VEB saw the risks to business from growth of salaries of Russians

After last year’s collapse in real wages of Russians by 9.3%, the economy will need five years to win back this fall, should be published on Monday, macroeconomic forecast of the Bank. Although the average annual growth of real wages in 2017-2020 will amount to 2.8%, the same level as in 2014 will be able to recover only to the end of the forecast period to 2020, says the report of VEB.

In March, the previous version of the macroeconomic forecast, VEB assumed that real wages of Russians will fall to 5.4% in 2016, but now expects growth of 0.7%. Another key adjustment is the revision of the rate of ruble strengthening in the baseline scenario, VEB sees the dollar in 2017 at around 60 rubles, in 2018 — about 55.

Both the wage growth and the strengthening of the ruble — will be the driver of recovery in consumer demand starting in 2017, but at the same time they are the risk factors for the economy, the report of VEB. “A stronger ruble and rising labor costs, faster than expected, to exhaust the potential for improvement of competitiveness both domestically and in foreign markets,” — warn the analysts of the development Bank.

The growth of real effective rate of the ruble by more than 30% by 2020, pledged in the baseline scenario of the Bank, will worsen the financial performance of companies and lead to loss of competitiveness of the industrial and tourist sectors.” It is the foreign demand and “sustained” health of export-oriented industries (oil, chemical production, metals, wood) are now a driver of economic recovery, says WEBB. To excessive strengthening of the ruble prevented, Central Bank policy may be partially refocused with the goal of reducing inflation to 4% in the direction of containment of the ruble through currency interventions, offers web in the “moderately optimistic” scenario. Beneficiaries of the weaker ruble will make the Federal budget and enterprises, and the main losing party will be households, admit analysts.

Thus, the Bank in its forecast, supported the point of view of presidential aide Andrei Belousov, who last month said that perekrasivshis ruble “works in the negative, reduces the budget revenues”, “reduces the competitiveness of Russian industry”. Before it to the problem of the ruble drew the attention of President Vladimir Putin.

The containment of wage growth also would help the economy, but the state has a social obligation, says WEBB. “Although low wages facilitate the fight against inflation and maintain the competitiveness of domestic products, the current crisis has actually given rise to considerable social debt, especially in the public sector, which will have to return for several years,” the report says. However, public sector employees, who account for over 20% of all employment in the economy, will not see real wage growth until 2018, when the rate only a little older, follows from the forecast of the Bank. Until 2020 the growth of salaries in Russia will be ensured mainly at the expense of the corporate sector, follows from the forecast.

Unit labor costs — indeed, one of the main constraints to the potential growth of the Russian economy, says chief economist at Alfa Bank Natalia Orlova. From the point of view of the Finance companies increased their costs, and they have no arguments to invest, she says. In Russia for 15 years, wages were growing ahead of productivity growth, noted earlier, the rating Agency ACRA in your forecast until 2020. The state broadcast of the export income in wages, but in the new conditions of a real reduction in government spending of wages in the budget sector will be the costs of labor to keep, and it gives a chance for “the beginning of the first 20 years of a long period of decline in unit labor costs.