Window on Eurasia: Russia’s Poor – Fewer in Number but Further Behind the Wealthy

Window on Eurasia: Russia’s Poor – Fewer in Number but Further Behind the Wealthy

Paul Goble

Baku, May 21 – The Russian government’s statistical agency reported this week that the percentage of Russians classified as poor fell in 2007, but a Siberian newspaper pointed out that they fell further behind the top earners in that country, yet another indication of the dangers of relying on a single measure to evaluate where a society is heading.
On Tuesday, Vedomosti reported that the percentage of Russians classified as poor fell to 13.4 percent, down from 15.2 percent in 2006 and 17.7 percent in 2005. Even though that leaves 18.9 million in poverty, it constitutes the kind of progress that any government would want to point out (www.vedomosti.ru/newsline/index.shtml?2008/05/19/595378).
But yesterday, Vostochno-Sibirskaya Pravda featured an article that showed that while there may be fewer people counted as poor in Russia today than at any time since the end of the Soviet Union, those with the lowest incomes are now further behind those with the highest, especially in major cities like Moscow (www.vsp.ru/show_article.php?id=45407).
The article was prepared by Irina Ovsyannikova, a statistician at Irkutskstat. She notes that in 2007, the average per capita monthly income was 12,600 rubles a month (550 U.S. dollars) but that average conceals as much as it reveals, since the least well off fifth of the population earns only 5.1 percent of all income, while the top fifth takes home 47.8 percent.
If one divides the Russian population by deciles as is common practice, Ovsyannikova points out, the top ten percent of earners receives 16.8 times what the bottom ten percent do, up from 14.5 times in 2003. She laconically notes that “these statistics beyond any argument testify to the increase in social-economic differentiation.”
An “inevitable sputnik of economic development,” this income inequality has real world consequences. It can trigger serious economic and political conflicts, something that is all the more likely in Russia because of the rapidity and scale of this differentiation and because of major differences among Russia’s regions and republics.
In European countries, she notes, the difference in income between the top and bottom deciles is six to nine times. (In the U.S., it is greater.) And Russians have had to adapt to it extraordinarily quickly because the Soviet system intentionally sought to keep the range of reported as opposed to real incomes relatively small.
Moreover, both because Russia’s regions are so different in terms of economic development, the relationship between rich and poor varies widely. In some regions, like Kalmykia and Ingushetia, the share of the population under the poverty line is over 40 percent, and in others, like Altai and Tuva, the poor make up more than a third of the population.
At the other end of the spectrum are those regions with oil and gas supplies: The Nenets, Yamalo-Nenets and Khanty-Mansiisk autonomous districts have poverty rates of 6.6 to 7.4 percent. These are the richest places in Russia (after Moscow, of course), but high prices mean that gross incomes do not go as far as they would elsewhere.
But Moscow has yet another distinction. There the top 10 percent of the population have incomes totaling 41.7 times the incomes of the bottom 10 percent, a ratio two and a half times that of the country as a whole and one greater than found almost anywhere else and one that could trigger a social explosion at some point.
Nonetheless, Ovsyannikova concludes, it is fair to say that “incomes [in Russia] are growing and not only in nominal terms.” Indeed, after years of difficulty, “the better-off portion of the population can allow itself a contemporary level of consumption. But the situation of the poorest, despite the general positive changes remains hard.”
Another example of a situation where some reports about an event point in one direction where others point in a very different one has taken place in Murmansk. Russian media are reporting that four closed military towns on the Kola peninsula have been transferred from the defense ministry to the oblast authorities.
Among the four is Polyarnyy, which will be remembered by viewers of Tom Clancy’s novel, “The Hunt for Red October,” and the movie based on it. The movie begins, as viewers will recall, with the new Soviet missile submarine heading out Polyarnyy inlet on a voyage its commander, the Lithuanian Marko Ramius, hopes will allow him to defect.
But the authoritative Barents Observer reports that despite the announced transfer of these four closed towns, something many will see as ending a notorious Soviet practice and reflecting a new openness, “the military towns in the region are likely to remain closed” (www.barentsobserver.com/military-land-transferred-to-murmansk.4482511-16149.html).