Russian President Vladimir Putin has increased the initial payments for volunteers to fight in Ukraine, aiming to streamline military recruitment but potentially causing economic imbalances. Effective immediately, all Russians who enlist will receive an upfront sum of 400,000 roubles ($4,651). Additionally, the decree urges regional governments to contribute at least an equal amount from their budgets.
With the base monthly salary for a private in the 'special military operation' set at 204,000 roubles, the new decree elevates the minimum yearly income for the first year of service to 3.25 million roubles ($37,791). Salaries for officers are commensurate with their rank and higher. All enlisted personnel also receive extra compensation for engaging in offensive actions or for destroying enemy equipment.
Earlier this month, Moscow's mayor announced an upfront payment of 1.9 million roubles ($21,777) for city residents enlisting, boosting their first-year earnings to 5.2 million roubles. These recent adjustments mean that the minimum annual salary for Russian contract soldiers in Ukraine now surpasses the national average by over three times, with Moscow residents earning more than five times the average wage.
These financial incentives have prevented a nationwide mobilization following a challenging 2022 campaign that resulted in a significant population outflow. However, some economists warn that these payments are fueling a wage inflation spiral. Supplementary measures include waivers on monthly interest payments for consumer loans for volunteers and state-backed loan guarantees in the event of death.
These provisions have spurred potential volunteers to take out consumer loans, contributing to sustained growth in consumer credit despite the central bank's efforts to cool the economy by raising interest rates. Russian authorities report that approximately 190,000 individuals have volunteered this year to fight in Ukraine, a decrease from the 490,000 contracts signed in 2023.
