Russian President intends to reduce a period of unemployment allowance payment to three to six months. That is stipulated in the first amendment of the President to the draft law on raising retirement age, which was published at the presidential webpage.
In experts’ view, that is done not to save budget funds but to improve unemployment statistics. Authorities expect a hike in unemployment coupled with a higher retirement age. President therefore suggests reducing length of the period when unemployment benefits are paid, from 12 to 6 months for everybody except for people nearing their retirement (who will continue receiving allowances for a year).
“The law does not specify the amount of allowances to be set by the government. Yet Putin promised that nearpensioners (those who will retire within five years) will be paid monthly allowances of RUR 11,280 ($160)”, Nikolai Yepikhin, expert on taxation matters and CEO of Uproshchenka tax focused Internet platform, says. “Such an allowance equals minimum monthly salary effective on January 1, 2019. Some people think that is a way to pay nearpentioners at the expense of all others whose guaranteed allowances will be cut by half. Still, it is not about money but about statistics. Labor market will get additional labor inflow, and hence unemployment figures will go up”.
According to the Ministry of Labor and Social Protection, as of late January 2018, there were 778,000 officially registered unemployed in Russia. Even if all of them are paid a current maximum monthly official allowance of RUR 4,900 ($70), overall payments will amount to RUR 3.8 bln a month. That is by no means a disaster for the state budget, since, according to the President, RUR 20 bln are paid out daily as pensions.
The President’s goal therefore is lowering the official unemployment rate, not saving government funds, the expert notes.