Putin sees growth of wages outrunning labor productivity as one of causes of economic crisis

ST. PETERSBURG. April 27 (Interfax) – The causes of the crisis in the Russian economy are not only external, but also internal, Russian President Vladimir Putin said.

“As to overcoming the crisis in the Russian economy, we need to understand the causes to decide what to do […] There are, of course, external causes, but they are primarily internal,” Putin said at the Legislators’ Council in St. Petersburg on Monday.

The president said the state justly tried to prevent and resolve social issues, specifically, wages, bearing in mind that they were traditionally rather low.

“However, it eventually caused certain imbalance in the economy, which consisted in that labor productivity grew slower than did the wages, and that always causes imbalances,” Putin said.

The president said in practice that means that consumption is increased due to imports. “Imports are increasing and we eventually cover it with our reserves received from selling hydrocarbons. That’s one of the causes [of the crisis]. As soon as the prices on hydrocarbons were halved, it led to some problems, primarily, the budget costs,” Putin said.