Raising Russia’s Minimum Wage: A Band-Aid for the Poor

624869d68f57b0f0b20b1b6c8e808f58“Why did you open up your MROT?”

Who Will Win and Lose from the Rise in the Minimum Monthly Wage?
Ivan Ovsyannikov
Proved.rf
February 20, 2018

The minimum monthly wage in Russia [often referred to by its abbreviation, MROT] has been pegged to the subsistence minimum. This gift to employees will come into effect on May 1, 2018, when the minimum monthly wage will grow from the current ₽9,489 to ₽11,163 [approx. €160 at current exchange rates]. Regional minimum wages might be higher. For example, in Moscow, it will be set at ₽18,700 a month, while in Petersburg it will rise to ₽17,000. According to former federal deputy labor minister Pavel Kudyukin, the lowest paid category of workers will benefit from the rise in the minimum wage, but there will more losers.

••••••••••

Pavel Kudyukin, Russia Federal Deputy Labor Minister, 1991–1993; currently, council member, Confederation of Labor of Russia (KTR):

The principle that the minimum monthly wage cannot be lower than the subsistence minimum was incorporated into the Russian Labor Code way back in 2001, with the proviso, however, it would be implemented gradually.

The fact this decision has been made amidst less than propitious economic circumstances is undoubtedly an election campaign gambit. Theoretically, it is a measure that had to be taken. Having a minimum monthly wage lower than the subsistence minimum, especially Russia’s subsistence minimum, is simply shameful. Some people will stand to gain from the decision, but fairly broad segments of the populace will also suffer serious losses. But the propagandists, of course, will talk about the gains, especially as we are in an election campaign.

Minimum Minimorum
The general opinion of nearly all social policy experts is that Russia’s subsistence minimum is equivalent to the poverty level. It will keep a person from starving to death, but it would be a great exaggeration to call it a means to a full-fledged, dignified life.

International standards are also quite modest, of course: the subsistence minimum is defined for the poorest countries. Naturally, the developed countries have their own notions of the subsistence minimum. It is an essential tool of social policy. Various welfare payments are pegged to it, and it determines the level at which households are seen to need additional assistance. It is measured in different ways. Measuring the subsistence minimum in terms of the consumer goods basket, as is done in Russia, is deemed quite an archaic method, although the US uses the same method to calculate it.

The question, of course, is how the contents of the consumer goods basket are decided. Russia does not fully take into account the needs of the modern individual. It bases its calculations on the assumption people have no need of such an important social benefit as housing. The costs of utilities are at least included in the basket, but the possibility of improving one’s living conditions are not. Cultural needs are very poorly represented. Most of the so-called non-product needs are calculated through an adjustment, as a percentage of the consumer basket given over to products. It is no wonder the subsistence minimum, as it is imagined in Russia, satisfies neither the experts nor ordinary people.

The subsistence minimum has also been reduced from time to time with reference to drops in prices. This has also provoked a slew of questions. How are prices determined? Inflation affects different income brackets in very different ways. The poorer people are, the greater their personal level of inflation. If the price for a Mercedes suddenly drops, it does not mean the price of sunflower seed oil will not go up.

There is an important brake on seriously expanding the subsistence minimum in Russia. When the number of poor people is between fifteen and twenty percent, you can provide them with supplemental financial assistance and benefits. If the percentage of poor people is fifty percent or greater, it is quite tricky for the state to do anything for them. When half of the populace is receiving poverty assistance payments, either the payments are utterly paltry and spread thin or the state simply cannot make them.

The Winners
For people who earn the least of all, pegging the mininum monthly wage to the subsistence minimum does constitute an increase in wages. It is a quite decent increase in some cases, especially if you consider the fact there are people in Russia—Deputy Prime Minister Olga Golodets has estimated there are nearly five million such people—who received a salary lower than the previous minimum monthly wage.

The workers who really have a chance to improve their lot are mainly those employed in the public sector in various auxiliary positions: maintenance personnel, cleaners, and so on. They will earn more.

The Losers
Formally, there will be winners, but there will be more losers. The rise in the minimum monthly wage will cause serious problems in the regions, since poor public sectorsworkers are usually paid from regional and municpal budgets. The new expenditures they incure will be only partly covered by transfers from the federal budget. Regional officials will once again have to optimize some things and lay off people. This is a quite significant aspect of the headache generated every time the parliament passes laws or the president signs decrees increasing payments to people who do not get them from the federal budget.

The rise in the monthly minimum wage will be a considerable problem for a number of businesses, especially small businesses. There is a risk it will expand the gray sector of the employment market. This is also an unpleasant consequence for workers, for when they are employed in the gray sector, payments to the Pension Fund are not deducted from their wages, and they lose pension payments they would have received in the future.  People in Russia usually disregard this, because, one, they do not actually believe they will live until pension age, and two, they really do not believe the state will not think up more mischief by the time their pensions come due.

