Window on Eurasia: Poverty Rate in Russia More than Twice as High as Kremlin Claims

Paul Goble

Vienna, June 6 – The Russian government says that the poverty rate in that country has fallen to 13.4 percent, but independent Moscow experts argue that the real rate, if one uses international standards, is 30 percent. And they note that with regard to the poor, it is “not only” a question of rates of pay.
Poverty rates, as Mikhail Kalmatskiy points out in today’s Novyye izvestiya, depend on the measures officials and researchers use to measure them. “One and the same individual depending on which criteria are employed may thus turn out to be poor or not very,” he writes (www.newizv.ru/news/2008-06-06/91448/).
In general, he continues, investigators use three basic approaches: an absolute standard, a relative one, and subjective evaluations. The relative approach treats as poor those who are significantly less well off than the average, while the subjective, by definition, considers as poor anyone who defines himself as such.
The Russian government uses the absolute approach, defining poverty in terms of the amount of income needed for food, clothing and certain other goods to “live at a minimal physiological level without dying,” according to Alevtina Gulyugina, a scholar who specializes in the measurement of poverty.
At present, the Russian government officially considers as poor those of its citizens whose incomes are lower than “4005 rubles (170 U.S. dollars) a month on average across Russia.” Using that standard, it is entirely correct to say that only 13.4 percent of Russians are poor.
But if one uses as the basis for this calculation European norms, which include far higher levels of income needed not only for food but for clothing and other aspects of life, then the share of the population in Russia that is poor is “almost 2.5 times” more than that – or nearly a third of all residents.
European standards, Russian experts suggest, are fairer, especially if one wants to compare poverty rates among countries. But Yevgeniy Gontmakher of the Moscow Institute of Economics says there is little chance that Moscow will do so anytime soon because the government would need to have far better income statistics than it does.
The level of “shadow payments” in Russia is “significantly higher than in Europe,” he told the paper, making exact income calculations extremely problematic. Other experts in this area agree, with Liliya Ovcharova noting in addition that “unlike us, Europe long ago surpassed the barrier of mere physiological survival.”
In Europe, she continues, “the problem of absolute poverty was resolved in the 1970s” when poverty was reduced to under five percent of the population. And consequently, European countries since that time have focused “not on the minimum level of consumption but on [income] inequality,” an entirely different thing.
In the short term, both Gontmakher and Ovcharova say, the best Russia can do is to increase the size of the minimum level of consumption for this measure, something officials are unlikely to want to do because in that event, “the official percentage of poverty with us will grow to 30 percent.”
Ovsey Shkaratan, a professor at the Higher School of Economics, adds that Moscow should shift from a poverty level defined in physiological terms to one based on social needs. Present standards in fact highlight “the level of poverty and social degradation” in the
Russian Federation.
“If you use physiological criteria” as the Russian government does, he says, “you get a physiological entity. If you use social criteria, then you get a human being. We must consider the need to produce a normal population and not ignore as now the cultural and educational requirements of people.”
Unfortunately, both the Russian government and Russian business have little interest in making that shift, the government for propagandistic reasons and business for profit calculations. Indeed, an article in Moskovskiy komsomolets yesterday points out, the drive for profit may be pushing wages down in some sectors (www.mk.ru/blogs/MK/2008/06/05/russia/356593/).
That is because many Russian businessmen are quite happy to use illegal immigrants instead of Russian citizens because the former will work for less and are not in a position to demand the social and other services that the latter view as their right. And that pattern too is keeping the poverty rate in Russia high, however much Moscow may be celebrating its decline.