27.03.09

The latest poll results indicate that a growing number of Russian citizens are unable to maintain their accustomed living standards and are being forced to economize on necessities - including food, clothing, and medications. Half of respondents say they are spending less on food.

Poll results released on March 24 by the All-Russian Public Opinion Research Center (VTsIOM) indicate that a growing number of Russian citizens are unable to maintain their accustomed living standards and are being forced to economize on necessities - including food, clothing, and medications. Half of respondents say they are spending less on food. Experts warn that as the crisis deepens, living standards in Russia will continue to plummet.

VTsIOM General Director Valery Fedorov says that the material well-being evaluation index, which measures satisfaction with living standards, has dropped from 60 to 35 points in the past six months.

In a February 2008 poll, 8% of respondents reported living below the poverty line: that is, with family incomes so low that they couldn't afford enough food. In a February 2009 poll, this figure had risen to 14% of respondents. According to VTsiOM, over half of respondents (56%) in February 2009 said that their incomes had declined in the past year. The proportion of respondents who aren't saving anything at all rose from 68% in February 2008 to 72% in February 2009.

According to Fedorov, people are being forced to start spending the savings they accumulated in the years of economic stability. The crisis is making them economize on everything. Half of respondents are spending less on food, 42% are spending less on clothing and footwear, 30% are spending less on entertainment, 29% are spending less on vacations and leisure activities. Nearly 25% are spending less on health care and medications. About 20% of respondents say they are postponing purchases of consumer durables until the situation improves; 18% are postponing purchases of property or cars. Cost-cutting measures of this kind are reported even by middle-class respondents who can afford to plan ahead for better accommodation, car purchases, and so on.

The pessimistic figures from VTsIOM are supported by data from the Federal State Statistics Service (RosStat), which showed overall unemployment rising to 8.5% of the economically active population in February: 6.4 million people. Real incomes in the first two months of 2009 dropped by 7.2% relative to the same period of 2008.

Experts predict that living standards will continue to deteriorate.

Alexei Shevlyakov, director of the Institute of Socio- Economic Problems of the Population (Russian Academy of Sciences), predicts that this year's real inflation rate will be at least 20% - meaning an effective rate of 40-50% for Russia's poorest citizens, who spend 70% of their incomes on food. "The state's promised indexation of pensions and benefits won't be enough to cover rising prices," says Shevlyakov.

Russia's official statistics acknowledge that 20% of Muscovites are living below the poverty line. Calculations using Western standards place 50-60% of Muscovites in that category. In these circumstances, even the strictest economizing on food and medications can't save Russian citizens from impoverishment.

Yakov Dubenetsky, head of the Investment Monitoring and Forecasting Center at the Economic Forecasting Institute (Russian Academy of Sciences): "The overwhelming majority of Russian citizens are living in poverty. Russia's economy is run-down and unbalanced, with a focus on commodities exports, and managed by amateurs who don't understand the depth of the problems." The crisis has only exacerbated the situation, showing that Russia's years of reforms have failed to create stable demand in the domestic market, including the consumer market. Dubenetsky maintains that only domestic demand, sustained by high pay rates and pensions, can guarantee normal development across all sectors of the economy - from light industry and foods to machine- building.

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Source: Nezavisimaya Gazeta