Another important question: what is included in the minimum monthly wage? Currently, there are several court rulings that the minimum monthly wage should not include any sort of compensatory pay, such as the northern hardship bonus. This pay must be disbursed over and above the minimum wage. These are sound rulings, but the problem is Russia does not have a precedents-based judicial system, and one court’s ruling is anything but obligatory for other courts. Every individual whose minimum monthly wage includes compensatory or incentive pay must file suit in court to have his or her wages individually recalculated. So, the problem is not only the amount of the minimum monthly wage and how it correlates with the subsistence minimum but also what is included in the minimum monthly wage.

A Band-Aid for the Poor
Increasing the minimum monthly wage cannot be implemented in isolation. It should be complemented by serious reforms in other areas. We must radically change our entire social and economic policy, including, as an obligatory part of such reforms, our taxation policy. It has not always been understood in Russia that there is no such thing as a welfare state* without progressive taxation. The introduction of progressive taxation, of course, will be an unpopular measure amongst a large number of people. Plus, given the inefficiency of the Russian state and the social irresponsibility of the rich, such an attempt would push the growth of the gray economy.

Poverty is not only a problem of social policy. It is not eliminated by paying people social benefits. We need a completely different economic policy that would give people the opportunity to work in well-paid jobs and thus make decent pension contributions. The problem of poverty is not solved merely by redistributing resources, although it is also necessary. Treating poverty with social benefits means treating the symptoms. Treating poverty with economic growth means treating the causes.

* According to Article 7 of the Russian Federal Constitution, the Russian Federation “is a social State whose policy is aimed at creating conditions for a worthy life and a free development of man [and where] the labour and health of people shall be protected, a guaranteed minimum wages and salaries shall be established, state support ensured to the family, maternity, paternity and childhood, to disabled persons and the elderly, the system of social services developed, state pensions, allowances and other social security guarantees shall be established.” For more on the practical implications of this constitutional guarantee in a quasi-populist kleptocratic tyranny, see Ilya Matveev, “The ‘Welfare’ State Doesn’t Get Any Better Than This,” Chtodelat News, October 12, 2012.

Cartoon by Alexei Merinov. Courtesy of Moskovsky Komsomolets. Translation by the Russian Reader

(Don’t) Pay Your Rates

DSCN4253A Petersburg housing services worker risking life and limb to clear snow off the roof of a tenement building in the city’s downtown. Photo by the Russian Reader

Russians Are Increasingly Not Paying for Their Flats
Growing Debts for Housing Services and Utilities Reflect Obvious Social Ills
Pavel Aptekar
Vedomosti
February 21, 2018

The increase in housing and utilities rates, occuring alongside a protracted downslide in personal income, has produced an abrupt upturn in debts for housing services and utilities, and collections of arrears in court, especially among low-income segments of the Russian populace.

The Russian Supreme Court has published statistics on the collection of debts for housing services and utilities. In 2014, 2.1 million such cases were ajudicated by the courts. In 2017, the figure was 5.4 million cases, and the total amount of recoverable debt had doubled, from ₽60 billion to ₽120 billion—taking into account, however, the debts of legal entities that paid for heating irregularly. Nevertheless, these figures reflect both an alarming trend—utilities payments have increasingly become a burden for disadvantaged parts of the populace—and the unwillingness of the rich to pay the bills for flats they have purchased as investments.

Generally, the collection of payments for utilities and housing services proceeds calmly. According to the Institute for Urban Economics, 95–97% of apartment residents pay their bills on time, but an individual’s timeliness in paying their bills depends on their income, as well as the climate and budget priorities of the Russian region where they live. According to Rosstat, household expenses on utilities and housing services per family member rose between 2014 and 2016 from ₽1,511 to ₽1,816, i.e., by 20.2%. The share of total household expenses spent on utilities and housing services rose during the same period from 10.3% to 11.3%.

For the sake of budget savings, many regions have reduced subsidies on housing and utilities, which has seriously increased the amount of money spent on these services by local populations, says economist Natalya Zubarevich. For example, housing and utilities account for 25.8% of paid services in Kursk Region, while in neighboring Oryol Region the figure is 41.1%. In Khabarovsk Territory, housing and utitilies expenses make up 26.7% of the cost of all services, while in Amur Region, which has a comparable climate, the figure is 45.8%.

