UPDATE: Low investment restrains growth of labor productivity – official

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SOCHI, Feb 27 (PRIME) -- A sharp fall in investments and the lack of incentives for technical re-equipment restrain growth of Russia’s labor productivity, Deputy Prime Minister Olga Golodets said on Monday at a Sochi Investment Forum.

“Today, the major hurdle for labor productivity growth is a plunge of investment in the Russian economy and the lack of incentives for businessmen to invest in technical re-equipment, which is spurred by cheap and underpriced cost of the labor force,” she said.

Currently, 4.9 millions of Russians receive a minimum wage, which is lower than the living wage. The increase of the payment for labor to a competitive level will be beneficial for both the economy and people, she said.

The number of vacancies stands at about 1 million, and it has not significantly fallen since 2012, she added.

Another problem for the economy is that Russian businesses have no motivation to make long-term investment and to invest in development. In 2015, the combined net profit of Russian companies jumped 76% on the year, but investment fell 9%. In 2016, the combined net profit rose 23%, while investment fell 3%, she said.

Financing the economy with support funds is not enough. “If we don’t restart the economy and don’t restart the main processes that affect changes in technologies, we will have no changes, and it would be more profitable for a company to deposit its profit with a bank,” she said, adding that the government expects restoration of major economic principles in its program for 2018 and will be ready to face up to any challenges in the 2020–2025 economic program.

Russian companies should have a long-term perspective, as too few companies are able to plan for future now. “We need to return to economic priorities of our country seriously …and to the system of emerging institutions of support, institutions of development, as I am sure that they always emerge as a response to changes in the economy of the country,” she said.

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