13.02.09

The global financial crisis did not change the ratio between the rich and the poor in Russia, the Federal State Statistics Service has reported. Experts argue, however, that the number of the poor should have increased and the number of the rich should have dropped as a result of the economic downturn. Yet, it was only in December that real incomes fell markedly, and annual statistics failed to register the change.

According to the Federal State Statistics Service, about 10 percent representing the country’s top earners took almost a third of total cash earnings in 2008, while the ten poorest percent got a measly 1.8 percent of the total amount. The largest group (20.1 percent) was those with monthly per-capital incomes of between RUB 10,000 and RUB 15,000 (approx. $277 to $415); 1.5 percent had incomes of below RUB 2,000 (approx. $55.4), and 15.1 percent received more than 25,000 (approx. $692) a month.

In Russia, the level of poverty is pegged to the official minimum subsistence level, which currently stands at RUB 4,646 (approx. $129), whereas in Europe, those with incomes below 60 percent of the average are considered poor. It should also be noted that real inflation is higher for poor categories: it is estimated at 20-25 percent, against the average figure of 12-13 percent.

Experts were surprised by the rich and poor figures. “There is some error here,” said Konstantin Simonov, president of the Centre for Current Politics in Russia. “The picture should have been much worse, due to growing unemployment and spiraling inflation, to say nothing of the weakening ruble,” he argued. In Simonov’s opinion, these factors should have increased the number of the poor in Russia.

Igor Nikolayav, chief strategic analyst at FBK, believes that the statistical figures simply have not yet been affected by the financial crisis, thus producing an illusion of stability. “The crisis worsened in the second half of October, but it was not until December that people’s real incomes dropped 12 percent,” he explained, drawing parallels between personal incomes and Russia’s 2008 GDP growth of 5.6 percent, which did not reflect the country’s economic situation at the end of the year.

The number of the rich is set to reduce in 2009, while the ranks of the poor will only expand, Simonov predicted: “The poorest categories will suffer from unemployment and inflation, while the rich will stop receiving windfall profits and be forced to save.” Igor Nikolayev expects a widening gap between the rich and the poor, just as we saw in the 1990s. “It will increase by a couple of percentage points at least,” he maintained.

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Source: Analytical department of RIA RosBusinessConsulting