Research on Compensations and Benefits in Russia

Introduction

At all times, Russian Government tried to support employees and to protect their rights as well as to assign specific responsibilities for them. The history of Labor Code in this country starts in 1918 in the Russian Soviet Federative Socialist Republic, however most of the remarkable changes in labor legislations were introduced by the Russian Labor Code which was adopted on December 21st 2001 and entered into force on February 1st 2002. Nowadays, the present Code regulates relationship between employee and employer, establishes rights and restrictions for both parties, set the minimum amount of remuneration and is applicable for all types of companies and to all employees regardless their citizenship. I am going to find out what is the minimum wage applicable in Russia by the Law, what benefits employees have and how the work – life balance is regulated.

Minimum salary in Russian Federation – what is it?

The minimum wage in Russia (the minimum amount of remuneration of labor) refers to the amount of monthly wages guaranteed by the federal law for labor of an unqualified employee, who has completely worked out working time rate while performing simple work under normal labor conditions. What is very important the minimum amount of salary is established simultaneously on the whole territory of the Russian Federation by the federal law and it cannot be lower than the amount of the cost of living of an able – bodied person.

Minimum salary in Russia established in 2018

The minimum wage in Russia is reviewed every 6 months. From the 1st of May 2018, the Russian minimum wage is 11, 163 /month. With an average 40 working hours per week. A minimum wage per hour can be estimated at around 64, 4 (around $1. 04 or 0, 85€). Russian minimum wages ranked as the 25th world’s lowest. Russian average monthly wages are reported at 41 140 /Month and it ranks as the world’s 36th lowest recorded wages. While there is officially a federal Russian minimum wage, the levels vary significantly across the country due to the local government agreements. Major cities such as Moscow and St. Petersburg and regions with significant natural resources receive the highest wages, while in South Siberia the lowest average wages paid.

Minimum salary applicable in the Hospitality industry

The monthly wages of an employee, who worked standard labor hours and carried out labor standard (labor duties), cannot be lower than the minimum amount of remuneration of labor established by the federal law. Talking about the level of salaries in the Hospitality Industry, there is no specific law of how high or low it should be - that is why all the salaries are different in every region of this huge country. Normally, every employee’s wage depends on his/her qualifications or complexity of work executed, the amount and quality of the input labor, and is not limited by the maximum point. Despite the fact that the salary for the same position at the hotel or restaurant will be different depending on the city, there is an example of salaries in two main cities in the country - Moscow & St. Petersburg, in which every year the growing number of International companies enters. Information was proposed by Awara Group’s salary survey in 2015. As we can see, the highest salaries are paid to the Directors of Sales, Finance, Human Resources and to the Chef. For sure, the amounts of salaries diverge depending on the size of the company and the level of experience of the employee. What is important, in general, salaries are on the rise.

Cause for minimum wage - Minimum Subsistence Level

As it has been said before, the minimum subsistence level is a cause for minimum amount of remuneration. Traditionally, the minimum subsistence level has to the changed 2 – 4 times a year, depending on the region of RF. There is an example of minimum Subsistence Level of some Regions, including the lowest and the highest ones

Cost of Living in Russia

According to OECD the quality of life in Russian Federation has improved significantly over the past 10 years. It ranks above average in social connections and work-life balance, however personal well-being, income, personal security, environmental quality, civic engagement, housing and health status are still below the average. Cost of living in Russia is 36. 67% lower than in Spain (all cities, rent is not taken into account). As well as the minimum subsistence level, the cost of living is different in all cities of Russian federation.

However, there is an official data regarding the average prices for people’s needs based on all cities in Russia.

First of all cost of minimum shopping basket which contains only that is needed for monthly subsistence. On such a shopping basket person can hope for little more than to survive It includes bread, pasta, meat, fish, vegetables, fruits, milk and sugar and costs 4209, 00 (54, 33€) a month. However, normally a monthly meal expenses are estimated to fall between 8 000, 00 - 20 000, 00 (103, 26€ – 258, 14€). All prices vary depending on the region. In the table below we can see average prices for different services in all the cities of Russia.

