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Deputy Prime Minister Viktoria Abramchenko reported on implementing the federal project on the transition to a circular economy and on plans to construct ecotechnoparks for recycling.

Minister of Transport Vitaly Savelyev spoke about the situation with domestic and international flights, the programme for subsidising civil aviation and the development of the Volga-Caspian Sea Shipping Canal.

Minister of Economic Development Maxim Reshetnikov gave an update on the Labour Productivity national project and reported on the work of the Federal Competence Centre.

Minister of Labour and Social Protection Anton Kotyakov and Governor of the Chelyabinsk Region – Head of the State Council Commission on the Economy and Finance Alexei Teksler delivered reports on the main issue on the agenda – the wages of certain categories of public sector employees specified in the 2012 Executive Order of 2012.

In addition to Government members, the meeting was attended by Chief of Staff of the Presidential Executive Office Anton Vaino, aides to the President Maxim Oreshkin and Igor Levitin, the governors of the Stavropol Territory and the Astrakhan and Chelyabinsk regions, the Mayor of Moscow, the heads of the Federal Agency for Maritime and River Transport, the Federal Agency for Air Transport, Russian Railways, the Federal Centre of Competences in Labour Efficiency, and the Russian Popular Front.

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Excerpts from transcript of meeting with Government members

President of Russia Vladimir Putin: Good afternoon, colleagues,

Today we will talk about implementing the 2012 Executive Order that concerns the wages of certain categories of public sector employees.

But first, as usual, let us address the most pressing current issues. Ms Viktoria Abramchenko (I already mentioned this at the previous event) told me this morning that our environmental agenda, in spite of everything and even in comparison with other countries, is making good headway and is one of the most important aspects of our joint work. Ms Abramchenko, there is such a topic as working on recycled raw materials, and the processing of raw materials itself. How is the work on creating circular enterprises going?

Deputy Prime Minister Viktoria Abramchenko: Mr President, colleagues,

Today, the large amount of waste in production and consumption remains one of the most acute environmental problems for absolutely all states.

For example, every year 10 million tonnes of plastic waste are dumped into the global ocean. If nothing changes, plastic debris in the ocean will outweigh fish by 2050. This is why it is necessary to actively implement the principles of the circular economy along with conscious consumption and waste reduction.

Last year we prepared such a federal project. This project was supported by the Prime Minister and was included in the list of key initiatives for Russia’s socioeconomic development until 2030. This project aims to create the infrastructure and conditions for the reuse of waste. By 2030, the share of recyclable materials used in construction must reach 40 percent, 50 percent in agriculture, and exceed 30 in industry.

The first thing necessary to achieve these goals was to develop the legal framework. All the draft laws have already been adopted, including the basic law on secondary material resources. In accordance with it, secondary resources must be recycled and their dumping will be prohibited starting from 2030.

Second. Every federal district must have an eco-technopark, including production sites for processing recyclable materials from various types of waste. The Government has allocated the necessary funds from the budget to finance the construction of eight such parks in the amount of 9.4 billion rubles and another 909 million rubles for their design. The heads of the Moscow, Leningrad, Nizhny Novgorod, Chelyabinsk and Novosibirsk regions, as well as the Stavropol, Krasnodar and Primorye territories, have already chosen the land plots for their construction.

The very first and active region in efforts to create such a park was the Stavropol Territory. Surveys are currently being completed on these land plots. We will start construction next year.

Each park will be linked to investment projects on manufacturing new products from recycled materials. We extended state support measures for industrial parks to these facilities. An additional incentive to attract investors was the creation of the entire engineering infrastructure at the expense of budgetary funds. As a result, 25 companies have already signed an agreement to establish 44 production facilities at these parks.

For example, there are plans to create a facility for the disposal of organic waste, construction waste, glass and used tyres in the Moscow Region.

