MUST READ--Russia's New Problem: Poverty

[Kollyvas]

This is where ROCOR should be concentrated:
http://www.census.gov/prod/3/98pubs/cenbr985.pdf

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http://www.cdi.org/russia/johnson/8383-4.cfm

RIA Novosti
September 27, 2004
THE SPECIFICS OF RUSSIAN POVERTY

MOSCOW, (RIA Novosti political analyst Yana Yurova)

In the World Bank's Poverty Assessment Report on Russia, researchers concluded that the situation in Russia had essentially improved. Since the poverty levels peaked in 1999 at 41.5%, poverty was cut in half by 2002 to 19.6%. About 30 million people have improved their financial standing, however the number of people in poverty is still high - every fifth Russian lives well below the official poverty line. According to the World Bank, the most vulnerable group was the rural population. About 30.4% of the rural population lives in poverty, while 15.7% of the urban population is poor. Children under 16 have a higher incidence of poverty, about 25%. According to the report, the North Caucasus, South Siberia and parts of Central Russia are the poorest regions in Russia.

The Russian government's difficult task is to halve the poverty incidence by 2007. The World Bank report said that in order for poverty to be reduced to 10.2% by 2007, the annual consumption levels should grow by 5%. However, if annual consumption levels grow only by 3%, poverty would only be reduced by about a third.

The World Bank also made recommendations for how Russia could reduce poverty. The recommendations include economic diversification (to reduce the federal budget's dependence on oil prices), stable economic growth, increasing targeted actions to decrease poverty, focusing aid on the poorest citizens, and implementing different social policies with regard to the poor, which calls for the redistribution of specific benefits using a point system. The most impoverished people receive the most points accordingly, this system would not provide the wealthy with any benefits.

In the last 10 years, poverty has been very popular issue. Many international organizations, including the International Labor Organization, have analyzed poverty, however the Russian government has rarely implemented their findings and proposals because foreign experts usually do not take into account the specifics of Russia, and instead apply international standards.

The World Bank said that the methodology it used for the report was to analyze household incomes (consumptions levels) rather than family budgets. However, the World Bank report does not differ greatly from the findings of Russian experts. Therefore, it is highly unlikely that Russia will change the relevant methodology base. Moreover, World Bank experts, who singled out those in need of selective aid, did not consider those individuals' personal assets such as dachas, apartments and personal holdings. A unique feature of poverty in Russia is that many people may have low incomes and consumption levels, but live in expensive apartments in the center of Moscow and can receive benefits.

The World Bank's proposal to redistribute specific benefits in favor of poor regions is suspect. Russian experts have established that the amount of misappropriated funds is directly proportional to federal budget subsidies to any territory for poverty elimination purposes. Poverty in Russia is now connected with the situation in the labor market. Poor households account for 26% of Russia, while about 60% of all poor Russian families have at least one unemployed adult, thus making up for 70%-80% of the entire income deficit. Instead of redistributing benefits, regional poverty must be reduced because the first option facilitates sponging attitudes. Those specific regions, which post average economic growth rates, must create additional jobs to effectively combat poverty.

Rural Russia, which has a surplus of manpower, suffers from chronic poverty. Even the most selective social aid cannot rectify this situation because everyone would have to get such benefits all the time. It is dear to create alternative jobs there. Labor migration is just about the only quick and cheap solution.

Ineffective social programs are a result of the ineffective performance of Russia's social institutions, rather than an ineffective methodology for identifying the most underprivileged groups. Russia's social institutions are mostly focused on helping the elderly, the handicapped, and veterans. In reality, poor people often are not members of these three groups and therefore fail to influence local politicians accordingly. Veterans organizations, groups representing the handicapped and Chernobyl cleanup workers managed to wrest additional privileges from the government. But this boils down to political-economic aspects of the poverty-elimination process. The state can settle these issues, if wants to. Beginning on January 1, 2005, Russian territories will have to pay all monetary benefits, which may drastically change Russia's poverty-elimination situation.

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http://www.cdi.org/russia/246-13.cfm

RW 2003 Master Index • Iraq: RW 2003

CDI Russia Weekly #246 Contents Printer-Friendly Version

#13
Majority of Russian army officers live in poverty: official

MOSCOW, Feb 27 (AFP) - More than half of all officers in Russia's underfunded military live in poverty, a member of the upper house of parliament said Thursday."Last year's wage increase for soldiers unfortunately did not raise their standard of living, because of a large increase in costs," said Valery Manilov, adding that 56 percent of officers lived in poverty.

Last year, 43 percent of officers lived under the poverty line, defined by a monthly wage of at 59 dollars (55 euros), Manilov said, quoted by Russia's Interfax-AVN news agency.

Nearly 370,000 Russian soldiers live without assigned housing, said Manilov, a former first deputy chief of general staff.

