Seminar «Wage Adjustment Policies in Russian Firms»

Speakers: Ksenia Rozhkova, Sergey Roshchin, Sergey Solntsev (LLMS HSE).

Theme: Wage Adjustment Policies in Russian Firms.

Wage adjustment for employees serves as a reaction mechanism to the changing market conditions and forms a significant part of pay policy. Though various attempts to explore wage levels and wage differentials were made in the past, wage adjustment policy remains a rather understudied topic. Thus, the purpose of this paper is to analyze the determinants of wage adjustments based on the data from Russian enterprises over the period from 2015 to 2017. The analysis is based on the detailed data from employer survey which covers more than 5,000 firms in both public and private sector. The study adopts probit models to find out what reasons determine wage revisions depending on internal employer’s characteristics and external labour market conditions.

The results are in line with previous research on the topic (Bayo-Moriones et al., 2016) and suggest that both internal and external factors influence wage adjustments. Wage adjustment is a reflection of the ability to pay meaning that revisions are often held by successful firms with high employee turnover. At the same time, institutional framework, especially trade union activity, affects the firm’s decision to adjust wages despite the general opinion on the insignificance of unions in Russia. This study contributes to the limited literature by analyzing the determinants of wage policy depending on the firm’s characteristics. Also this is the first study of this kind based on extensive Russian data.