In 2016, housing and utilities expenses accounted for 15.2% of all expenses among the ten percent of Russian families with the lowest incomes, and 14.8% of all expenses among the ten percent of families who were less poor. People who have to scrimp on everything are often forced not to pay for housing and utilities simply in order to survive. However, according to Mikhail Men, Minister for Construction and Housing, some of the arrears are owed by the proprietors of apartments bought as investments, who do not want to pay the bills for vacant flats.

According to Rosstat, the total amount of money owed by the Russian populace for housing and utilities in 2014 was ₽111 billion; in 2015, it was ₽135.8 billion. Subsequently, the debts have grown more quickly. In October 2016, Andrei Chibis, Deputy Minister for Construction and Housing, informed TASS News Agency they had reached ₽270 billion, and in July 2017, Men cited the figure of ₽645 billion [approx. €9.2 billion].

This increase reflects an obvious social ill. Housing and utitilies fees are billed by private companies, who turn not only to the courts to collect unpaid bills but also to the services of illegal debt collectors. Such circumstances could engender serious conflicts, especially in small towns with poor populations.

Translated by the Russian Reader. See my numerous previous posts on the problem of debt in Russia.

How Rosstat Stopped People’s Incomes from Falling by Fudging the Stats

1024px-Centrosoyuz_Moscow_-_Ak_Sakharova_viewThe Tsentrosoyuz Building, on Sakharov Avenue in Moscow, was designed in 1933 by Le Corbusier and Nikolai Kolli. Originally built as headquarters of the Central Union of Consumer Cooperatives, it now houses Rosstat and the Russian Federal Financial Monitoring Service. Photo courtesy of Wikipedia

Rosstat “Stopped” Populace’s Incomes from Falling
Analysts Accuse Agency of Fudging the Figures
Yelizaveta Bazanova and Filipp Sterkin
Vedomosti
February 19, 2019

Household Debt in Russia Over 170 Billion Euros

reliable future consumer credit coopReliable Future Consumer Credit Cooperative is one of many retail lenders ready to help ordinary Russians “boost their standard of living.” Photo by the Russian Reader

Household Debt of Russians Exceeds Twelve Trillion Rubles
Half of This Amount Was Borrowed Over the Last Year
Emma Terchenko
Vedomosti
January 31, 2018

This emerges from statistics gathered by the United Credit Bureau (OKB), based on information about the outstanding loans of 82 million Russians.

According to the Russian Central Bank, the Russian populace’s bank debt grew by 13.2% in 2017 to 12.2 trillion rubles [approx. 170.75 billion euros].

The OKB’s calculations show the number of new loans grew more slowly than their total amount. Over the past year, loans increased by 37% compared to 2016 (by 4.14 trillion rubles), whereas their quantity increased only by 12% to 34.8 million individual outstanding loans.

Moreover, an increase was observed in all segments of the loan market—mortgages, cash loans, auto loans, and credit cards—according to the OKB’s statistics.

Banks mostly disbursed money to Russians in the form of cash loans: nearly 3 trillion rubles or 33% more than in 2016. The number of such loans reached 24.7 million units, an increase of 14%.

The total amount of mortgages issued for the year increased by 42% to 1.8 trillion rubles, while the total number rose by nearly a third to 959,237 individual mortgages. According to Rusipoteka, a financial analytics company, 53% of the housing mortages issued last year were supplied by Sberbank.

In November, the mortgage portfolios of Russian banks exceeded a record five trillion rubles, the Central Bank reported previously.

“Afer the crisis, banks tried to build up their mortgage portfolios. Many of them reduced their down payments to accomplish this. Therefore, amongst the loans issued last year, around a third had down payments of less than 20%,” says Rusipoteka director Sergei Gordeiko.

According to the OKB, auto loans for all of 2017 increased by 36% to 333.3 billion rubles or by 25% to 436,539 individual loans. The National Credit History Bureau (NBKI) estimated the annual growth of auto loans at 29%.

“Auto loans have returned to pre-crisis levels, and the share of cars bought on loan has been growing,” notes NBKI’s director general Alexander Vikulin. “In 2017, every other automobile in Russia was purchased with a loan.”

The OKB claims credit cards are the fastest growing segment. Although the number of new credit cards issued last year grew only by 8% to 8.65 million cards (this figure excludes replacement cards), their total limit increased by less than half: by 48% to 544.5 billion rubles.

According to the NBKI, the number of newly issued credit cards grew by 52.6% to 6.87 million units in 2017. Equifax reported an 52% increase to six million new cards issued on the year.

The reason for the discrepancy is the databases of creditors monitored by the various credit bureaus differ. Unlike other credit bureaus, the OKB receives all information about loans made by Sberbank, which, according to different estimates, accounts for 42% to 46% of the loan market. The NBKI, for example, does not monitor figures from Home Credit Bank. None of the three bureaus—OKB, NBKI, and Equifax—take Russian Standard Bank’s statistics into account.