Russia's armed forces, some 1.1 million strong, have been plagued by financial problems since the collapse of the Soviet Union in 1991.

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An interesting study:
http://www.nes.ru/english/about/10th-An ... rrocks.pdf

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http://www.nes.ru/english/research/abst ... skov-e.htm

Spryskov D.S. Persistent Poverty in Russia.- 49 p. BSP/2000/037

Abstract

Poverty has become one of the most severe problems in Russia since the breakup of the Soviet Union in the early 1990s.

The aim of this paper is to determine the major micro and macro factors that cause a household to be persistently poor. The methodology we use is standard duration-data analysis. Proportional- hazard Weibull models are estimated using three groups of covariates: demographic, regional and economic. As a primary source of data we use Russian Longitudinal Monitoring Survey (Rounds 5-8).

To evaluate poverty among the “extremely” poor as well as the difference in needs among ages, four different poverty lines are used. In each case, family income is estimated using two approaches: reported income of households and their expenditures.

Our estimates show that longer-term poverty is highly correlated with the size of a household, the presence of children or pensioners in a family, the characteristics of the household’s head as well as location of a household and unemployment status of it’s members.

Full text in .pdf file Back to the list of publications

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http://www.wsws.org/articles/2005/mar20 ... -m11.shtml

WSWS : News & Analysis : Europe : Russia & the former USSR

Wealth and poverty in modern Russia
By Vladimir Volkov and Julia Denenberg
11 March 2005
Use this version to print | Send this link by email | Email the author

Since the beginning of the year, protests have been under way, primarily by pensioners, against the transformation of social benefits into substantially smaller cash payments. (See: “Russia: wave of protests against welfare cuts,” 27 January, 2005; and “Russia: Putin lays siege to social benefits,” 21 September, 2004.)

Government propaganda has sought to attribute the spread of protests to problems in the implementation of the new laws on social security benefits, while insisting the laws themselves are necessary and inevitable. However, protests by pensioners are only the tip of the iceberg. The underlying cause of growing discontent is the enormous degree of social inequality that has resulted from the introduction of capitalism in the former Soviet Union.

In his New Year speech, President Vladimir Putin maintained that the social situation of most Russians had improved over the previous year. Just a few days later, however, the outbreak of protests indicated what broad sections of the population thought about this question.

Even a cursory examination of the social situation in modern Russia reveals a deeply divided society. An array of statistics documents the reality of two different worlds that hardly come into contact with one another. One—the world of wealth and luxury—is inhabited by an insignificant minority. The other—the world of social decline and an arduous struggle for life’s necessities—is inhabited by millions upon millions.

Figures showing the distribution of wealth reveal the glaring nature of this social polarisation. According to government data, the incomes of the very richest members of Russian society are 15 times those of the poorest—one of the highest levels of social inequality to be found among the world’s leading countries. In Moscow, this difference is 53-fold.

Below the poverty line

According to figures published by the World Bank at the end of last year, 20 percent of the Russian population lives below the poverty line, which is defined as a monthly income of 1,000 roubles (less than 30 euros, or $38).

The great majority of Russian families are teetering on the edge of poverty. The World Bank has calculated that an average decrease in income of 10 percent would produce a 50 percent rise in the poverty rate. The majority of the poor in Russia are to be found among working families headed by adults with average technical professional training, and in families with children.

Most of the poor workers are employed in the public sector, including teachers, physicians and low-ranking civil servants. The occupations with the lowest incomes—including those employed in the health services, such as nurses and medics—are of great social importance. The poor living conditions of those employed in these sectors contribute to a decline in the structures upon which a functioning society is based.

The well-off receive greater privileges and benefits than the poor or the near-poor. The World Bank writes that medium-level social allowances (with the exception of those for children) paid to the relatively rich exceed those received by poorer social layers.

Russia’s National Statistics Office officially classifies a total of 31 million people (22 percent of the population) as poor. Other surveys, however, place the poverty rate at 40 percent or higher.

The All-Russian Centre for Living Standards published the following figures for the varying degrees of poverty:

At the end of 2003, average monthly income was calculated at 2,121 roubles (60 euros/$77 a month), with those who are employed receiving 2,300 roubles (65 euros/$83) and pensioners receiving 1,600 roubles (45 euros/$58). Those whose income falls below these levels are defined as poor. A second category, those who are badly off, includes families where per-capita income lies between 2,121 and 4,400 roubles (60-126 euros/$77-$161). A significant section of the population can be found in these two categories.

The Centre for Living Standards regards the “middle layers” as households with a per-capita monthly income of between 4,400 roubles and 15,000 roubles (126-430 euros/$161-$550). By Western standards, this level of income would represent poverty.

