Two years braking: what will happen to labor productivity in Russia :: Economy :: RBC

The growth rate of labor productivity in 2018 and 2019 will decrease, predicts the Ministry of economic development. Acceleration will begin in 2020. Productivity depends on investment growth and GDP, and it will slow down, experts say

Photo: Kristina Brazhnikova / TASS

The labor productivity growth in Russia will slow down in the current year and next, the acceleration will not begin until 2020, and follows from the basic parameters of the forecast socio-economic development (RBC), which prepares the Ministry of economic development. The parameters of the macroeconomic forecast that is part of the budget for the next three-year period, was approved in July at a meeting of the government Commission on budget projections.

In 2018, the labour productivity growth of 1.5% after a 2% growth in 2017 and 2019, the growth rate of labour productivity has already slowed to 1.2%, follows from the document. Acceleration will begin only in 2020, when productivity will grow by 1.8% in annual terms. By 2022, the figure will reach 3.1% and will remain at about that level until 2024 (forecast based on a six-year-old).

The second attempt

Performance is calculated by Rosstat as the ratio of GDP dynamics to the change in aggregate labor costs. The task to increase labor productivity were set in the may decrees of President Vladimir Putin in 2012. Then the head of state instructed the government to increase labor productivity by 2018 by 1.5 times compared with 2011. The indicator grew at a slower pace — they did not exceed 3.3 percent. In 2015 and 2016, in a recession, productivity and even decreased by 1.9% and 0.3% respectively, according to Rosstat. By the end of 2016 (the latest available data from Rosstat; the data for 2017 will appear at the end of September) labour productivity (counted cumulatively) in comparison with 2011 increased by 4%. In 2018, if based on the forecast of economic development, it will be 7.6% higher than in 2012.

The task of increasing labor productivity was again set by the President in the new the may decree of may 7, 2018. Now the target was the growth rate “for medium and large enterprises of the basic non-oil sectors of the economy below 5% a year.” To achieve it needs to be in 2024. While open access data for this indicator, there are methodology development, said RBC press service of the Ministry of economic development.

While the data from the forecast preliminary, the reply of the Ministry on the request of RBC, 5% growth in 2024 is expected on the base of non-oil medium and large companies. “Growth performance of the remaining enterprises is expected to be below 5%,” — noted in the Ministry (this is overall performance will be lower than the indicator of may of the decree).

Growth through program

Dynamics of labour productivity depends on the rate of economic growth and targeted efforts to increase the efficiency of production and the introduction of new technologies, said RBC Deputy head of the Institute “development Center” Higher school of economy Valery Mironov. From September 2017 the Ministry of economic development is implementing a project to increase productivity and support employment at the expense of internal reserves of the enterprises.

According to the passport of the program in 2018 150 companies in 15 regions launched special programs to improve business models and retraining of employees (.pdf). “We have the results, when the company already participating in the program, show the dynamics of growth [performance] by tens of percent”, — said the head of the Ministry Maxim Oreshkin. Often, the implementation of the project “does not release excessive labour resources as people retrain through this program remain in the enterprises”, he said.

But while this effect is in the forecast, are not fully taken into account. “The contribution of the project “Increasing productivity and employment support” will be assessed in 2019. At the moment the contribution of the programme to increase the pace of productivity growth is estimated at 0.1 p. p. in 2019″, — told RBC press service of the MAYOR.

The short horizon

“The slowdown in productivity growth [labour] will be associated with the pending launch of investment projects with state participation, while the growth in the tax burden since the beginning of the year,” — explains the Ministry of economic development.

To a large extent the productivity growth is a matter of technology, but in terms of sanctions technological openness of Russia remains in question, said the chief economist of Alfa Bank Natalia Orlova. In addition, there are problems and by forecasts. “Because of the sanctions the forecasting horizons become very short. We consider three-year budget, but actually in fact, the horizons of budget we have more annuals. Now the main question — what will happen in 2019,” — said Orlov RBC.

Photo: Alexey kudenko / RIA Novosti

Productivity is low, as in recent years, there was not enough investment growth, which could be broadcast in the growth of productivity, she adds. In 2019, GDP growth will slow to 1.4% from 1.9% in 2018 amid rising VAT to 20% and delayed start of projects with state participation, according to the macroeconomic forecast. The growth of investment in fixed capital also will slow down: this year he will be 3.5%, and 3.1 percent (in 2017 was 4.4 per cent), according to the forecast. In 2020, the Ministry expects the revival of growth of investment (it will reach 6-7%) and, as a consequence, the acceleration of GDP (2-3%).

Not faster than wages

The Central Bank has repeatedly warned about the dangers of a situation in which wages will rise faster performance: it can lead to proinflationary risks. But of 2019 salaries in the public sector will cease to increase rapidly (as may orders are already made), and inflation will rise due to the increase in VAT, and this problem will not be acute, follows from the data of the Ministry of economic development. If in 2018, according to the forecast, real wages will grow by 6.3%, in 2019 — by 0.8%. 2021 growth stabiliziruemost at the level of 2-3%.

“The lack of meaningful pressure on wages from the public sector will lead to a convergence of rates of growth of real wages in the private sector with the growth rate of labor productivity,” said economic development in the forecast.

The data from the forecast the MAYOR is the “simplified” calculation of performance, says Director of the analytical Department of “Loco-invest” Cyril Tremasov, until 2017 held the post of head of Department of economic forecasting Ministry of economic development. Because of rising unemployment, which occurs, in particular, by increasing the retirement age, productivity growth is more slow in comparison with GDP growth, he explains.

Work less

Labor productivity in Russia by the end of 2015 was two times lower than in OECD countries, said Prime Minister Dmitry Medvedev (it was about the GDP per hour hours worked in the economy): “We put a lot of effort, time, and the output results are very average”. This is due to low competitiveness, technological backwardness, lack of investment and administrative barriers, Medvedev said.

In Russia reduced the growth rate of total factor productivity is a broader index, which reflects the increase in efficiency due to technological progress and focuses in particular on the development of infrastructure and quality of market and regulatory institutions. As written the analysts of the Department of studies and forecasting of the Central Bank, the most efficient companies expand market share, and the least effective “reduced in size, but contrary to the logic of “creative destruction” of the market do not go or do not go through a restructuring.”

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