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Introduction 2
Minimum wage policy 3
Minimum wages: positive or negative? 5
Employment opportunities 6
Conclusion 7

Bibliography 8

The minimum wage rate is an important tool in managing labor market in the world and also in Russia. There are both supporters and opponents of introducing the minimum wage rate (MWR) in the country’s economy. Both supporters and opponents of the minimum wage assert that the issue is a matter of ethics and social justice involving worker exploitation and earning ability. Supporters claim that increases in the minimum wage increase workers' earning power and protect workers against employer exploitation. Opponents claim that increases in the minimum wage increase unemployment.
The aim of this essay is to familiarize with this topic, understand the current situation in Russia with the minimum wage policy and understand the current employment opportunities in our country. For me it is extremely important to be informed about the MWP, its impacts on the labour market and know the trends and opportunities of the Russian labour market, because I am a student of the 3-rd course of Plekhanov Russian Academy of Economics, IBS and I am going to enter to the labour market very soon; and I prefer to be informed and prepared.

Minimum wage policy
A minimum wage is the lowest hourly, daily, or monthly wage that employers may legally pay to employees or workers. Equivalently, it is the lowest wage at which workers may sell their labor. First enacted in Australia and New Zealand in the XIX century, minimum wage laws are now enforced in more than 90% of all countries.
Economics of the minimum wage
1. Supply curve for labour
The number of hours of labour that workers are willing to supply is generally considered to be positively related to the real wage rate. Economists graph this relationship with the wage on the vertical axis and the quantity (hours) of labor supplied on the horizontal axis. Since higher wages increase the quantity supplied, the supply of labour curve is upward sloping, and is shown as a line moving up and to the right.
2. Demand curve for labour
A firm's cost is a function of the wage rate. The amount of labour demanded by firms is generally assumed to be negatively related to the real wage; as wages increase, firms demand less labour. This is because, as the wage rate rises, it becomes more expensive for firms to hire workers and so firms hire fewer workers (or hire them for fewer hours).
The introduction of the minimum wage may have the following effects (fig.1). Combining the demand and supply curves for labour allows us to examine the effect of a minimum wage. We will start by assuming that the supply and demand curves for labour will not change as a result of raising the minimum wage. This may be an incorrect assumption since jobs this low on the demand curve may be so integral to a business' function that they will not simply disappear because the business has to pay more to hire people for those positions.
Minimum wage level is set through a variety of means such as: tripartite commissions; national agreements; tripartite institutions; collective agreements ; and directly by government. In some countries, (for example Iceland) MWR is set through collective agreements and this can impact on employers and employees irrespective of whether they are members of the negotiating organizations.

Fig.1. Minimum wage effects of the labour market.

In Russia the Federation Council has supported the increase in the minimum wage, having approved changes in the law "On the minimum wage rate". Since January, 1st, 2009 an increase of the minimum wage rate to 4330 roubles a month, that is 1,88 times, is provided. As ITAR-TASS comments, this increase extends on all workers and will promote growth of incomes of the poorest groups of the population having the salary below 4330 roubles. The subjects of the Russian Federation can establish a higher size of the minimum salary with allowance for sizes of the subsistence in region. On April, 1st, 2008, 45 subjects of the Russian Federation introduced higher standards of the salary in comparison with the federal level of the minimum wage rate. In 21 subjects of the Russian Federation the minimum salary is established at the level of a subsistence of able-bodied population. It promoted 27% national salary growth on average. The law “On the minimum wage rate” is supported by additional 30 bln roubles provided by the federal budget, and 90 bln roubles provided by the budgets of the subjects of the Russian Federation. Senators also aim, that minimum wage rate increase will result in a reduction of “shadow” payments. It, in turn, will promote an increase of a provision of pensions and social insurance, and also an increase in receipts of the uniform social tax in the state off-budget funds.
It is important to say that even the just established level of 4330 rubles of MWR in Russia is extremely low, if we take into consideration the level of prices in Russia. As mentioned above, the subsistence minimum in Russia will be approximately equal the MWR in 2009, but the subsistence minimum set by the Russian Government is really underestimated and it is impossible to have a dignity standards of living on this minimum of subsistence level.
Current Situation in Europe. National minimum wages in the European Union in 2006 ranged from €1503 a month in Luxembourg to €129 in Latvia (twelve times difference). Increases in the minimum wage from 2005-2006 ranged from between zero in Greece and Portugal to 38% in Turkey, with the highest increase in the EU in Poland at 14%. The average rise in all countries was 8.5%.