The Leningrad Region and the Stavropol and Krasnodar territories will work on polymer waste and creating enterprises for the production of alternative fuels from waste. Production facilities for wood-polymer composites and road construction materials will appear in the Nizhny Novgorod Region. The production of raw materials for new food packaging and heat-insulating building materials will be launched in the Chelyabinsk Region.

The third important part of the project is to stimulate the use of recycled materials in the economy. We started with government procurement. Starting January 1, 2023, in government procurement of paper products or paving slabs, for example, priority should be given to products containing recycled materials. The relevant resolution has been signed.

The Government is also developing industry-specific programmes to use materials from waste. Two such programmes have already been approved for industry and for construction, and two more programmes for agriculture and the use of alternative fuels from waste will be approved before the end of this year.

The use of recycled materials not only has a tangible environmental effect, but also an economic effect. In road construction, the use of rubber additives from recycled tires, and the use of recycled asphalt concrete can reduce the cost of road construction by up to 20 percent while maintaining service performance.

Wood-polymer composites, which are used in many industries, are made from timber and polymer waste. These materials are 30 percent cheaper than products made from primary raw materials and are three times more durable than traditional materials. By the way, a project to produce WPCs will be implemented in the eco-technopark in the Nizhny Novgorod Region.

Plastic waste can also be used to make geotextiles. Its use as a soil cover in agriculture helps reduce irrigation rates by reducing moisture evaporation by 15 percent, and this is very important for water-deficient regions. There are many such examples.

Now, thanks to the development of waste recycling technology and competent interaction between the state and business, the use of recycled materials is becoming not only trendy, but also efficient. Large companies like Russian Railways, SIBUR, Russian Post, and Leroy Merlin are already introducing elements of a circular economy into their activities. Over the first year since its implementation, the project has become recognizable, and is in demand, and not just in the regions with eco-technoparks. Currently, we are negotiating with the Tula, Ivanovo, Rostov, and Kemerovo regions and the Krasnoyarsk Territory to scale up this effort.

Mr President, I want to thank you for your permanent support for all of the Government’s environmental initiatives, and for my part, I will continue to monitor the implementation of these plans as scheduled.

Thank you.

Vladimir Putin: Ok. We have allocated almost a billion for such a project in Nevinnomyssk in the Stavropol Territory.

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Vladimir Putin: Mr Savelyev, this year we have allocated 172 billion – quite a sum – to support and subsidise civil aviation, as well as to support a number of programmes. How is this money spent, and what are the results? How do the fares reflect what is happening, especially the economy-class fares?

Transport Minister Vitaly Savelyev: Mr President, colleagues,

You are absolutely right, this year an unprecedented amount of 172 billion rubles was allocated to Russian civil aviation. Of these funds, 100 billion were allocated to subsidise domestic air transport, and more than 27 billion went to traditional programmes subsidising regional transport, transport for the most vulnerable groups of people, and subsidising our Far Eastern company Aurora.

We have provided 19.5 billion rubles from this amount to compensate for the cost of tickets returned by passengers. We will also provide assistance in the amount of 15 billion rubles to support the State Air Traffic Management Corporation. We will provide over 7.5 billion rubles to 11 closed airports in the south, and 2.9 billion rubles to support air cargo carriers at the end of the year.

I will briefly elaborate on the implementation of these programmes and the amounts of subsidies. The most significant amount of financing in the amount of 100 billion, as I said, went towards subsidising domestic service, of which we have already paid out 96 billion.

Considering this support measure, we have planned to transport 100 million passengers by the end of this year. I would like to remind you that we wanted to carry 90 million passengers on domestic airlines, and we planned to transport 10 million passengers on international airlines.

According to the latest information, Russian airlines have already transported 87 million people since the beginning of the year – 71.4 million on domestic flights and 15.7 million on international routes. Fifteen Russian airlines provide international passenger service. They fly to 22 foreign countries, and 51 foreign companies from 25 foreign countries fly to us, which is also very important; there has been an increase.