Regarding “The Atlantic” magazine and Derek Thompson’s article, people in Russia spend more for food, than for anything else. The chart below shows the monthly spending by category introduced by Derek Thompson in his article. Correspondingly to the above-mentioned information, it is clear that to survive in a Russian city with your own apartment (no rent payment) you need 15 000, 00 – 20 000, 00 ₽ monthly. If renting an apartment you will need 50 000, 00 just to survive.

Regulations on maternity leave applicable in Russia by Law

The Labor Code of Russian Federation clearly discloses regulations on the maternity leave and describes all restrictions and liabilities of female employees and employees with the family. In accordance to the Law, females are to be granted maternity leave of 70 calendar days before childbirth; in the event of multiple pregnancy – 84 calendar days before childbirth. Woman also gets 70 calendar days after childbirth with social payments in the amount specified by law; 86 calendar days in the event of abnormal birth, 110 - birth two and more children. More than that, as soon as the child reaches the age of three years, female has to be back at work. In case a child’s father, grandmother, grandfather or another relative is able and willing to take care of a child before he/she is reaching three years, female may request and work half time or at home with reservation of the right for social payments during the child rearing leave. Moreover, child rearing leaves are included in the total and uninterrupted record of employment and female holds the position of employment for the period of child rearing leave. Upon the request of a female employee, she may be granted an annual paid leave before or after maternity leave notwithstanding how long she has been working in this organization.

The employees who have adopted a child are granted a leave for the period of adoption up to 70 calendar days after the birth of adopted child and in the event of adoption of two or more children, the period is increased up to 110 calendar days after their birth date. Upon the request of the employees who have adopted a child (children) they may be granted a child rearing leave for the period up to when the child (children) reaches the age of three years.

Benefits for pregnant and nursing women

First of all, working female with the child under 1, 5 years old are granted to the extra 30 minutes breaks no less than every 3 hours for feeding a baby. These breaks are included in worktime and have to be paid. Another possible benefit that pregnant females have is that it is forbidden by law to send them to business trips and to make them work overtime, nighttime, on free days and holidays. Another good point is that pregnant female is secured to keep her position in the company as long as the contract cannot be cancelled without her agreement. More than that, employer has no right to cancel the contracts with:

• female having children under three years old;
• single mothers nursing children under 14 years old;
• single mothers nursing handicapped children under 18 years old.
• Parent can also request for additional paid free days per month for:
• nursing handicapped children;
• persons handicapped from birth up to reaching by them 18 years old.

Each of these days has to be paid in the amount and procedure fixed by federal law. Reduction of work at nighttime and overtime, free days and holidays, business trips, additional leaves, privileged work schedules are given to single parents/tutors of non – adults.

Work-life enhancement in Russia

Russian Labor also regulates the work – life balance for the employees and introduces breaks for the rest and meal. Work time routine should make provision for the duration of the working week with (five days’ working week with two days off). Shifts and working hours should be agreed between the employee and employer within the organization. Government of RF supports to the employees and admits to introduce added up calculation of working hours so that duration of working hours for the record – keeping period (a month) would not exceed the standard working hours. The procedure of the calculation of working hours which is established by the internal labor regulations of organizationIn compliance with the Labor Code every employee should be given a break for rest and meal, not more than two hours long, but not shorter than 30 minutes, which is not included in working hours. Normally the organization establishes the concrete time of a break internally and that is stated in the agreement between the employee and the employer. It is important for all employers to maintain employees being productive and motivated, that is why the weekly continuous rest cannot be shorter than 42 hours. Moreover, all the workers are granted days off. Sunday is a common day off, the other day off is established by the collective agreement or by the internal labor regulations of the organization. There are also common non – working holidays in Russian federation:

• 1st and 2nd January – New Year;
• 7th January – Christmas;
• 23rd February – Day of the Defendant of Motherland;
• 8th March – International Women’s Day;
• 1st and 2nd May – Spring and Labor Holiday;
• 9th May – Victory Day;
• 12tht June – Day of Russia;
• 7th November – Day of Agreement and Reconciliation;
• 12th December – Day of Russian Federation Constitution.