Minimum wages: positive or negative?
The following is based on the materials taken from the research made by International organization of employers (IOE), Geneva, Switzerland in 2006 among 48 countries, Russia included.
When it came to analyzing the impact of the minimum wage on enterprise creation and growth, 63% of respondents of the research felt the impact was negative. Likewise for its impact on increased labor market entry for certain groups of workers, a majority 61% felt it was negative. In India for instance the system itself is extremely bureaucratic and extremely onerous on SMEs and moreover there has been an increased trend of looking to fix minimum wages for political gains, irrespective of economic performance. In terms of entry into the labor market for certain groups of workers, such as young, female, or disabled workers, MWL (minimum wage legislation) has made no difference or has been an obstacle. According to the survey, less than 20% of the respondents felt that the minimum wage acts as an incentive to entry into the labour market for these groups. Low skilled workers and young people were the two groups in particular identified as being adversely affected by MWL. According to the results, the minimum wage leads to the growth of informality in more than 40% of the cases, but in almost 35% of the cases, the minimum wage is not a key issue in the informal economy. Other factors are drivers for informality. The impact of the minimum wage on employment, poverty reduction and investment varies. Positive, negative and no difference categories had similar results. It has had no impact in almost 40% of the cases; in more than 30% of cases it has had a negative impact, while in less than 30% it has been positive. Sometimes when wages are high, unemployment will increase and poverty is more likely and MWL can limit investment. Some respondents stated while MWL can have a positive impact on poverty at the same time it can impact negatively on employment growth. Other said that the social welfare system should address poverty issues and not MWL as wage policy is too blunt an instrument to address poverty. A central theme running through responses was the danger of setting the MWL too high as this will put pressure on competitiveness, increase informality and discourage investment.

Employment opportunities in Russia
Russian economy is the one with the very high rate of development in the world. Of course this situation provides a lot of demand for professional specialists in different spheres: in engineering, construction, management, marketing, financial and economic spheres as well. There are many people seeking for a job in Russia and a lot of companies looking for good specialists. The reason of this situation is that there are not too many really good specialists in their sphere on the Russian labour market. It happened because of the weaknesses of Russian education systems, because of the mentality of Russian people; they both have not adapted to the new standards of working in Russia: a lot of successful companies in Russia are looking for really good workers not just with diplomas but with the ability and knowledge to work, to make things. But on the other hand this situation provides great opportunities for young people, students in particular, to work much in their trade and become competitive on the Russian labour market and be paid several times higher than the MWR level in Russia.

The minimum wage rate is an important tool in managing labour market. It helps to protect workers against employer exploitation. But on the other hand MWP has several disadvantages for the economy such as: unemployment, an increase of informality in the labour market and a discouragement of investment. In Russia MWR is established to support and protect Russian employees, but it is on the extremely low level and, taking into consideration the level of prices in Russia, it is impossible to have a dignity standards of living on this minimum wage level. But the current situation on the Russian labour market gives many opportunities for people who are willing to work a lot and have a high salary, much higher than MWR. It is so due to the uncovered demand among Russian successful companies for highly educated persons with modern understanding of business environment.
1) The research made by INTERNATIONAL ORGANISATION OF EMPLOYERS (IOE), Geneva, 2006
2) www.vedomosti.ru
3) www.wikipedia.org
4) http://www.ilo.org - The International Labour Organization

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