaysia only. For more details, click here.

(2) Mean average China figure. For a complete national breakdown, click here.

(3) For more information about Thai minimum wages, click here.

(4) For more information about Vietnamese minimum wage levels, click here.

(5) Average subsistence level. For more information about India’s minimum wage levels, click here.

“It is interesting to note that Russian minimum wages are similar to minimum levels found in South-East Asia”, comments Chris Devonshire-Ellis of Dezan Shira & Associates. Siberia and Far East Russia, especially, are becoming increasingly integrated with Asia as a whole, and will begin to compete over time with manufacturing and production centers elsewhere, given current Western sanctions. This shows that opportunities are there for Asia-based investors to have a look at the costings for Russian manufacturing to access that market, and also to take advantage of Russia’s membership of the Eurasian Economic Union (EAEU).  With the EAEU poised to sign off on Free Trade Agreements with China, India, and several ASEAN nations, and the EAEU itself acting as a transport and land bridge between China and the European Union – these wage comparisons could not be more apt.”

 

About Us

Dezan Shira & Associates advise foreign investors on business intelligence, corporate establishment, tax, and operational issues to international SME’s and MNC’s throughout Eurasia. With offices in Russia, China, India and ASEAN we are uniquely poised to assist business development throughout the region. Please contact us at info@dezshira.com or visit our website at www.dezshira.com

 

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