Considering the prolonged closure of airports in the south of Russia, we plan to transport approximately 94–96 million passengers this year. This is about 80 million domestic airline passengers and 16 million international airline passengers. This happened due to the closure of 11 southern airports, which, if they were open, could carry an additional 19 million passengers, and our figure would then be 2–4 million people better than the figure for 2021, when – let me remind you – we transported 111 million passengers.

I would like to thank you, Mr President, for the decision adopted at the meeting with Government members on July 25 to extend the support for air carriers in the low season for travel. We are now in the low season, and it will last from November to the end of March 2023.

Amid the unprecedented external sanctions pressure, our air cargo carriers also needed state support for the first time. About 2.9 billion rubles were allocated for these purposes, and we have executed this in full – by 100 percent.

The support measures taken also made it possible to stabilise the activities of the only traffic control service in Russia – the State Air Traffic Management Corporation, whose revenues significantly decreased due to the lack of flights by foreign airlines. The subsidy for this totalled 15 billion rubles, of which 13.5 billion rubles has been distributed to date.

The Ministry of Transport continues to implement our three traditional air transport subsidy programmes. Out of 27.1 billion rubles planned, 22 billion rubles have been distributed.

These support measures will make it possible to provide airline services at reduced fares to 5 million passengers this year. These are programmes for the Far East – primarily Aurora airline.

According to the Federal Anti-Monopoly Service’s data as of November 10, this year the average fares remained the same as the last two years and even decreased 6.5 percent compared to 2019, thanks to these support measures.

These subsidies allowed us to avoid a surge in airfares during the summer, despite the increase in airline operating costs. For example, the cost of jet fuel increased by more than 45 percent this year compared to 2021, and fuel costs are over 30 percent of the total ticket cost.

Also, we were not affected by inflation. According to the estimates by the largest airlines – we also conducted a survey on this – without the subsidies, the number of flights would have been reduced by about 20–25 percent, in line with the reduction in the number of passengers.

During the peak travel season, the average economy class fare you asked about was reduced on domestic flights. According to my data, it decreased by 10 percent as of late June, by 6 percent in July and by 2 percent in August, compared to last year.

In conclusion, I want to say that due to the support provided to the civil aviation sector this year, we managed to maintain the accessibility of air transport, the mobility of the population and transport connectivity in the country.

Next year, Russia will celebrate the 100^th anniversary of civil aviation, and we will reach this milestone with a preserved fleet, which is the most important thing, thanks to you, Mr President. I think that decision was the basis and groundwork for all of us, so that today we can retain our staff and see a positive trend in passenger transport.

We will do everything that civil aviation depends on in our country.

Thank you for your attention. My report is over.

Vladimir Putin: Mr Savelyev, last summer we agreed to focus on the Volga-Caspian Sea Shipping Canal. How is this going? The main problem is dredging. It must be 4.5 metres deep along the entire length so ships with this much draft can pass through it. What is the status of the project?

Vitaly Savelyev: Absolutely right, Mr President.

The Volga-Caspian Sea Shipping Canal is a very important infrastructure element on our Trans-Caspian route. It is part of our comprehensive North-South logistics corridor that we are planning to use in full. Over quite some time (construction began in the late 19^th century and continued into the late 20^th century), its length increased from 33 kilometres to 188 kilometres.

Of course, today we are working hard to move ahead with this project. We must provide for ships with a draft of no less than 4.5 metres. We need to dredge to this depth to ensure normal navigation in the canal.

I must add that we are working on this in spite of the steady drop in the Caspian Sea level. Unfortunately, over the past 20 years, the sea level has dropped by 1.5 metres. This is a big drop. We are working to ensure the development of Russian ports. There are three of them on the Caspian Sea: Astrakhan, Olya and Makhachkala. Their aggregate capacity is 19 million tonnes. Thankfully, today, we have a lot of extra capacity because they are only being used at 28–30 percent of their capacity, but this canal is the bottleneck.

