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President of Russia Vladimir Putin: Mr Shmakov, you wanted to discuss social insurance problems, the system of social insurance and some issues related to the implementation of our decision on the minimum wage.

Chairman of the Federation of Independent Trade Unions of Russia Mikhail Shmakov: Yes, absolutely.

On the whole, the system of mandatory social insurance is not improving. The system comprises temporary disability insurance, medical insurance and still pending – they are trying to adopt it – employment insurance. This work must continue since at present, for instance, the Budget Code is being drafted primarily by the Government’s financial block. This new Budget Code, its proposed new edition, does not take into account the Social Insurance Fund, in particular.

According to the most recent information, it is meant to be “dispersed” in the budget, which is wrong and will only weaken workers’ protection.

Vladimir Putin: What do you mean by “dispersed” in the budget?

Mikhail Shmakov: The issues addressed in the Social Insurance Fund will be distributed among different sections of that Budget Code. In fact, it means the Government will be able, to put it bluntly, to dip into the Fund for budget reasons. Thus there are a number of issues that must be addressed. But these are inter-agency issues, highly contested at times, and are difficult to solve.

What are our proposals? We have proposed setting up a council on reforming mandatory social insurance along all the four lines, say, under your guidance, under the aegis of the President of Russia, to be able to resolve all those inter-agency contradictions more easily. Then everyone will be enthusiastically engaged in this job.

Vladimir Putin: This is the Government’s domain but I am certainly ready to take part in it.

Mikhail Shmakov: We are talking about a council. Of course, the Government should work, as should employers together with us. However, having this status for a certain period would be very useful from our point of view until we come up with a definite concept to be complied with by everyone.

Vladimir Putin: All right, let us discuss that. How about the second issue?

Mikhail Shmakov: The second issue: we must follow up on the decisions made by the Constitutional Court that, on the one hand, the minimum wage does not include compensations and bonuses. On the other hand, the lowest salary – the first labour grade rate – cannot be below the minimum wage at any job.

Vladimir Putin: Yes, there is such a decision.

Mikhail Shmakov: Yes. Currently the Government, mainly the Ministry of Labour, is issuing clarifications contradicting this and saying that the rate can be lower whereas it cannot be below the minimum wage with compensations and bonuses. This means an amendment to the Labour Code is needed and we ask you to support this decision.

Vladimir Putin: Let us look into it.

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