The authorities approved a new approach to calculating the cost of living in Russia

The ratio between the cost of living and the median income (currently 44.2%) will be reviewed at least once every five years based on the conditions of Russia’s socio-economic development. An additional protective standard is being introduced - the cost of living cannot fall below the level of the previous year. “Such a guarantee was introduced in the event that for some reason in certain years there is a decrease in median income,” the Ministry of Labor emphasized.

According to the draft amendments, subsistence minimums for the working population, pensioners and children are proposed to be established in relation to the subsistence minimum per capita in Russia as a whole: for the working population - 109% of this level, for pensioners - 86%, for children - 97%. These ratios were determined on the basis of the current consumer basket, calculated taking into account WHO recommendations for a healthy diet, the Ministry of Labor clarified.

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The media learned about the plans of the Ministry of Labor to change the calculation of the minimum wage and subsistence level Society

The minimum wage (SMW) will be set in the ratio of 42% of the median salary for the previous year and should not be lower than the subsistence level of the working population. In 2021, the federal minimum wage will be 12,792 rubles, the Ministry of Labor reported. For comparison: in 2021, the minimum wage was 12,130 rubles.

A new approach to determining the subsistence level and minimum wage in Russia will require additional federal budget expenditures (in 2021 - an increase of 48.2 billion rubles, in 2022 - by 13.4 billion rubles, in 2023 - by 60.1 billion rubles), as well as regional budgets (in 2021 - by 28.5 billion rubles in all regions, in 2022 - by 32.8 billion rubles, in 2023 - by 49.6 billion rubles). At the same time, additional expenses of the non-budgetary sector are estimated by the Ministry of Labor at 253 billion rubles. for three years.

Regional subsistence minimums will be established for the next year by the constituent entities of the Russian Federation in relation to the federal subsistence minimum per capita, but taking into account coefficients specially developed for each region. Now in many regions of the Russian Federation, regional subsistence minimums are underestimated, and by 2025 they should increase gradually, the Ministry of Labor explained. In 2021, the draft amendments establish the norm that all regional subsistence levels for all social groups should not be lower than the subsistence level for the second quarter of 2021.

Differences in indicators

The minimum wage is a fixed indicator that reflects the minimum wage for Russian citizens. It is approved by the government of the country. The minimum wage is the same for the entire state; wages cannot be paid below this figure. But the law also explains possible exceptions that may arise in certain situations. The subsistence minimum is the minimum amount of earnings that a citizen will need to meet the minimum level of needs.

The federal minimum wage is established for the entire territory of the Russian Federation. Employers are required to pay wages to employees in an amount not less than a fixed amount. Since the territory of Russia is large and located in different climatic conditions, the standard of living differs by region. Therefore, local authorities can set the minimum wage in a larger amount than the basic indicator for the country, but not less.

Regional levels are used for specific regions - the Far North and territories that are equivalent to it, including highlands and deserts. The minimum wage also differs for capital districts. The minimum wage in the Russian Federation is regulated by Law No. 82, adopted in 2000.

Many other payments to citizens depend on the monthly salary and the minimum wage:

• earnings;
• compensation for sick leave;
• pensions;
• payments to pregnant women;
• child care payments;
• compensation.

What the minimum wage and the living wage have in common is that both indicators are designed to guarantee citizens a normal existence and satisfaction of basic needs.

The main differences between the minimum wage and the PM:

1. The minimum wage is a minimum fixed indicator of income for performing labor activities.
2. With the help of PM, the standard of living in different cities and regions of Russia is assessed through the consumer basket. That is, how much food can you buy in a certain area for the same amount. Or how much the same set of products will cost in each region.

The living wage is based on the consumer basket - the monetary value of all goods and services that are needed for a normal life. It includes:

• food, utilities, non-food products;
• other mandatory payments to the government or essential service providers.

Therefore, the concepts of minimum wage and minimum wage rather complement each other.

Benefits

This question is relevant for citizens who plan to apply for social assistance. The status of a low-income family gives the right to receive benefits and subsidies from the state.

Family wealth is affected by the number of people who do not bring in income. In addition, the professional activities of some individuals may not provide a decent standard of living or require certain expenses for its implementation. In addition, the cost of living for children takes into account education costs. That is why this figure is higher for minors than for pensioners.

The lower the income per family member, the higher the likelihood of receiving social support from the state.