This year, the Transport Ministry will carry out more dredging. This is the first time we will remove as much as 5 million cubic metres of bottom. This is several times more than in previous years. In 2021, we removed 2.5–3 million cubic metres. By the end of this year, we plan to reach a depth of 4.2 metres. Due to fluctuations in the Caspian Sea levels, barges actually had a draft limit of 3.5 metres last year, which made navigation very difficult.

To carry out this amount of work, we have used an unprecedented dredging fleet. Now we have 28 units of equipment there, including 12 dredgers of different types. We took them from different sea and river basins, from the Black Sea, the Sea of Azov, the Middle Volga River, the Volga-Baltic Waterway and Kama. Our crews are now working around-the-clock.

We are facing a no less important target in 2023 – to remove at least 12 million cubic metres of bottom. The exact amount will be determined in the spring following check analysis and with due account for spring floods. I would like to emphasise that the project includes expert inspections to meet environmental requirements.

In terms of financing, in general, significant money was also needed this year. This project is being paid for by Rosmorport: 1.6 billion rubles. The state budget has allocated 2.5 billion rubles for this next year. We will take 3.1 billion rubles from the investment programme. This is from port fees, an extra-budgetary source, but it will also be from Rosmorport. We will incur expenses of up to 7.5 billion rubles to complete the dredging in full.

The tender for this project will be finished before the end of this year. We are also attracting companies from the Caspian countries: whoever wants it; the tender is open to all participants.

In addition, we are currently building protective dams and discharge channels, which is very important. These structures will decrease silting in the channels, and then we will not have to dredge them so often in the future.

All of the above measures will allow us to operate ships with a draft of up to 4.5 metres by the end of 2023 and to maintain certain sections of one-way traffic. This is acceptable; that’s how it works. But if there is an increase in cargo volume, and we will likely see this, then we will have to expand the canal to full two-way traffic, if necessary.

Therefore, Mr President, everything is going according to plan so far, and we hope that we will complete the goals set for us.

Thank you for your attention.

Vladimir Putin: Yes, there are a couple of other elements there, such as the port of Olya. We wanted to give it the special economic zone status and think about further development, because, as you know, the competition in the Caspian Sea is increasing, and our neighbours, God bless them, are actually doing a good job, and they are developing their port facilities very actively, creating real competition; they are working hard at this.

In this regard, we, of course, must pay special attention to this. What’s happening with this, are we doing something in this area?

Vitaly Savelyev: Yes, of course, we are working in this area. We are to transfer 12 berths in total, of which two berths are already operating under special economic zone status at the port of Olya. The Ministry of Economic Development supervises this special economic zone.

We are also transferring our four berths, which belong to Rosmorport. We signed and approved the transfer to the Ministry of Economic Development. The remaining eight berths are owned by private businesses, and we have also agreed that they will be part of the free economic zone.

So, I think that next year we will be prepared to implement and expand the free economic zone with all of our partners.

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Vladimir Putin: Mr Reshetnikov, what about the Federal Competence Centre that we established in 2018, I believe?

Minister of Economic Development Maxim Reshetnikov: Mr President, colleagues,

Mr President, I would like to say a few words about the national project that deals with labour productivity because the Federal Competence Centre is one of the main components of this national project.

Over the past five years, the national project has been scaled to all regions, covering more than 4,000 companies and 1.5 million workers. How has the work on the project progressed? Experts of the Federal Competence Centre and regional competence centres help businesses and companies to effectively use internal resources and remove bottlenecks. They work on reducing reserves and the scope of unfinished production, helping to ensure full load of equipment, to optimise moving products within a company and logistics in general. Consequently, they help companies increase their profits, creating opportunities for raising wages. What is important? In most cases, no substantial investment from businesses is required as the necessary result is achieved with engineering and managerial solutions. Literally, by moving equipment and training staff.

