August 2, 2011

RUSSIA: More people see themselves as poor

MOSCOW / Russia Profile / Culture & Living / August 1, 2011

Poor Russia

The Number of People Who See Themselves as Poor Is Growing in Russia

By Svetlana Kononova - Special to Russia Profile

The Public Opinion Foundation (FOM), a Russian NGO that conducts sociological research, has found that 45 percent of Russians feel poor. Only one percent of respondents in FOM’s poll consider themselves to be rich, while more than a third of respondents believe that from 11 to 30 percent of people in Russia are rich, and one in four claims to have rich acquaintances in their social circle.

The definition of poverty in Russia remains controversial. The official minimum wage is 7,411 rubles ($265) per month in Moscow, and 6,473 rubles ($230) per month in the rest of the country. About 22 million people in Russia (15 percent of the population) earn less than the minimum wage. State statistics officially count these people as “poor.”

But the minimum wage amounts to hardly anything in real life. For example, utility payments for a small, one-bedroom apartment start from 2,500 rubles ($90), and renting a flat costs from 7,000 rubles ($250) in small towns and from 28,000 rubles ($1,000) per month in Moscow. A universal transportation pass for one month in Moscow costs 2,380 rubles ($85). Even if the hypothetical minimum-wage earner doesn’t rent a flat, what’s left after housing and transportation expenses is not enough to live on.

According to the State Statistics Committee, only 11 percent of the country’s population earns more than 35,000 rubles ($1,250) per month. The average monthly income in Russia is 18,500 rubles ($660). More than half of all Russians make less than this, but are they “poor?” By comparison, in the United States and most Western European countries, the lower middle class starts at a monthly income of $2,000 to $2,500 per person.

Another criterion that some researchers use to define poverty is the share of income spent on food. People who spend more than a half of their income on food are deemed poor. In Russia, this group is estimated at 50 to 60 percent of the population, according to various surveys. About a third of the country’s population can afford only food, about a half only food, clothes, and cheap household appliances, and the rest – expensive goods, such as cars. “The number of people who think of themselves as poor has increased since 2008. This probably reflects the consequences of the economic crisis, when many incomes dropped and living standards took a downward turn,” said Ekaterina Sedykh, the director of the “Dominants” project at FOM.

According to the survey, most people who see themselves as poor have a low level of education, live in villages and small towns, are retired or will retire soon. Respondents who describe their incomes as average are young or middle-aged, live in Moscow and other big cities, and are active Internet users. “This group includes the so-called ‘people of the 21st century’ who lead a modern lifestyle, traveling abroad, using bank cards, making purchases via the Internet, and investing money in education. These people can have a high standard of living even if they are not rich. For example, they can organize a trip abroad with minimal expenses, because they are familiar with traveling in general – they know how to book cheap tickets through the Internet and where to stay,” Sedykh explained.

Respondents who see themselves as poor or with an “average” income gave a wide range of ways to become rich. The poor believe that the secret to financial success is “knowing the right people,” “shiftiness, the ability to beguile” and “the availability of initial capital to start up a business.” Respondents with average incomes prioritize “good education and high [professional] qualifications,” “knowing the right people” and “hard work.” “Such people believe that it is absolutely essential to make a conscious effort to improve their financial situation and standard of living,” Sedykh concluded.

“Poor and middle-income respondents understand ‘knowing the right people’ in different ways. The first group believes that the ‘right connections’ should be used for problem solving. But for the second group, it is a stimulus for personal development. Personal and professional contacts with successful people generate new ideas and new prospects and promote further self-development. Respondents who have already climbed out of poverty value and build long-term, mutually advantageous relationships with other people,” Sedykh said.

Elena Kovalenko, a social policy expert at the Institute for Urban Economics, thus described Russian poverty: “The level of poverty in the country in general has been slashed in half during the period of economic growth – mostly due to growing minimum and average wages and a high employment level. Paradoxically, the current programs meant to support vulnerable social groups don’t have any measurable influence on the fight against poverty,” she said.

People who worked in the “gray area” of the economy and received “gray salaries in envelopes” suffered the heaviest blow from the economic crisis – their incomes dropped sharply. But they aren’t the only ones at risk of sliding into poverty. “It’s not retired people who are at the highest risk of poverty in Russia, as is often believed, but households with children. In 2008 to 2009, mostly families with three and more children accounted for the growing numbers of the poor. Families with small babies aged one to two years are also at risk,” Kovalenko said. Thus it is not surprising that the average Russian family has one or two children. Sociological research shows that the majority of young Russians do not plan to have children in the next two to three years, and the number of those who do not want children at all is also growing.

In Russia, the “Gini coefficient,” a statistic that determines income and wealth inequality, is about 40 – the same level as in some Arabic countries, which recently experienced revolutions.

© Russia Profile, 2011
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