With its share of the credit card market, Sberbank has an impact on discrepancies in the calculations of the OKB and the other bureaus, argues Frank RG director general Yuri Gribanov.  According to Frank RG’s data, based on the management statements of banks and taking into account the utilization of credit limits and overdue debts, Sberbank’s portfolio of credit cards and overdrafts constituted 42.5% of the overall portfolio of all Russian banks as of December 1, 2017. During the year, it grew by 16.4% to 559.6 billion rubles.

A Sberbank spokesperson did not provide exact figures for the issuing of new credit cards last year, but confirmed they had not grown, remaining at a “consistently high level.”

Tinkoff Bank issued 2.41 million new credit cards in 2017, 43% more than the previous year, while Sovkombank issued more than a million credit cards. Vostochny Bank increased its issuing of credit cards by 140%, OTP Bank, by 135%, and VTB Bank by 13% (440,000 cards).

“The main reason for the growth is that banks have returned to sales channels that were frozen after 2015, for example, lending to walk-in customers,” says Alexei Shchavelev,  director of the cross-selling department at OTP Bank.

“In addition, many banks now have built up a broad base of quality customers: payroll customers, debit card holders, borrowers. It is now much easier for them to sell credit cards, because this customer base has been clarified,” Pavel Samiyev, managing director of the National Rating Agency, explains.

The demand for credit cards from borrowers themselves has been caused by the growth of consumer activity in general and improved customer solvency, argues Rostislav Yanykin, director of Russian Standard’s credit card sales. In the fight for customers, banks have been offering increasingly advantageous terms for using credit cards, he admits.

People who take out loans to boost their standard of living have mainly fueled the growth in lending to the populace, argues Nataliya Orlova, chief economist at Alfa Bank.

“In the past two years, they suffered more than others from the crisis in terms of reduced purchasing power.”

According to NBKI’s Vikulin, retail lending has been growing due to the economy’s stabilization.

Translated by the Russian Reader

NB. According to a May 17, 2017, article in the New York Times, household debt in the US had risen to $12.73 trillion in the first quarter of 2017, a new peak. Converted into rubles, this would amount to approx. 742 trillion rubles at current exchange rates. Based on the latest UN estimates, the current population of the US is nearly 327 million people, while the population of the Russian Federation is nearly 144 million people, based on the same estimates. In 2016, GDP (PPP) per capita in the US was over $57,000, while it was just over $23,000 in Russia, according to figures published by the World Bank. TRR

Migrant Workers Clash with Russian National Guard in Tomsk

migration centerImmigration Center in Tomsk. Photo courtesy of tv2.today and segodnya.ua

“Inhumane, Wrong, but Nothing Can Be Done”: Migrant Workers on Clashes with the Russian National Guard in Tomsk
Roman Chertovskikh
Takie Dela
January 11, 2018

The Russian National Guard dispersed a crowd of migrant workers in Tomsk on January 9. Over 2,000 foreigners had paralyzed the work of the immigration center and refused to leave, after which security forces used cattle prods and batons against them. Why did it happen?

In 2018, Tomsk Region has received a quota of only a thousand temporary residence permits. Yet the permit is issued only once annually, setting off a brouhaha among foreigners. The queue for those applying for the permit formed on January 2. Eight hundred people were on the list, and they checked in every day. On the day the permits were to be issued, a huge crowd had gathered at the entrance to the immigration center, located on the Irkutsk Highway, by six in the morning. The queue included students at Tomsk universities and workers alike.

The immigration center opened at nine, but work ground to a halt at eleven-thirty. Having serviced only three hundred people, the center’s employees stopped seeing any more clients and declared an emergency. The Russian National Guardsmen and OMON riot cops who arrived at the scene pushed the foreigners back and blocked the entrance to the building.

“Riot Cops Disperse Mob of Migrant Workers in Tomsk with Cattle Prods.” Video published on YouTube, January 8, 2018 [sic], by vtomske

One Center Instead of Numerous Local Federal Migration Service Offices
Most of migrant workers consider policy makers in the presidential administration responsible for the incident. Whereas last year foreigners were served by various local offices of the Federal Migration Service (FMS), as of this year all of Tomsk Region [the sixteenth largest region in Russia, although not all of its land mass is habitable—TRR] is served by one center.

“Since the ninth [of January] I have been busy running round to various government offices, trying to find someone who could help me and other students. I have so far struck out. I have been trying to get a temporary residence permit for four years running. I always encountered queues and crowding, but this was the first time I witnessed such a nightmare,” says Günel, a Kazakhstani citizen and second-year grad student at Tomsk State University.