Businesses see that they can benefit from this kind of investment. Over the three years between 2019 and 2021, the companies that joined the project have shown a five-percent increase in labour productivity compared to those that have not joined. As a result, the project participants have increased their profit by more than 60 billion rubles, or 4.5 times more than what the state spent on the national project itself during the same period. So, we can say that the project is paying off.

Companies show high interest in the national project. As I said, we already have 4,000 participants and 2,000 new applications on the waiting list through 2023.

Regions help step up the pace when it comes to the national project. In addition to federal support measures, they are launching regional measures as well and actively expanding the network of regional competence centres, addressing issues that are particularly relevant for a specific constituent entity.

For example, the airport in Kazan reduced aircraft maintenance time by one-third, resulting in 50 percent fewer flight delays and 25 percent faster pre-flight procedures for passengers. This has been achieved thanks to the Federal Competence Centre.

In Udmurtia, Sochi and Samara, the average maintenance time for trolleybuses and trams has been significantly reduced as well.

When the pandemic was its peak, experts from the national project helped to achieve a tremendous increase in the production of face masks and disinfectants and also worked with healthcare facilities.

The capacities of the national project are constantly expanding. In 2019, we launched the Leaders of Productivity programme that has provided training to over 8,000 professionals. Since 2021, in cooperation with the Skills Development Agency, we have been providing professional development opportunities and promoting an efficiency movement, with efficiency experts producing breakthrough ideas and technological solutions to be adopted by companies.

The Russian Export Centre helps our companies emerge on international markets, which is producing the synergy of all our projects, and in the current circumstances it is also allowing them to move their products to the markets of friendly countries.

This year, acting at the regions’ request and in line with their commitments, we have expanded the criteria for the businesses’ participation in the national project. In particular we have removed sectoral restrictions for backbone companies and other firms with the revenue of up to 400 million rubles.

These efforts are increasing the enterprises’ demand for accelerated digitation and data management transition. They can get this transformation started on the Эффективность.рф platform, which has been launched on orders from [First Deputy Prime Minister] Andrei Belousov. Over 650 enterprises have been tested and issued recommendations on digitising their business processes.

I would like to note that we are using this for introducing AI technologies at our enterprises, as you said at the AI Conference last week, Mr President. The national project team is preparing proposals on working jointly to strengthen the focus on using AI technologies to improve labour efficiency.

Mr President, we are sometimes asked why budgetary funds are being used for consulting the private sector, if we allocate funds to skilled consultants and train them to consult enterprises under the efficiency improvement programme. Why cannot [private] businesses pay for this?

We discussed this with those who are only joining the project and those who have completed it. Both say that few of them would have dared to reset their companies without taking part in the project. In other words, it was a first attempt. When top experts who know the best global practices show on the ground how they can be applied, this produces a good end result and helps companies develop a taste for innovation that lasts a long time.

We have visited the companies with which we worked in 2019 and ask their directors if they had stopped after completing one-time projects. They replied that they still had the teams and people who did that, and that they continue working together. I believe that this is extremely important, because what we offer is not one-time changes but help them acquire a taste for continued improvements.

This is why we believe, taking into account the effects of the national project for business and the economy, that this work should continue after 2024, that it should not end that year.

In addition, we have proposed giving access to the project for companies in the housing and utilities sector, tourism, the health and recreation sector, and healthcare. It would allow us to double the number of participants and also to seriously increase their contribution to our economic growth.

We have discussed these proposals with the Government, and all parties have agreed that we should proceed in this manner. Therefore, Mr President, we would like to ask you to support these proposals.

Vladimir Putin: I see. Thank you.

You mentioned using AI technology. Only recently, Sber held a very interesting and, in my opinion, relevant event on developing AI technology. We agreed to create a project supporting the use of artificial intelligence by real production sectors.

Mr Solomon, have you made any progress in practice? How are things going?

Director General of the Federal Competence Centre for Labour Productivity Nikolai Solomon: Mr President,

I would like to add a few words. The Federal Competence Centre and the labour productivity project mark five years this month. We have accumulated significant experience.

