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Opinion
December 15, 2017 www.intellinews.com I Page 20
Putin’s comments supported both camps. He mentioned the need to improve labour productivity several times. “Productivity doesn’t grow as quickly as wages in the economy,” Putin said. “Even when real incomes went down a little, this year we still saw internal demand that grew 3%. And I think real incomes will improve this year as well.”
However, in the same section he referred to his 2012 May decrees, where the government set goals to increase spending on many essential services, that have put an enormous strain on many regional budgets.
“In 2012 we set benchmarks — wages of teachers, doctors, kindergartens — [without these] the situation would be worse. So my colleagues and
I did the right thing. Most of those benchmarks were set several years ago, these goals have been achieved. In 2018 we will reach the final goals
and all those benchmarks will be achieved,” Putin said.
Putin also touched on another issue of key domestic interest: increasing retirement ages.
A crucial reform, it is also typical of the whole programme: a plan has been drawn up but while it began to be implemented it too was suspended for the meantime due to the crisis and may be restarted only next year.
“I can tell you a final decision has not been made,” said Putin. “There are those say we have to raise it. The age we have today was set back in the 1930s and the life expectancy then was the same as the age they set.
“Look at European countries, including Belarus and Kazakhstan, they have taken the decision to raise the retirement age. We are the outlier in Europe. If we don't do this there will be more and more people ready to retire and less able to work. But that won’t happen. We will be able make payments but the income and growth of income of pensions would be frozen so their income will go down... But we are talking about the technological modernisation of our economy. That means 100
people will be able to do the work of 1,000. If we increase the retirement age what will happen to all those people? Where will they go? We need to ask the experts. I am not trying to dodge this question. We just need to think about all the spillover effects.”
The answer clearly demonstrates the middle path the state is trying to find, and the central role the Kremlin sees itself playing to coddle the citizenship and keep them loyal. The same theme was evident in Putin’s comments on the ongoing Central Bank of Russia (CBR) campaign to clean up the banking sector.
“We have too many banks. It’s not that we need
to get rid of them, but we need to make sure our system is healthy for the sake of the clients. We want to make sure that the clients don't suffer in the case of instability,” Putin said. “I hear the CBR is actually increasing the government involvement in the sector. This is not true. We have 521 banks. And even if the CBR increases control over some banks the ultimate goal is to make those banks independent again,” Putin said.
But things continue to change slowly as the Kremlin faces up to the new realities of the post- oil price collapse that has set a new normal for oil at $50-$60 for the foreseeable future. The first thing that Putin did on taking office in 2000 was slash taxes and introduce a flat tax regime — the bedrock of his popularity. After 2018, however, Putin says the government will probably hike taxes for the first time in nearly two decades.
“We have agreed that taxes will not be increased until the end of 2018. And we have honoured this commitment. What happen after? We invest in healthcare, the military and education. But we need to get resources for all those projects. We need to study our system to make sure it works efficiently so can make investments so the system works faster. We need to talk to the experts and then you need to talk to business community.” And this approach will probably be the essence of Russia’s politics for most of next year.