Legal documents

The minimum wage has been enshrined in federal law since 2000; before that, a new legislative act was issued each time. Since then, annual changes in the law concern only the amount of the lowest income for working Russians. For 2021, the minimum wage was 11,280 rubles, and from January 1, 2021 it will be increased to 12,130 rubles. The cost of living in 2021 was higher than the minimum wage. For 2021, the cost of living is 11,185 rubles, that is, it is 95 rubles lower than the federal minimum wage.

The size of the regional minimum wage is determined on the basis of Article 133 of the Labor Code of the Russian Federation, and the indexation of the indicator is supported by Article 421. Wages are not the same thing as the minimum wage. The salary consists of salary, bonus payments, allowances, and regional coefficients. If all these payments in total exceed the minimum wage, then the employer can legally reduce the salary.

The minimum wage may be less than salary in such situations:

1. When the employee is not on full-time work. In this case, the salary is proportional to the time worked.
2. If a citizen works part-time in several organizations. Moreover, his total income with full-time work cannot be less than the minimum income level.

The cost of living is regulated by Federal Law No. 134. The indicator is used to assess the lives of citizens and for statistics on the number of poor people in the country. The PM serves as the basis for the formation of the minimum wage.

Example

It is not enough to just know in theory how to calculate the cost of living per person. You need to be able to apply information in practice.

Using the above information and formula, let's try to calculate the cost of living for a family consisting of two able-bodied adults, two children and one pensioner.

First you need to add up the income of all family members, multiplied by the cost of living separately for each category. The result is 51,845 rubles 70 kopecks.

Now the result must be divided by the number of family members, that is, five people in this example. The result is 10,369 rubles 14 kopecks.

In this example, this is below the subsistence level for the working population.

When the minimum wage may not reach the subsistence level

The Decree “On National Goals and Strategic Objectives of the Development of the Russian Federation until 2024” defines ways to combat poverty in the Russian Federation. The minimum wage is set for the next year based on the cost of living calculated for the second quarter of the previous year.

Since the minimum wage has been equalized with the minimum wage, employers cannot set wages for their employees that are less than the subsistence level. The monthly minimum income must now include the monetary size of the consumer basket. If for some reason the employee’s salary is less than the minimum wage, the employer must pay the missing amount through bonuses, allowances, or increase the salary by an additional agreement.

To form the minimum wage, the subsistence level of the second quarter of the current year is chosen for the following reasons:

1. In the second half of the year, the inflation rate decreases. Because of this, the cost of living also decreases.
2. According to statistics, it is the second quarter that reflects the average PM level for the year.
3. After the second quarter, there are still 6 months left to distribute finances for the next year and wages to citizens of the Russian Federation who receive funding from the budget.

Consequences for employers in violation of the minimum wage law:

Sanctions are imposed on the basis of Article 5.27 of the Code of Administrative Offenses.

Step-by-step instruction

Now you can understand how to calculate the cost of living for 3 or more people. To do this, simply follow the instructions below.

• First of all, you need to understand how many socio-demographic groups there are in your family and how many are included in each of them. Conventionally, all citizens are divided into three categories: children, able-bodied people, and pensioners. If there are no representatives of any category in the family, then they do not need to be taken into account in the formula.
• Next, you need to find out what the cost of living is for each category in your region. It is important to take into account current data, as the government reviews the established indicator quarterly. Citizens can check with the administration or social protection for information on the cost of living.
• Having found out all the input data, all that remains is to substitute them into the formula and find out the result for your own family. If the indicator is below the established subsistence level, this may be a reason to apply for social assistance.

Where is the PM level taken into account?

In general, in Russia a living wage is needed in order to:

• assess the standard of living of citizens of the Russian Federation when implementing a program to improve the economy in the state;
• justify the minimum wage at the federal level and the minimum pension;
• establish scholarships, social benefits and other payments assigned from the federal budget;
• form the federal budget.

The living wage for the regions of the Russian Federation serves for:

• determining the quality of life of citizens in a certain region and the success of the program to improve living conditions;
• providing financial support for low-income families;
• formation of the regional budget.

Also, the PM for the region is needed in order to identify suitable vacancies for registered unemployed persons in employment centers.

Size

To better understand how to calculate the cost of living, let's pay attention to what indicators are set by the Russian government. For example, let’s take just two regions – Moscow and St. Petersburg. This will allow you to understand the difference in the established cost of living. You need to understand that in other Russian cities the numbers will also be different.

So, below are examples for the following categories:

• able-bodied citizens;
• pensioners;
• children and minors.

What do minimum wages and PM affect?