In 2020, we reported to you that, within the shortest term, in three months, we had managed to increase several-fold the production of personal protection equipment by using lean manufacturing technologies, in an effort to counter the pandemic. Indeed, it was then that you instructed us to actively promote and use this technology across industries.

Due to the increased demand for oxygen by hospitals, we worked together with medical professionals in the red zones to lower the consumption of oxygen by 25 percent, to ensure that it is available to all patients in a severe condition.

We continue to work with the Healthcare Ministry. With sanctions in place, we decided to cut the time for certification of medical drugs in half.

We also work with charity foundations to reduce the delivery times for uncertified vital medication for sick children by 40 percent.

When it comes to the school maintenance programme of the Education Ministry, we engage children and the entire school community in changes, to make sure that after renovation, schools not only look beautiful but are also very comfortable, without crowds in hallways, locker rooms and canteen, and with convenient navigation and schedules at hand.

Of course, over this period, regional officials and the Ministry of Industry and Trade have turned to us for solutions to very important tasks: import substitution and multiple growth of Russian production, including in the defence industry. We complete the majority of such projects on a commercial basis outside the Labour Productivity project.

As Mr Reshetnikov said, lean technologies alone are not enough to improve efficiency, and thanks to Mr Belousov, one of the main priority areas of additional growth in labour productivity is the widest possible use of Russian information technology in the activity of the organisation.

At a conference in Sber, you suggested expanding the mandate of the Federal Competence Centre by charging us with the task to introduce artificial intelligence and advanced systems in the management, economy, social sphere and public administration.

We confirm our readiness to expand such competences in consulting. I want to note that we already partly implement import substitution tasks on the management consulting market, 80 percent of which accounted for international consulting brands that have left Russia this year. We are ready to grow rapidly under market conditions and in the context of break-even performance.

Thank you.

Vladimir Putin: Mr Solomon, you said that your experts are working at defence industry enterprises to increase labour productivity. Are they successful?

Nikolai Solomon: Yes, they are. I think that by the end of January, leaders of relevant enterprises will report on the results.

Vladimir Putin: Good, thank you.

Deputy Prime Minister – Minister of Industry and Trade Denis Manturov: Mr President, may I add something?

Vladimir Putin: Yes, please, Mr Manturov.

Denis Manturov: Thank you.

I would like to use this opportunity to thank Mr Solomon for his excellent work. He has been helping me a great deal. Starting with the pandemic, when we needed to overcome rough spots and even readjust enterprises for the production of PPEs, they helped us a lot. And today they do the same for many other sectors that take part in the state procurement order. I reported on it to you the other day. Mr Solomon also takes part in this work, and I appreciate it.

Vladimir Putin: Good, thank you very much. And thank you, too.

I would like to say a few words about the transport complex. Mr Savelyev, as we agreed, I asked you to pay special attention to the situation with the shipping of containers from Far Eastern ports.

In general, the situation is changing for the better, and I want to thank you for that. But we understand that the number of containers will keep growing next year. Could you please say a few words about it?

Vitaly Savelyev: You are absolutely right, Mr President. The situation has stabilised thanks to the decisions you have supported.

We have three more trains for loading today, which we have moved over from the coal sector for six weeks, as per your permission. We broke a record yesterday by loading 688 containers on open freight cars, up from 214 on November 16. This is a major achievement.

However, we need to address this task in its entirety and to find a systemic solution. We are now discussing a tariff system so that cars would not return empty after delivering coal but would be loaded with containers, which will benefit our senders and operators. We are working on this issue with [Russian Railways Chairman of the Management Board Oleg] Belozerov. We have a great deal of ideas. After we coordinate practical systemic measures, we will report and coordinate them with the Government. I believe that, if they are approved, we will be able to do this on a regular basis.

To date, the situation has normalised, as I have said. We expect a major change after the three additional trains are loaded. We will be able to ease the peak load off the New Year season, as we pointed out.

