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Disbalance in Pay Structure of Employees in Federal Budgetary Institutions

Author

Listed:
  • Olga V. Bogacheva

    (Financial Research Institute, Moscow, 127006, Russian Federation; Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), Moscow 117997, Russian Federation)

  • Oleg V. Smorodinov

    (Financial Research Institute, Moscow, 127006, Russian Federation)

Abstract

Among other things, the introduction of new pay systems in Russian federal institutions (2008) resulted in rapid growth of the variable part of wages. In the early 2010s, in numerous institutions this figure exceeded 50 %, and it still remains at an unreasonably high level. It is known, from the history of labor relations, that violation of balance between fixed (salary) and variable parts of wages leads to a reduction in motivation levels of employees and, as a consequence, to deterioration in productivity indicators and labor quality. In OECD countries, at the legislative level, the concepts of base and full rates of pay are introduced, and the number and size of incentive and compensation payments are optimized. The rates of base pay are regularly reviewed, taking into account changes in consumer prices and the cost of living. This practice allows a reasonable balance to be maintained between fixed and variable parts of wages. At the level of institutions, competency standards are being developed that ensure optimal differentiation in the size of the fixed part of wages and minimize the possibility of making incentive payments to employees simply for the performance of their job duties. The purpose of the article is to develop proposals for solving the problem of imbalance in the structure of wages of employees at Russian federal institutions, based on modern foreign practice in this area.

Suggested Citation

  • Olga V. Bogacheva & Oleg V. Smorodinov, 2020. "Disbalance in Pay Structure of Employees in Federal Budgetary Institutions," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 6, pages 113-125, December.
  • Handle: RePEc:fru:finjrn:200608:p:113-125
    DOI: 10.31107/2075-1990-2020-6-113-125
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    References listed on IDEAS

    as
    1. Lorenzo Forni & Natalija Novta, 2014. "Public Employment and Compensation Reform During Times of Fiscal Consolidation," IMF Working Papers 2014/192, International Monetary Fund.
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    More about this item

    Keywords

    new pay systems; fixed and variable pay; base pay; incentive rewards; standards of professional competencies;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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