“Life Is Very Difficult for People”

“Life Is Very Difficult for People”
Yelizaveta Mayetnaya
Radio Svoboda
November 30, 2017

The announcement first appeared on the doors of a cafe in St. Petersburg, and then on the social media networks: “Olivier salad, kharcho, vegetable ragout with chicken, compote or ale, bread. 200 rubles. Free of charge to veterans and impoverished pensioners.” The whole town learned about the charity campaign literally within a few days, and old people flocked from all ends of the city to enjoy the free lunch special.

No one asks for any letters, verifying a person’s income. Pensioner ID cards are not required, either. You just have to sit down at a table and you will be fed.

Czech Yard, the cafe that will not let pensioners go hungry, is a family business. 25-year-old Alexandra Sinyak, the cafe’s co-owner, came up with the idea for the charity campaign.

“It all started with an old man who came into eat, but had little money on him. My husband was working in the cafe that day. He felt sorry for the man and said that lunch specials in our cafe would be free to pensioners,” recounts Sinyak. “The old man came for lunch every day for three weeks or so. We thought we should be feeding all the old people in our neighborhood, and not once, but on a permanent basis. We hoped our colleagues would support us, and one or two cafes that fed old people would pop up in each district. We did not imagine, of course, that they would come from all parts of the city to our cafe, but life is clearly very difficult for people. They spend forty minutes, an hour traveling one way to come here. We feed everyone. We do not turn anyone down.”

At first, Sinyak recalls, for some reason the old women brought their pension receipts along with them. The amounts listed on them were 6,200 rubles, 8,000 rubles, and 10,000 rubles. [That is, these women receive, at most, a pension of 143 euros a month.] They brought other receipts as well, such as the receipts for their apartment maintenance bills, which contained almost identical sums. [In fact, the amount of my latest apartment maintenance bill is 6,285 rubles and 20 kopecks. It tends to be lower by two or three thousand rubles in the summer months, when the centralized heating system is shut off—TRR.] Many of them have adult children who are employed, but they cannot help their own old folks, because they are barely making ends meet themselves.

According to Rosstat, around two million employed Russians are paid wages below the subsistence level. If we account for the fact that this money is also spent on other family members, the number of employed but impoverished Russians is over twelve million people or 16.8% of the population, according to calculations made by experts at the Russian Federal Government’s Analytical Center. Analysts at the World Bank have argued that the percentage of economically vulnerable people in Russia is over fifty percent.  According to a World Bank report, the proportion of Russians with a daily income of less than $10 has risen to 53.7%, while 13.8% of Russians spend less than 5$ a day.

Sinyak has seen her share of employed poor people in hospitals and rehabilitation centers. Four years ago, she and her husband gave birthto a premature baby. Doctors told the couple the girl would not be able to walk, talk or see, and they could not even dream of sending her to school. The Sinyaks threw all their efforts into making their baby daughter well. Now she has a slight limp, but is otherwise a normal child.

“We organized charity concerts for the children, and my husband and I simply gave their parents money because we really wanted to help them,” says Sinyak. “Now we are thinking about organizing a New Year’s party for the old people.”

At first, they posted the announcement about the free lunch specials on the cafe’s front door, but only one person showed up. It was only after Sinyak posted the announcement  on social media sites that the whole city discovered her and her husband’s lunches. Now they serve at least twenty-five free lunch customers daily.

То самое объявление

The initial announcement outside the cafe: “Dear patrons! The restaurant invites needy people of pension age and veterans to enjoy free lunches daily from 10 a.m. to 1 p.m.” The post on the VK social network reads, “Czech Yard Cafe at 73 Sixteenth Line. All veterans and elderly people can eat lunch for free from noon to four p.m. […] We will support all cafes that can afford to do it. There are three of us for the time being. We are reposting this. Maybe a whole bunch of cafes in every district of the city will join us.”

One of their customers is 66-year-old Lyubov Volkova. She lives nearby, but she ordinarily does not walk on the side of the street where the cafe is located. She saw the announcement on VK. She spread the word to all her girlfriends in the neighborhood so they could lunch together.