As we can see, the time for work and rest are well – balanced in Russia and employees have enough time to recover after a working day. Besides stated non – working holidays annual paid leave granted to employees and consists of 28 days. As we can see, government of RF ensures that people rest enough and the time for work and private life is well- balanced.

Compensation Strategy

When we are talking about the 5-star Hotel, we mean that everything in the property is perfect, especially the guestrooms. To my mind, it is crucially important to have enough employees in the Housekeeping Department to prepare the guestrooms on time, ensure cleanliness of the whole hotel and to maintain the highest standards of accommodation provided to the clients.

The main idea behind salaries proposal is to pay to the employees enough so they are able to cover all their main needs – pay for food, for utilities, clothes and leisure. An intern is paid the least salary, but provided with the accommodation. All employees are provided with two meals during shift (breakfast & lunch/ lunch & dinner); Night Room Attendant gets a meal pack at night and breakfast. Each meal break lasts for 30 minutes.

Medical insurance is provided for all employees and a private staff parking space as well. All employees have two days off a week and two vocations 14 days each. Tips are to be shared between all employees. In order to motivate the room attendants to work properly, little surveys could be implemented in all the rooms, for example: “Ms. Shelly has prepared the room for you today, please, rate her work”. Therefore, at the end of the month, the employee with the best feedbacks gets a gift card, restaurant certificate, movie tickets or paid time off. For the laundry attendants performance standards are implemented and at the end of the month, Laundry Supervisor decides who performed the best and gives him/her some of the recognitions mentioned above.

Some outside master-classes in a relaxing atmosphere have to be done every half a year as part of the training program. The main goal of management is to encourage employees to perform better and by satisfying them. As J. Willard Marriott, founder of the Marriott Corporation says: “Motivate them, train them, and make winners out of them. They’ll treat the customers right. And if the customers are treated right, they’ll come back”.

Conclusion

The main purpose of the assignment was to create an overview of the compensation regulations applicable in Russia in all industries, particularly in the Hospitality Industry. For the better understanding the whole situation I have researched the Russian Labor Code, the economic situation in Russia in 2018 and compared with the work of another student – Terhi Vuorinen. He viewed the same aspects in 2015 in his thesis: “Hotel and Restaurant Industry in Russia: recruiting Channels and Employment Process in Finnish Employees”.

Terhi makes a research on the Hospitality Industry situation in Russia in general and economic life in the country. The same as I did, author first of all, describes the Labor regulations in Russia in 2015 and makes a research on average salaries in Hospitality Industry. What is important, Terhi Vuorinen says that a wage level in the industry is an issue in Russia, because the cost of living in some cities is high and income is law, so for example waiters try to increase their income by getting tips. For sure law level of salaries in the Hospitality Industry is still definitely a big issue in the country of 143 million inhabitants. Comfortable life is very difficult, because people’s income is often lower than the cost of living. At least 50 000 per month is needed to cover all needs, when the standard wage of the waiter is 25 000. Terhi also made a research on several recruitment interviews and what is interesting, interviewees said that well developed cities like Saint Petersburg and Moscow are good for working in the Hospitality industry, whereas in small towns situation is opposite.

The situation remains the same now – Moscow and Saint Petersburg are still the most preferred for work among Russian Citizens. However, we should pay attention that the Russian Labor Code ensures that the employees get different benefits and provides with enough time to rest regardless the region or city. The minimum wage is slightly increasing every year and gives a hope that people will live better very soon. However, by now I could say Russia is a good place to work (in terms of benefits and social security), but not to live (in terms of cost of living comparing to income).