65%

of Russian companies are freezing their employees’ salaries during the economic crisis.

It is rare for Russian companies to reduce wages in nominal terms; even during crises and falling revenue, businesses try not to use salary cuts as a way to achieve cost reductions. The reason is that employers do not want to lose employees. However, freezing wages at a certain level ultimately leads to decreased earnings in real terms, as they are gradually 'eaten' away by inflation.

By way of comparison, in the US and UK, the probability of freezing wages is much lower at 5-20%. In the EU, wage freezes are found most commonly in Portugal, where 58% of companies use this practice.

These data are presented in a report by Alexander Larin, senior lecturer in the Faculty of Economics at the HSE Nizhny Novgorod campus. The report is called 'Downward Nominal Wage Rigidity: Attributable to Labour Unions or the Voluntary Decision of Firms?' More information on how wage freezes affect the labour market can be found on the OPEC.ru website (in Russian).