Overall, you have noted correctly that this issue must be addressed, and we are already considering solutions, because only up to 9 percent of containers can be transported by road, considering the adverse weather conditions. Therefore, the main focus and trend will be on the use of railway transportation, especially on the return journey.

Mr President, this is the situation to date.

Vladimir Putin: Yes, apart from the problems we are aware of, there is also the fact that a considerable volume of goods from the east was delivered via other logistics chains, as you know very well, that is, via European ports. Today, they – not us, but they – have a problem with the movement of our cargo. They are losing sales and transhipment revenues. But that is their business.

Of course, the load on railways has increased. We need to think about additional logistics and technical reequipment, as well as to expand the Eastern Operating Domain. But it is a big issue that should be addressed separately.

All right, thank you. Please, be sure to give the necessary attention to this sphere.

Let us discuss the main issue now. The reports will be delivered by [Minister of Labour and Social Protection Anton] Kotyakov and [Chelyabinsk Region Governor and Head of the State Council Commission on the Economy and Finance Alexei] Teksler. As I have pointed out, the matter concerns the implementation of the Executive Order of 2012 on the wages of certain categories of public sector workers.

I would like to remind you that in early November we had an in-depth discussion on state support measures for families with children. Today we will resume the discussion on people’s incomes in general. As a reminder, our priority is to ensure the growth of real incomes and to reduce unemployment and inequality in the country.

This year we have made a number of important decisions on that issue. In particular, from April 1, monthly allowances were expanded to include families with children aged between 8 and 17, which has increased the number of recipients. These funds are paid to an additional 5 million children.

In addition, ahead of schedule, as of June 1, the subsistence wage was increased. Consequently, related social allowances have been increased as well.

As a result, the poverty level has decreased to 10.5 percent in the third quarter. It is not a major achievement. What was the previous figure, 11 percent? Yes, it was 11 percent in the third quarter of 2021. So, the decrease is modest, but it is significant that there is a positive dynamic in the current complicated economic situation. We must maintain it.

The incomes of the poorest 10 percent of the population are growing thanks to targeted state support. The level has increased by 27.8 percent compared to the third quarter of last year.

Overall, nominal income growth over the first nine months of this year was 12.8 percent. This is nominal growth, whereas what we must achieve is an increase in real incomes.

As I have said, it is important to solidify these trends, to ensure steady growth in people’s incomes, surpassing the rate of inflation. I very much hope that the inflation rate will decrease in the first quarter of 2023, as we said. We must ensure the growth of wages in all the main economic sectors.

A separate goal, where the role of the state has fundamental significance, is to increase wages in the public sector. This is what we are going to focus on today, bearing in mind the Presidential Executive Order of 2012. It is the main subject of our meeting today. It concerns our professionals in such priority sectors as healthcare, education, science, culture and social protection.

I would like to remind you once again that the goal, which was formulated back in 2012, is to link public sector workers’ wages to the average wage in their regions.

Statistically, this year, wages have been growing slightly higher than predicted across the economy. There must be a similar dynamic in the public sector.

I hope very much to hear reports today on the situation in this area, as well as on the timeframe for the additional adjustment of wages.

Let us start working. Mr Kotyakov, please.

<…>

Vladimir Putin: As the Finance Minister [Anton Siluanov] just said, this year we have no questions. There are more uncertainties about next year, but this year, we have no questions. It is very good that we don’t, but the people do – if we have not fulfilled our commitments to them.

Obviously, we must be guided by the statistics we have. But, first, statistical accounting is imperfect and needs to be improved, and second, frankly, people see their prosperity not by statistics, but by the amount of money in their pockets. And we need to look at this very carefully – as the Russian Popular Front representative said, we really need to pay attention to this. What am I talking about? We need to consider each industry, and even more than that, each company. And we do have the opportunity to do this, both at the municipal and regional levels. Pay more attention to this. And I agree with the Finance Minister here – we need to identify our priorities, of course.

