Russia labour market remains in standby mode and wages continue to grow

The muted growth in Russia nominal wages remains the crucial challenge for the labour market, though some positive backward revisions in June have embellished the dramatic contraction of real income. It is hard to find any drivers for nominal wages in June, especially given that the government continues to freeze civil servants' wages. 

Moreover, the authorities have spoken about the need for fiscal consolidation over the next three years, which implies that the political cycle will not be a driver for wages. The labour market seems to be caught in a trap.

The slow improvement in the internal economic backdrop is not underpinning a recovery in the factors that could see wages revised up, while the contraction in real wages is holding back economic recovery. 

"Real wages are seen printing near -8.5% yoy, anchored by inflation, and the rate of unemployment is seen remaining near its cyclical lows at 5.7% in June", says Societe Generale.