Pensioners and young people constitute the poorest sections of Russian society. The Social Opinions Fund has found that practically no young people (just 1 percent) are saving for their old age. Two thirds of young people who were asked said they could not afford to buy anything. Young people living in the countryside or in small cities are at greatest risk of being poor. In contrast to Western countries, where poverty is often concentrated in the large cities, the poor are more frequently found in Russia’s villages and towns.

Families with children are exposed to the constant danger of poverty, particularly those with two, three or more children.

Children from families with low incomes have substantially decreased chances of going on to gain an apprenticeship after graduating high school. Only 15 percent of children from poor families go to the more specialised technical colleges and universities. A low level of education is an important factor in the persistence of poverty.

The poor are more frequently ill or succumb to alcohol. The incidence of tuberculosis in Russia is 10 times higher than in Europe.

Scientists have calculated that since the beginning of the 1990s, some 8 million Russians have died prematurely. The mortality rate has risen one-and-a-half times over the same period. In 2003, it reached a high point at 16.4 deaths per 1,000 inhabitants.

The average Russian man can presently expect to live only to 58. That means married women, on average, are widowed for 15 years. This is due both to women’s greater life expectancy and to the younger age at which women marry.

Despite the adversities of everyday life in the Soviet Union, for most people the social situation was substantially better than that which exists in contemporary Russia. Today, the minimum wage covers only 27 percent of what is needed to sustain an adult of working age; the child benefit covers just 3 percent of necessary expenditure for a child; and the minimum pension covers only 46 percent of the minimum expenditure of a pensioner.

In the Soviet Union, the minimum wage amounted to one-and-a-half times the minimum required consumption. Russia’s minimum wage would have to be trebled to cover the minimum level of consumption.

A serious struggle against poverty is impossible without a real reform of the educational system and health service. Both would have to be made accessible to broad layers of the population. However, the tendency is in the opposite direction.

For increasing numbers of Russians, it is becoming clear that further capitalist “reforms” will not improve their situation.

The wealthy end of the spectrum

Then there is the other Russia. It finds its personification in figures like Roman Abramovich, governor of the remote region of Chukotka (just across the Bering Strait from Alaska) and owner of a controlling interest in the Russian oil giant Sibneft. He is considered the richest man in Britain, where he now resides. Two years ago, he acquired the English soccer club Chelsea for an astronomical sum.

Russia is ranked third in the world for the number of billionaires, and thirteenth for having the largest enterprises.

Taken as a whole, the fortunes of Russia’s billionaires amount to nearly half as much as the total value of the largest Russian enterprises. By comparison, in the US, this sum amounts to 6 percent.

The greatest part of shareholdings in the largest Russian enterprises can be found in the hands of this tiny social layer. According to the World Bank, in 2003, the 23 largest business groups account for 57 percent of all of Russia’s industrial production.

Forbes magazine has calculated that, measured against the economic output of the country ($458 billion), there are more billionaires in Russia (36) than anywhere else in the world. The total assets of these 36 richest Russians amounts to $110 billion—24 percent of the country’s economic output.

Most of the Russian billionaires and multimillionaires control raw materials and their associated industries. According to Forbes, this applies to 66 of the 100 richest Russians. The 34 others have gained their wealth from new business fields—above all, telecommunications, construction, food production and retail trade.

The incomes of the top managers are also incomparably greater than those of the ordinary citizen or pensioner. Gaseta.ru cites data showing they receive annually between $1 million and $3 million.

The president of Lukoil gets $1.5 million. If the business achieves certain goals, he enjoys a bonus of $2.2 million. The vice president gets $800,000 annually, with up to $1.1 million in bonuses. The picture was the same at Yukos, until it was liquidated by the state.

In large-scale enterprises like the United Mechanical Engineering Works and the Tyumen oil company, basic executive salaries amount to $500,000 and more. Oleg Deripaska, the boss of the Basis Element aluminium producer, paid taxes of $294 million in 2001 on his income in the Siberian Republic of Khakassia. His pay constituted 10 percent of the total income of the republic.

The “new Russians,” as they are sometimes called, often live abroad, where they can be found in the most expensive hotels, clubs and restaurants. They possess racehorses, yachts and mansions. Practically every billionaire has his own yacht and airplane. They particularly enjoy buying expensive antiques and jewelery, as well as purchasing real estate in the most expensive areas of Europe’s capitals. A special attraction for them is London.

Russians constitute a third of all foreign investors on the London property market. Over the past 10 years, the number of British visas given to Russians has increased eightfold. Of 250,000 Russians living in London, 700 are multimillionaires.

New Year celebrations are the high point of profligate consumption for the Russian nouveaux riches. The International Herald Tribune reported recently that some 20,000 Russians “wallowed in luxury, ate, drank and went shopping” in the elite boutiques of the ski resort of Courchevel, which lies in a snow-covered corner of the French Alps. In this spa resort can be found four-star hotels like Les Grandes Alpes, where a room costs between 550 and 1,250 euros ($704 and $1,600) per night. In the hotel restaurant, one can drink wines for a mere 1,750 euros ($2,239) a bottle. A new suite opened in the hotel Byblos des Neiges recently that measures 220 square metres and costs 6,500 euros ($8,318) a night.