First of all, I would like to emphasise that we aren’t changing our targets when it comes to wages in the public sector, especially since we have no questions this year, as the Finance Minister said. The federal budget has sufficient revenue, and regional revenue as well. We are not going to abandon those targets; the commitments here must be met.

However, to avoid disrupting the general rhythm of work and to take into account the local specifics, we have made a special decision for the regions that are falling short of the target by a certain percentage within the agreed timeframe; we have given them a small tolerance, a little leeway – up to 5 percent below the public sector wages target.

However, I would like to draw the attention of my colleagues in the Government – and in the regions as well to the following: that decision is in no way a signal or justification for lowering the bar that we set in 2012 and thinking that it is acceptable to meet the targets by 95 percent. This can be an option when they cannot reach 100 percent, but it can’t be done all the time in the future. I ask you to avoid this approach on such an important social issue like this.

Wages in the public sector are primarily the responsibility of the regions, of course, but their financial capabilities differ; here, the Chelyabinsk Region Governor is right.

To date, only ten Russian regions are fulfilling the targets for all categories of public sector employees, but still only by 95 percent. In fact, the decision to meet the needs of the regions, to take into account inevitable volatility is perceived as the wrong signal and serves as a way to justify shortcomings. Let's not do this, this approach is unacceptable.

Once again, I would like to emphasise that the wage targets in the public sector remain the same. They are fixed in the Presidential Executive Order and are obligatory for execution. Moreover, we have, so to speak, cut them some slack, bearing in mind that we could not really imagine how the situation with finances would develop by the end of the year. But it has been developing normally, favourably. This area just requires more active and effective work at all levels of government.

According to our colleagues from the Government, the regional budgets are being funded quite well, as the Finance Minister just said. I very much hope that the regions – indeed, I also agree with the Minister here – will correctly set their priorities and focus on increasing the incomes of citizens.

As for the regions with low budgets and those whose budget revenues have objectively decreased, here I would like to approve the approach of the State Council Commission – the Finance Ministry does not mind, and the Minister said that we would refine it for each region. It is necessary to provide additional federal support to these regions. I would ask the Government to determine the amount of this support by the end of this week and then send the funds to the regions.

By the way, I would ask our colleagues from the Government to cooperate more closely with the State Council commissions, consult with them, and jointly work out decisions related to the regional finance, economic and social development of our regions, and as a result, improve the living standards of the people.

As for 2023, avoid delaying the federal support measures for the regions. It’s a bad idea to allocate on the last day of the year. What am I talking about? This year, we have been struggling with inflation, as everyone knows. Prices have spiralled, but as I said, wages have grown slightly across the economy, at least in nominal terms.

This means wages of public sector employees need to be indexed as soon as this January and the necessary financial assistance needs to be provided to the regions that really need this assistance. We also need to do this early next year.

There is one more problem affecting all public sector enterprises. This is something I would like you to consider. In recent years, the state assignment budget for such enterprises has decreased by about 20 percent in nominal terms. In real terms, adjusted for accumulated inflation, the financing of the state assignment shrank even more.

In addition, their own revenues have not yet recovered from the COVID-19 pandemic – I don’t have to add any comments here, obviously, this is because the volume of services provided is smaller – and this primarily affects culture-related institutions. This is also something to pay attention to.

I ask the Government to analyse the situation in each specific institution if necessary and propose ways to increase their efficiency and improve the work of the entire system.

We need to ensure that the specialists employed there, including those who are not included in so-called “certain categories” (we should not forget about them either), have a decent level of remuneration, and are motivated to work with dedication, with high quality and at a high level.

In turn, I ask the heads of the regions to keep this issue under personal control. Here I have to agree with Mr Siluanov and say once again that we need to set our priorities wisely. A most important priority – if not the most important – is the Russian peoples’ well-being.

Thank you.