The expert spoke about the negative effect of mandatory salary indexation

The draft law of the State Duma (State Duma) on mandatory annual salary indexation in the private sector will send a signal to businesses about compulsory responsibility for inflation, provoke an increase in costs and shadow employment, Elena Razumovskaya, Doctor of Economics, Professor at Ural State University of Economics, told Izvestia.

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The fact that the State Duma is now working on a bill on mandatory salary indexation in the private sector is a definite signal to business, the expert believes.

"We are moving towards compulsory responsibility of business for government policy, at least monetary policy. Expenses will certainly increase, wages will increase, and so will all deductions. This will affect the entire business, not just small and medium—sized businesses, which will have a harder time than large ones," Razumovskaya said.

The expert noted that in the context of an increasing tax burden, this measure will hit small businesses especially hard.

"Whether this will lead to an increase in shadow employment is likely, although it is now more difficult to go into the shadows due to the total labeling of unaccounted—for flows. The inflation to which an employer, if such a law is passed, will be required to index wages is not his fault," she recalls.

Razumovskaya notes that indexation control is possible for the wage fund, but employers will circumvent the norm by indexing only salaries, not the entire amount. The population may not feel the indexation, since the official inflation of 2025 (6.5-7%) for a unified basket is at odds with real commodity prices, the economist points out.

Earlier it became known that the State Duma introduced an inter-faction bill on mandatory annual salary indexation not lower than the inflation rate for the previous year. The initiative applies to all employers.

Read the details in the Izvestia article:

Price request: the State Duma wants to force businesses to index salaries by inflation

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