The International Herald Tribune writes that Russian ski teachers are being employed to cope with the wave of Russian tourists in Courchevel, where Russian advertisements can be seen everywhere. “This is wonderful business for us,” explained the owner of one local four-star hotel.

This is the reality behind the invocations of “national unity” proclaimed by the Putin government. It is no wonder that ordinary Russians increasingly demonstrate their discontent and protest against the worsening of their situation. These protests will inevitably continue and intensify under conditions in which the government lacks any solution for Russia’s mounting social problems.

See Also:
Russia: Putin lays siege to social benefits
[21 September 2004]
Putin strengthens his authoritarian regime
[18 September 2004]

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http://www.ilo.org/public/english/burea ... russia.htm

UN World Summit 14-16 September 2005

Working out of poverty in Russia

Despite the Russian Federation's recovery from financial collapse in 1998, official statistics show that almost one person out of five still lives in poverty. What's more, a high percentage of those living in poverty are Russia's so-called 'working poor': at least half actually have jobs. ILO on line reports from Russia's North West where the ILO recently launched a project to promote employment and reduce poverty.

VSEVOLOZHSK, Russia (ILO on line) - Sergey and his wife Oxana both work - he as a teacher, she as a physician - but their combined earnings total just 4,500 rubles a month (about US$ 157). As a low income family, they also receive a benefit of 70 rubles (about US$ 2.50) for each of their two children. The total amounts to about US$ 162 per month - far below the official poverty line of US$ 390.

Sergey and Oxana are typical of Russia's working poor, many of whom are concentrated in education, culture, health and other public services. Other vulnerable groups include the rural population, those living in small and remote towns, children and the unemployed, people with low education, and those living in depressed regions.

How do they cope? Tight budgets, few purchases, a lifestyle limited to the bare necessities. "The worst month for me is September when our kids go to school", Oxana says. "Children grow so fast, and every year we need to buy new clothes for school, also notebooks and other things. I go over the list, trying to limit myself to the absolutely necessary items, and I buy only at sales, but I still cannot go below US$ 150.00. This creates a huge hole in our budget, and I don't think we'll be able to pay all our debts before December".

According to Rosstat, the statistical office of the Russian Federation, 18 per cent of the population, or about 30 million people today lives in poverty. Regional differences are dramatic, as poverty levels vary from 8-9 per cent to 70 per cent in some areas in 2004.

Though the Russian Federation doesn't have a national anti-poverty strategy so far, President Vladimir Putin has put forward an ambitious programme aimed at achieving sustainable growth and development for the country. Poverty reduction is one of its most urgent national goals. Other priority areas aim at doubling the country's GDP, reforming the health, housing and education sectors, and improving social conditions for army personnel. The UN Millennium Development Goals (MDGs) would be the foundation of such a Russian strategy that could go well beyond the global goals.

"In the area of poverty reduction this includes support to regional pilot programmes with an emphasis on employment generation and training, where the ILO clearly has an important role to play", says Pauline Barrett-Reid, former director of the ILO Moscow office. "This is why we launched a pilot project based on the ILO Decent Work agenda to promote employment and reduce poverty in the North West of the country".

The Russian Ministry of Labour and Social Development proposed the North West Federal Okrug (district) as a project pilot territory, and the choice wasn't accidental. The okrug that comprises 11 regions with a total population of 14 million, has experienced most types of poverty found today in Russia, including low wages for the working population. Within the district itself, there are important differences of poverty levels ranging from 16.5 per cent in St. Petersburg to 35.1 per cent in the Kaliningrad region.

The ILO had already launched various training courses and seminars for regional administrations, and employers' and workers' organizations to promote Decent Work, and to learn how to apply the ILO's anti-poverty tools at the regional level. The programme also provided a comprehensive overview on the poverty situation across the regions of the okrug, or district, and fostered the development of policy recommendations regarding standards of living, as well as income, wage and labour market policies.

"A set of studies prepared during the project found keen interest among of all those who deal with the poverty issue, and ILO Moscow now receives numerous requests for copies", Ms. Barrett-Reid said. "The most popular study is certainly the one on social benefits' monetization - a burning issue in today's Russia." Through the recent monetization of social benefits the Russian government tried to reduce the social burden on the state, which caused social unrest last January.

Project coordinator Rimma Kalinchenko says the project has just been completed and appears to have achieved much. "At the same time we have a feeling of being at the very beginning of a long way still to go", she said. "We have already received proposals from donors who offered their support to continue our work. But most important for us is the fact that the Decent Work approach is being increasingly recognized and applied to poverty reduction not only in the North West but also in other regions of Russia".