The minimum wage and the cost of living affect the following payments:

1. Wage. In 2021, a citizen cannot receive an income per month below the established figure. If the salary is below the subsistence level, the employee has the right to file a complaint with the appropriate organization. After this, sanctions are applied to the company owner and fines are imposed. At the same time, real earnings may be lower than the minimum wage if a citizen works part-time, does not meet the time and labor standards, or works part-time.
2. Benefits. Benefits for pregnancy, childbirth, child care up to 1.5 years old, and sick leave payments depend on the minimum income.
3. Taxes. The amount of taxes also depends on the minimum wage. As the minimum wage increases, tax deductions increase.
4. Regional coefficient . Additional payments are assigned to those citizens who work in special climatic zones.

Minimum wages can have a negative impact on small businesses. Entrepreneurs are not able to pay salaries in this amount. In addition, a number of citizens have reduced motivation to develop and improve professional skills.

If a Russian’s pension is less than the minimum subsistence level, then the payments reach the required level. The pensioner will need to contact the social protection fund at the place of residence or the Pension Fund and submit a written application.

about the author

Klavdiya Treskova - higher education with qualification “Economist”, with specializations “Economics and Management” and “Computer Technologies” at PSU. She worked in a bank in positions from operator to acting. Head of the Department for servicing private and corporate clients. Every year she successfully passed certifications, education and training in banking services. Total work experience in the bank is more than 15 years. [email protected]

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How do specialists act?

• First, the cost of the food basket is determined. To do this, calculate the number of products a person needs for a year, and then divide the resulting figure by twelve.
• The calculation result is multiplied by the average price of services and goods.
• The results are added up.

If we are talking not about an individual citizen, but about a family, then slightly different calculation rules apply. To receive benefits, you need to contact the social protection department.

For correct calculations, you need to provide information about the full composition of the family in need of social support from the state, as well as the amount of income of each able-bodied member for the last three months. In addition, employees request information about the property owned by a particular family.

Not only wages are taken into account as income, but also other sources determined by law. For example, this could be the average income that must be paid to an employee when he is laid off from the enterprise.

Also included in income are various benefits, payments for occupational diseases, alimony, etc.

However, there is a category of income that is not taken into account for benefits. What does this mean?

1. Income of the spouse if he is serving a sentence or is in military service.
2. Income of children who live separately or are on state support.
3. Income of parents who were deprived of their rights.

Comments: 21

Your comment (question) If you have questions about this article, you can tell us. Our team consists of only experienced experts and specialists with specialized education. We will try to help you in this topic:

Author of the article: Klavdiya Treskova

Consultant, author Popovich Anna

Financial author Olga Pikhotskaya

1. Yuri
   07/13/2021 at 22:49 Why in Ryazan do I get paid PM differently every month?
   Reply ↓ Anna Popovich
   07/19/2021 at 16:11

   Dear Yuri, every quarter the amount of the subsistence minimum is approved by Government Decree. Its value is also influenced by seasonal fluctuations in food prices, economic, demographic, social and other factors.

   Reply ↓

Formula

How to calculate the cost of living for a family? This question is relevant not only for specialists who set this indicator quarterly, but also for ordinary citizens.

First of all, you need to know the formula.

PM = ((PM tn * N tn) + (PM p * N p) + (PM d * N d))/( N tn + N p + N d)

This formula uses the following notation:

- PM - subsistence minimum.

PM tn – PM for the working population.

PM p - PM for pensioners.

PM d - PM for children.

N is the number of able-bodied citizens belonging to the relevant socio-demographic groups. For example, N d is the number of able-bodied children.

For children

Since 2021, the Government has adopted a law on the basis of which families can receive payments for their first child up to one and a half years old.

How to calculate the cost of living for child benefits?

• First you need to calculate the average per capita income for each family member. An important nuance is that income is taken into account before taxes are paid. That is, the calculation uses the amount of salary before payment of income tax. However, everyone understands that the amount that a citizen will actually receive will be lower.
• Next, you need to find out what the cost of living is established in your region for the working population. Moreover, you need to take into account the indicator for the second quarter of the previous year.
• Now the cost of living needs to be multiplied by one and a half, and the resulting amount compared with the average per capita income of your family. If the second indicator is lower, in accordance with the law, you can count on receiving child benefits for the first child.

How to calculate the cost of living for child benefits? First of all, you need to make sure that the income for each family member is below the level established for your region. This will be a reason to contact the social assistance department. If a family is recognized as low-income, it can count on social support from the state.