Russia 110705 Basic Political Developments
Million Live Below Poverty Line
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- Poverty in Russia grows faster than expected
- Inflation severs Russia’s material comforts
23 Million Live Below Poverty Linehttp://www.themoscowtimes.com/news/article/23-million-live-below-poverty-line/440015.html 05 July 2011 The Moscow Times The number of officially recognized impoverished Russians increased by 2.3 million to 22.9 million, or 16 percent of the population, in the first quarter of 2011, compared with the same period last year, according to the State Statistics Service. The number of impoverished had decreased in the first two years after the 2008 recession, but the trend was reversed this year, Kommersant reported. The minimum monthly wage currently stands at 6,437 rubles ($231), up 17 percent in the first quarter of last year. The increase, which was mostly due to rising food and services prices, is coupled with weak salary growth nationwide and has resulted in more people finding themselves below the poverty line, the report said. Analysts told Kommersant that the new figures are more accurate than previous reports by the statistics service but still downplay the actual number of impoverished people in the country. No alternative estimates were provided. Poverty in Russia grows faster than expectedhttp://english.pravda.ru/business/finance/04-07-2011/118392-poverty_russia-0/ 04.07.2011 The number of impoverished people in Russia has increased by 2.3 million and made up 22.9 million in one year, the Russian Federal Statistics Agency said. Many experts believe that official statistics does not reflect the real state of affairs and is very often undervalued. Therefore, it means that the number of the poor in the country grows much faster. According to official statistics, an impoverished individual is a person, whose income is lower than the living wage. The level of the living wage is calculated by the state. This term virtually designates the limit enough for real physical survival; it is not the actual poverty line. The number of people living close to this point has increased in Russia from 20.6 million in the first quarter of 2010 to 22.9 million in 2011. This is 16.1% of the entire population of the country. It is worthy of note that a year ago, the Russian Federal Statistics Agency was saying that the number of the poor in the country was decreasing. The cost of living in Russia raised by 17%, which automatically increased the number of poor people. In the first quarter of the current year, the cost of living made up 6,437 rubles ($230). The inflation rate was quite high, whereas salaries in many regions of the country did not return to the pre-crisis level. "The growing number of those living below the poverty line is connected with high inflation in the beginning of the year. The level of people's salaries and incomes was not growing much. The number of poor people in the country increased, but the level of people's income went down," Anton Safonov, an analyst with Investcafe said. In May 2011, the real money income of many Russians decreased by seven percent. We didn't have such a serious reduction even during the peak of the crisis. The reduction during the first five months made up 3.7%. The World Bank published a regular report on the economy of the Russian Federation. The report also pointed out the negative situation with poverty. Vladimir Shabanov Bigness
Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/be03d45c-a666-11e0-ae9c-00144feabdc0.html#ixzz1RDUDx6ah July 4, 2011 7:12 pm Inflation severs Russia’s material comfortsBy Charles Clover During the years of the Soviet Union, most Russians got used to the trappings of a basic middle-class lifestyle. Everyone had the same flat, the same Lada car, the same Gorizont television set, the same crystal dessert set and worked in identical ministry offices. While the collapse of communism in the 1990s destroyed most Russians’ standard of living, something resembling a middle class began to appear again between 2000 and 2008, as real incomes doubled and oil revenues kept wages and pensions well ahead of inflation. However, since the onset of the economic crisis in 2008, real incomes have been stagnating as wages have been frozen – while inflation gallops on. For a middle class that has cautiously got used to a steadily rising standard of living, the new reality is hard to swallow. “It is impossible to see this situation getting better,” says Alexander Golushkin, a specialist at the Russian Academy of Sciences Institute of Literature. “Everyone thinks we are going downhill.” Opinion polls show a new pessimism reflected in flagging support for the ruling “tandem” of Dmitry Medvedev, president, and Vladimir Putin, prime minister. Though both are still rated highly, they have each seen their approval ratings drop by about 10 percentage points since the start of the year. Mr Golushkin says the Rb25,000 ($900) he earns from his teaching job every month has gradually been whittled away by inflation, to the point where he has to think twice before shopping at his local super market, Perekryostok, a ubiquitous and affordable chain that has become one of the marks of middle-class membership. Those on lower incomes tend to shop in the open air markets on the outskirts of Russian cities, where prices are cheaper. Most of Russia is feeling the same pinch. “Wages are the same, but prices are increasing all the time,” says Ekaterina Barova, who works as an editor in Moscow. She says that five years ago, shopping for two people for two weeks cost Rb3,000; now it is at least Rb5,000. Since the onset of the economic crisis in 2008, which saw gross domestic product fall 8 per cent in 2009, wages in most sectors have been frozen, while inflation, temporarily damped by the crisis, has now picked up. In the first quarter of 2011, real wages fell 2.9 per cent, driven by higher inflation than expected. While official inflation for the year sits at just over 9 per cent, many think this statistic is fudged. “I think the real inflation rate is being understated by official statistics,” says Sam Greene, a professor of political science at the Moscow-based New Economic School. Prices for many products have jumped sharply – petrol, for example, rose 6 per cent in the month from April to May. Over the past five years, official statistics show prices rising 62 per cent, but most Russians feel much greater increases. Oksana Vozhdaeva, a journalist from Tomsk in Siberia, says her utility payments have gone up from Rb1,000 to Rb2,500-Rb3,000 a month in five years, and the cost of groceries has doubled. The pressure on Russia’s middle class is a common feature of many large emerging market countries, which have seen inflation gallop ahead since the end of the global economic crisis. Since the relative prosperity of the Putin era, people hesitantly started to be optimistic once again, after the economic chaos of the 1990s, when most lived on the verge of bankruptcy and even starvation. Now, those hopes are being dashed, and many are losing their foothold on middle-class respectability. A lucky few are being swept into the ranks of the elite, with million-dollar flats in gleaming new blocks on the outskirts of Moscow and foreign cars. But the majority are losing ground. “The middle class is splitting in two,” says Mikhail Chernysh, head of the social mobility section of the Russian Academy of Sciences Institute of Sociology. “One part is in danger of falling out of the middle class, while the other part is gaining. “Getting into the middle class is very difficult in Russia, and once you are there, it is hard to stay.”
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