According to Günel, it is wrong to issue a thousand permits at the same time on the same day, although the young woman is not eager to condemn the actions of the police.

“I cannot say anything bad about the Russian National Guard and OMON riot police acted. They were doing their jobs, after all. I saw the cattle prods, and I saw them being used, but I did not notice the police beating anyone up, as has been written about a lot in the media instead of analyzing the causes of the situation. I was not in the crowd. To break through to the front door, you would have had to stop at nothing, pushing women and old men aside. It’s also hard to blame the people who generated the crush. They had been waiting for their permits for a year, and some of them had waited longer. There were young students in the queue, and ethnic Russians who had decided to return to their historic homeland. There were also a lot of people from other countries who need a temporary residence permit to avoid paying for a work permit every month. Basically, they could not care less about citizenship.”

Günel argues that a thousand temporary resident permits is much too few for Tomsk, so permits are obtained through personal connections from year to year. She does not believe it is possible to issue a thousand permits in two hours.

Unjustifiably Small Quotas
Seil, a Tomsk State University anthropology grad student from Kyrgyzstan and employee of the company Immigrant Service, argues the clashes were the consequence of administrative errors caused by the peculiarities of the quotas. Temporary residence permits are issued only in keeping with the demands of the labor market. If Tomsk Region needs a thousand foreign workers, it does not matter how many people come to the region over and above the thousand-person quota, and how many of these people are university students.

According to Seil, numerous immigrants, in fact, work in the city of Tomsk and Tomsk Region illegally, without a legal permit.

“Then why, I wonder, are we talking about the need for foreign labor and setting quotas on the number of laborers at the same time? Everyone knows the actual circumstances are extremely different from the circumstances on paper, but no one tries to change the status quo,” Seil says, outraged. “Unfortunately, we have to follow the regulations. It is inhumane, wrong, and ugly, but if 1,001 people come and apply for temporary residence permits when the quota is 1,000, nothing can be done for the ‘superfluous’ person.”

Seil argues it is not profitable for Russian state agencies to issue temporary residence permits, but those who have work permits are forced to pay 3,500 rubles [approx. 50 euros] a month in Tomsk Region.

“It is unprofitable, of course, for the state to lose this source of revenue. Tomsk Region makes several million [rubles?] a year from the tax on the work permit alone,” says Seil. “I’m certain that if the quotas were set so the numbers reflected the circumstances in the region, there would not be a huge difference between supply and demand, and emergencies would be prevented. Something similar happened last year. People nearly broke the door down, there was such a brouhaha.”

Seil condemns the actions taken by employees of the immigration center.

“Maybe an emergency really did occur, but why was it necessary to close the doors at 11:30 a.m.? They could have tried to resolve the difficulties. Employees at such institutions like to boast that if closing time is 6 p.m., they won’t work a minute later than 6 p.m. Sure, they wear uniforms [i.e., because the FMS was dissolved, and a new immigration entity was established within the Interior Ministry, that is, within the Russian national police force—TRR], but why treat people that way? They could have worked at least another ninety minutes, until lunch time, in order to take the situation down a notch.”

Quotas have been reduced nationwide in 2018, not only in Tomsk Region. In November 2017, the Russian government approved a quota that provided for only 90,360 temporary residence permits, which was 19,800 fewer permits than were allowed the previous year. In 2016, however, the quota was 125,900 temporary residence permits, and in 2017 it was 110,160.

According to a prognosis by Rosstat, Russia’s able-bodied population will have decreased by seven million people by 2025. A reduction like this cannot be compensated only by increasing the Russian population’s labor productivity and economic activity, so an influx of immigrants is necessary for economic growth.

Translated by the Russian Reader

Russia’s Working Poor

Employed and Poor
Andrei Bespalov
Takie Dela
December 13, 2017

According to official statistics, at least ten million Russians work hard all their lives but cannot escape poverty. 

Russia has no clear criteria for poverty. The concept is absent from Russian legislation. There are poor people throughout the world, but not in Russia. We vaguely define them as “low income,” meaning people whose income is below the subsistence level. Each region of Russia has its own subsistence level. For example, for a person of working age to make it for a month in Omsk Region, he or she needs at least 9,683 rubles [approx. 140 euros]. In Moscow, the minimum income is twice as high: 18,472 rubles [approx. 267 euros]. If your income is lower than the officially approved subsistence level, you are living below the poverty line. True, this in no way mean you cannot be paid less this same minimum for your work. You can indeed be paid less: if your monthly wage exceeds the minimum wage at least by one kopeck. Currently, the minimum monthly wage in Russia is 7,800 rubles [approx. 113 euros].

