Wednesday, September 8, 2010

Window on Eurasia: Russia’s ‘Working Poor’ Ever More Conscious of Themselves as a Group, Delyagin Says

Paul Goble

Staunton, September 8 – Those Russians now making enough to pay for food and clothing but not major purchases constitute that country’s new “working poor,” an incipient working class that increasingly views its interests as being different than those of the state and itself as a segment of society ignored or oppressed by the state, according to a Moscow analyst.
In an interview with the Novy region – Moskva agency yesterday, Mikhail Delyagin, the director of the Moscow Institute of Problems of Globalization, said that in the 1990s, many Russians were far poorer but now, those near the top of the poverty groups are doing better and they form nearly 48 percent of the population (
Such workers, he continued, “can purchase food and clothing,” but they lack the funds for more expensive durable goods. Because of their share of the population, they are potentially able to make greater demands on the state precisely “when the [latter] has decided that it can do whatever it wants with [them],” although as yet they do not constitute a serious threat.
Instead, Delyagin argues, the long slow decline in their economic position over the coming years is likely to allow them gradually to become conscious of themselves as a force in society, something that politicians may seek to exploit for their own purposes or that they may act on, either of which will ultimately change the nature of Russian politics.
According to the Moscow economist, self-consciousness on the part of this “new social formation” has already become to “manifest itself in critical situations,” such as during the forest fires this summer. The interest of such people in justice has been offended when the government has shown that it “has no need for the people who are defending it.”
As a result, Delyagin says, “the occasion for conflict between those on top and those below is already growing. The sharp growth in prices for certain food products will continue this fall.” While officials will say that the rate of inflation “will not exceed 10 percent – the politically significant limit” -- in fact, it will be much higher, especially for poorer groups.
Indeed, he says, in Russia at present, “official statistics has the same relationship to real life as the promises of the United Russia party do to it actions. Therefore, it will become harder to make ends meet.” And there are indications that industrial production will continue to fall, and that the standard of living for most will decline as well.
Because this will take place more or less gradually, “catastrophes will not occur.” But looking a little further ahead, there will be problems, especially when rates for communal services go up in January and when officials try to balance the budget by extracting more money from the population.
Again, Delyagin insists in conclusion, he is not pointing to an explosion or a catastrophe as a result. But the slow worsening of the lives of Russia’s working poor points to the emergence of a new social group, the working poor, who are watching their lives get worse even as those above them appear to be living ever better.
Delyagin’s argument is reinforced by statistics offered in “Vedomosti” earlier. According to the paper, “Russia is now a country of poor people,” and it is they who will “suffer most of all from inflation,” be “the first to lose their jobs,” and “more intensely than other groups” any downturn (
The paper suggests that while it might appear that there is no way out of this situation, in fact, the experience of other countries points to one: entrepreneurial activity by the working poor. But such activity, it continues, requires micro-financing, and unfortunately Russia’s banking system is not prepared for that.
On the one hand, Russia’s banks are concentrated in Moscow and the big cities, with 49 percent of them in Moscow alone. Of 130,000 cities and towns with populations under 50,000, “the majority do not have any banks.” Consequently, someone hoping to go into business is often unable to secure the loans he or she needs to get started.
And on the other, Russia’s banking system has relatively little experience with such small loans, preferring to make only larger ones, at least in part because the price of doing business in Russia involves so much corruption that micro-loans that could help the working poor better themselves appear a poor investment from the point of view of the banks.

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