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. Last Updated: 07/27/2016

Industrial Upturn Sparks Real-Wage Increase of 12%

An upturn in Russia's construction and manufacturing industries is fueling a revival in workers' real wages, which had nosedived earlier this year, analysts say.


Average wages grew 12 percent in June to 480,600 rubles ($110), according to figures release Thursday by the State Statistics Committee. The increase outstripped monthly inflation for June, which clocked in at 6.7 percent.


Real wages -- workers' inflation-adjusted earnings -- have been easing upward gradually by about 1 percent a month after crashing by around 30 percent in the first two months of the year.


The main reason for the recent increase is a revival in the construction and manufacturing industries, which employ around half of the population, said Vyacheslav Bobkov, director of Russia's Center of Living Standards.


Construction saw a 15 percent growth in output in June, with wages in the sector rising by 19 percent, Bobkov said. In manufacturing there was a 2 percent increase in output accompanies by a 9 percent increase in wages.


"Wages grow with the production," Bobkov said.


Other reasons for the growth in wages include increases in the minimum wage in April, May and August and a seasonal increase in bonus payments due to the vacation period.


Despite recent progress, however, real wages are still some 30 percent lower than 12 months ago, according to the Center for Economic Reform. Experts attribute this to the tight monetary policy pursued by the government and the Central Bank.


"Tight fiscal policy is like a bitter medicine," said Pavel Teplyukhin, director of the Moscow office of the London School of Economics. "We have to take it because we've been neglecting the illness for too long."


The increasing amount of rubles, however, could fuel inflation if the government does not stick to its policy.