Story No. 1: Olga
We imagine you have go looking for poor people far from Moscow, and the farther you get from Moscow, the more flagrant poverty you will encounter. It is not true. There are large numbers of people living below the poverty line in the capital. I should emphasize that, in this case, we are talking Russian nationals, not about migrant workers from the former Soviet republics.

Take Olga. She works in a lab at Moscow Medical University. In her fifteen years there, she has risen from senior lab assistant to head of the lab. Olga’s monthly salary is 12,000 rubles [approx. 173 euros], and it is her entire income.

True, she gets the occasional bonus, but they come “a little more often than once in a lifetime.” Ordinary lab employees are paid 11,000 rubles a month [approx. 159 euros]. Such salaries are hardly a rarity in Moscow.

Olga was educated as a programmer. She graduated from Bauman Technical University, but she has not worked as a programmer for a long time. She believes she cannot catch up and has lost her qualifications. Olga worked as a programmer before her children were born. Her family had enough money for everything, and besides, she had the opportunity to earn money part-time. When her maternal leave was up, she was unable to go back to her old job: her department has been disbanded. She was able get the job in the lab at Moscow Medical. Olga likes everything about the job—her colleagues respect her, and her work team gets along well with each other—except the salary. Management occasionally permits her to work from home. This is good for Olga: she does not have to spend money on commuting. (Olga lives in Moscow Region, not in the city.) This comes to around 300 rubles [approx. 4 euros] a day for the trip to the city and back on the commuter train and a round trip on the subway to the university.

When her children were small, Olga did not try and find better-paid work, and when they were older, she tried, but was turned down everywhere she applied. To her surprise, she realized no one wanted to hire a woman in her forties.

“First, you can’t find work because of the children, who are constantly ill, and then you can’t find work due to your age. Although what age are talking about? I’m forty-five!”

Olga had wound up in the category of people with no prospects. The only place she could get a job was a school. Olga worked there for several years before quitting. She had never been offered a full-time position, and her monthly salary of 6,000 rubles [approx. 87 rubles] was only enough to pay for her commute.

“I don’t want to leave these folks. It’s easy working with professors. They are quite cultured, decent people. It would be a pity to quit the job. I feel I’ve become a highly qualified specialist over the last fifteen years,” said Olga.

If it were not for her husband, a programmer, she would have a hard time feeding them and their two children. The family of four’s overall income is above the subsistence level, if only by a little. It comes to around 80,000 rubles [approx. 1,155 euros] a month. (The per capita subsistence level in Moscow is 18,472 rubles, meaning Olga and her family make around 7,000 rubles more in total than the subsistence level.) It was their good fortunate both her sons were admitted to university as full scholarship students. Olga and her husband would definitely not have been able to pay their tuition.

Olga’s family took out loans to improve their living conditions. They started out in a room in a communal flat and, after several steps, moved into their own two-room flat. However, they had to rent housing for three years, since construction of their apartment building had been postponed. Renting meant additional expenses. Subsequently, Olga had to take oout a loan to fix up the flat in order to move in as quickly as possible. That was five years ago. Of the original loan of 500,000 rubles, they still have 300,000 rubles [approx. 4,300 euros] to pay off. The monthly minimum payment is 20,000 rubles [approx. 290 euros].

In her free time, Olga tries to earn extra money by knitting. She says she is very good at it. But she is unable to supplement her salary by more than 4,000 or 5,000 rubles a month, and this happens extremely irregularly. Olga says a master knitter would have to work all month without taking a break to earn that kind of money. Everyone likes the things Olga knits, but people are willing to buy them if they do not cost more than mass-produced Chinese goods, that is, they are willing to pay the price of the yarn. Olga is not ready to give up her job at the university.

It’s Unique
The poverty experienced by employed people harms the economy and hinders its growth. This was the conclusion reached by the Russian Government’s Analytical Center in a report published in October 2017.

“The poverty of workers generates a number of negative economic and social consequences, affecting productivity and quality of work, shortages of personnel in the production sector, especially manual laborers, the health of the population, and educational opportunities,” wrote the report’s authors.

Olga Golodets, deputy prime minister for social affairs, has spoken of the fact that the working poor have no stake in increasing productivity. Judging by a number of recent speeches, the authorities are aware that grassroots poverty threatens the country. Golodets called poverty among the working populace a unique phenomenon in the social sector. A uniquely negative phenomenon, naturally.

Story No. 2: Nadezhda
Nadezhda works as a history teacher at a technical school in Barnaul. She has been teaching for twenty-seven years, and her monthly salary is 12,000 rubles [approx. 170 euros]. Nadezhda has been named Teacher of the Year several times. The regional education and science ministry awarded her a certificate of merit for “supreme professionalism and many years of conscientious work.”

Nadezhda works with a cohort of students that includes many orphans and adolescents with disabilities: the visually impaired, the hard of hearing, and the deaf and dumb. It happens that her class load is as much as eight lessons a day.

Nadezha and her eleven-year-old son share a room in the technical school’s dormitory. Nadezhda has been on the waiting list to improve her living conditions for fifteen years.

“Last year, I was ninety-fourth on the list. This year, I’m ninety-first. At this rate, I can expect to get a flat in thirty years or so,” she said.

Nadezhda thought long and hard about applying for a mortgage, but she decided against it, although the bank had approved a loan of one million rubles [approx. 14,500 euros]. But what income would she have used to pay back the loan, when the monthly payment would have been 21,000 rubles?

In Altai Territory, where Barnaul is located, 12,000 rubles is above the subsistence minimum, which has been set at 10,002 rubles for the able-bodied population. In addition, the state pays Nadezhda’s son a monthly survivor’s pension of 8,300 rubles after the death of his father. Officials cite this as grounds for rejecting her request that her son should receive additional social benefits. The family’s monthly budget is 20,000 rubles, so they should be living high on the hog from the official viewpoint, apparently.

In 2013, Nadezhda suffered a severe concussion involving partial loss of hearing and eyesight. She was struck by a student high on drugs, she said. She spent over two months in the hospital. Ever since then, she has had to take pills that run her 3,000 rubles a month.

“Working with classes in which there are many orphans is not easy at all. They demand your constant, undivided attention. When I say ‘demand,’ I mean ‘demand,’ and they get that attention. But then conflicts arise with the parents of other children: the class doesn’t consist entirely of orphans. They say I don’t give their kids enough attention.”

Over the course of her life, Nadezhda has never been able to earn enough money to buy a standard 600 square meter dacha plot. Thanks to her former father-in-law, however, she grows vegetables on his plot.

“I hear the call to be a patriot from every radio, TV set, and kitchen appliance. What are you going on about, guys? I have been humiliated my entire life, paid crumbs for a difficult, responsible job. I’m hit on the head by students, and they go unpunished. I’m told to quit if it doesn’t suit me: no one is holding me back. They tell me they will find a way to evict me from the dormitory, although they are unlikely to succeed as long as my son is a minor. I’m a teacher of the highest category, with a certificate of merit from the education ministry. Our family income exceeds the minimum subsistence income by 700 rubles, meaning that officially we are not poor. Thank you very much, it makes life so much easier.”

A Trend
Since 2005, the poverty level in Russia has decreased threefold, note the authors of the study. At the same time, they write, “We cannot recognize as normal circumstances in which over ten million employed people have incomes that do not allow them to provide decent living conditions not only for themselves, but for their families.”

The researchers at the Russian Government’s Analytical Center have noticed a trend in recent years. There have been more people working in needy families, but “this has not vouchsafed their exit from poverty.”

Story No. 3: Igor
Igor Kurlyandsky, a PhD in history and senior researcher at the Institute of Russian History of the Russian Academy of Sciences, cannot be categorized as belonging to the working poor. His monthly salary exceeds the minimum subsistence income for someone living and working in Moscow by 600 rubles. His monthly after-tax income is 19,300 rubles [approx. 279 euros]. There are freelance jobs, of course, but they are irregular and do not change Igor’s circumstances for the better.

“Generally, the salaries at the institute are pitiful. Doctors of Science and senior employees are not paid much more than I am, three or four thousand rubles more,” Kurlyandsky said.

FANO (Federal Agency for Scientific Organizations) is supposed to pay quarterly bonuses based on performance indices, for example, academic publications. But this year, according to Kurlyandsky, FANO has not paid out any of these bonuses, and it has canceled old bonuses as well.

“It’s wrong to demand that scholars publish frequently. They might work for a year in the archives, collecting material for future academic articles. Or they might take several years to write a book. I worked for four years on a book about the relationship between the regime and religion during the Stalin era. I will not be paid a fee for the book. I might get a salary bonus for it from FANO. But whatever it is, if you divided it by four years, it would amount to kopecks. The institute has nothing to do with selling books. Authors earn nothing except complimentary copies.”

According to Kurlyandsky, the Institute of Russian History, one of the principal historical research institutions in Russia, with many wonderful scholars on its staff, is itself a beggar.

“It literally has no money for anything. The state hardly finances it. Of course, for many years, its fellows can travel for business only at the expense of host institutions.”

“If memory serves me, the last time researchers got a raise was around fifteen years ago. Life becomes more expensive, but our salaries stay the same. Over this period there were several spikes in inflation, but our salaries were not indexed. I have to skimp on lots of things,” Kurlyandsky confessed.

Where Are There More Poor People?
If you look at the situation by sector, the majority of the working poor are employed in housing services and utilities, education, culture and sports, agriculture, forestry, and a number of other sectors. The sectors with the fewest working poor are the resource extraction industries, finance, public administration, the military-industrial complex, and social security administration.

Generally, the statistics say that, since 2005, the number of working poor has decreased from eight million to two million, and the percentage of poor people from 24.4% to 7.3%, and this has occurred mainly due to the private sector, not the public sector.

Story No. 4: Svetlana
Forty-four years old, Svetlana works as a senior librarian. She arrived at the library immediately after graduating from a teacher’s college. Twenty years on the job, Svetlana has a huge amount of experience and a monthly salary of 8,300 rubles [approx. 120 euros].

“When I was a student, I imagine my future job as a perfect idyll: silence, lamps glowing on the tables, people reading, and me bringing enlightenment to the masses. It’s funny to remember it. I didn’t think about the money then, of course, but nowadays it’s the thought with which I wake up and go to sleep. My husband teaches at a university and makes a little over 14,000 rubles [approx. 200 rubles] a month. We have two sons in school. My dad is quite unwell, and my husband’s mom and dad are also quite ill. So we earn our 23,000 rubles a month and divide it among seven people. Among seven people, because my dad and my husband’s parents have pitiful pensions, public pensions, despite the fact they worked in factories for thirty years. It’s my perennial puzzle. What should we buy? Medicine for the elderly? Shoes for the kids? Pay off part of the debt we owe on the residential maintenance bill? Buy decent trousers for my husband? I haven’t given myself a thought for a long while. Honestly, I wear blouses and skirts for ten years or so before replacing them. I can’t recall the last time I bought cosmetics.

“Earlier, we bore our poverty more easily, maybe because we were younger. So what there was nothing to eat with evening tea? Who cared that we dressed modestly? It was a style of sorts. We tried to make sure the children had better shoes and clothes.

“The most terrible thing right now is not that we are paid kopecks. My husband used to believe we would struggle through, that we would work off our debt. But then he burnt out. He forces himself to go to work. The children are perpetually dissatisfied, and our parents are always ill. Only I don’t pretend it’s okay, that everyone lives like this. I have caught myself sizing up how people are dressed on public transport, and at the store I look into their baskets. What fruits, meat, and wines they buy! We are always eating buckwheat groats with bits of chicken and meatless soups. I hate the dacha, but it really does put food on our table.

“I have no prospects. I won’t live long enough to be promoted to head librarian, because our head librarian is my age. I lack the strength for side jobs. My real job is not easy: there is lots of scribbling involved. Plus, we divvied up the jobs of the cleaning woman and  janitors, so we either mop the floor or chop ice on the pavement. I crawl home barely alive. Frankly, I don’t see how my life could change, and I’m used to it. What worries me is my sons’ future. I’m horrified when I think that soon they will be applying to university. What if they don’t get full scholarships? We definitely don’t have the money to pay for their educations. So it turns out we have doomed our boys to the same poverty.”

It’s Shameful to Admit
Nearly everyone with whom I spoke when writing this article asked me not to use their real names and places of work. They all made the same argument. First, it is shameful to admit you work for mere kopecks. Second, their bosses would be unhappy and punish them for “disclosing information discrediting the organization.” Many of my interviewees actually had signed such non-disclosure agreements, entitled “Code of Ethics,” at work.

All illustrations courtesy of the artist, Natalia Gulay, and Takie Dela. Translated by the Russian Reader

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Labor ministry: about 13% of Russian population live below poverty line
TASS
December 28, 2017

The number of citizens with incomes below the minimum cost of living is around 20 million people, according to the Russian labor minister

The incomes of about 13% of Russia’s population are lower than the minimum cost of living, Labor Minister Maxim Topilin said in an interview with Rossiya 24 TV channel.

“According to current estimates, the number of citizens with incomes below the minimum cost of living is still around 20 million people, which is 13–13.5% of the country’s total population,” Topilin said.

He noted this is “at least an unpleasant indicator.” The minister attributed this figure to price increases in the last two years and, as a result, the growth of the subsistence minimum.

Topilin stressed the government has already taken the first steps to reducing the number of people with incomes below the subsistence minimum. He recalled that under a law that was adopted recently and would come into effect on January 1, 2018, the minimum wage would rise to 85% of the minimum subsistence level, and to 100% on January 2019.

“For the first time in the history of the Russian Federation, we have managed to bring the minimum monthly wage to the minimum subsistence level,” Topilin said.

NB. This article was lightly edited to make it more readable—TRR.