“The lunch specials are a tremendous support to me. I worked my whole life. I have the title of veteran worker, but my monthly pension is 10,200 rubles, and the maintenance bill for my two-room flat is at least 7,000 rubles during the winter. I’m left to my own devices,” says Volkova, sighing heavily. “The electricity has been shut off for non-payment, and I have 15,000 rubles in unpaid fines, but I have not paid them, because I do not have the money to pay them. There are lots of people like me in our district. The people at the housing maintenance service and the electric company have become insolent. They constantly raise rates. They could not care less whether we can pay their bills or not. It is a good thing that Alexander appeared on the scene. Her cafe is charming and serves tasty food, and it is just nice to come here.”

Александра Синяк с мужем Евгением и пенсионеркой Любовью Волковой

Alexandra Sinyak, her husband Yevgeny, and pensior Lyubov Volkova

Volkova leads a rather active lifestyle. She is a member of the human rights public monitoring commission, inspecting pretrial detention centers and prisons, and she also volunteers at several public veterans organizatons. But all this work is unpaid.

“Most of the work in Russia is done by migrants. Our own people struggle to make ends meet, and they cannot get jobs. I have two sons, but they themselves have to squirm to feed their families. And I have lots of girlfriends: we left jobs at research institutes in the nineties to trade on the streets in order to raise our children. The situation was no better: everyone’s pensions were tiny. You know, I really love Russia, but everything that is happening makes me terribly sad. I want to go back to the Soviet Union. There was stability and calm then. Sure, we did not live high on the hog, but nor did we go begging. We had enough to pay for the essentials.”

Igor Bukharov, president of the Federation of Restaurateurs and Hoteliers of Russia, says the vast majority of restaurateurs have been feeding the needy for many years, but they do not talk about it.

“Societies for disabled people ask us for help, as do war veterans, as do veterans of military operations, as do the orphanages. Who doesn’t ask us for help?! Some ask to be fed breakfast, some ask to be fed lunch, some ask for help with charity suppers, and I have never heard of anyone being turned down,” claims Bukharov. “Generally, I think helping the needy is everyone’s personal affair, and we should not talk about it.”

For the time being, according to Alexandra Sinyak, they have been contacted by one only restaurant, in Sestroretsk, about arranging lunches on a permanent basis, rather than a one-off basis, and businessmen have turned up who are willing to supply their cafe with produce. Municipal councils in some large cities arrange free lunches for pensioners, but there are waiting lists, and the pensioners have to provide documented proof of their neediness. On the other hand, you can then eat free twenty-one times per quarter, says Lyubov Volkova.

Social organizations also provide assistance in the form of produce and groceries. For example, the Rus Food Fund has distributed 20,000 tons of produce and consumer goods to the needy during the five years it has operated. Right now, for example, the fund has been collecting “Food for the Backwoods” in time for the New Year’s holiday. The food will be delivered to the poor and lonely who live in villages in seven regions. Fifteen thousand people will receive assistance.

Anna Kirilovskaya has taken charge of so-called foodsharing in St. Petersburg. Volunteers collect food from various businesses, and distribute it for free to the needy. Originally, Kirilovskaya explains, the idea was to save edible produce from being discarded. The project now employs around 400 volunteers. The produce is collected almost daily, and thirty businesses give away their leftovers on a constant basis. According to the project’s website, over 113,000 kilos of produce have been saved in the different regions where foodsharing exists and there are teams of foodsavers.

“The volunteers decide themselves what to do with the food. They can take unsold soup from a cafe and pour it into sixty packets, freeze them, and eat them for the next two months. But I know that many of our volunteers take care of neighbors, families with lots of children, and old people. Some volunteers will take leftover meat that has been given to them, turn them into cutlets, and hand them out to the people they look after, but we get the most donations from vegetable warehouses. We mainly distribute fruits and vegetables,” says Kirilovskaya.

According to Kirilovskaya, the businesses most willing to help are owned by green-minded people who promise their customers fresh products and goods.

“Imagine how bakers at a private bakery feel when they have to throw their unsold goods into the trash in the evening?” Kirilovskaya wonders. “But everyone, employers and employees, likes giving away food to the needy. By the way, employees appreciate their employers more when they have this considerate attitude to their work.”

Alexandra Sinyak says she does not know what to do if hundreds of people come every day for their lunch specials, and whether she and her husband can continue to feed them at their own expense for very long.

“We decided we would do it as long as we were able,” she says.

In the coming days, she plans to make the rounds of the cafes in neighboring districts to personally persuade their owners to provide similar lunches to their own local pensioners. Sinyak is certain that someone will respond to her request.

Lyubov Volkova argues that Sinkyak should keep a count of the people who come for lunch, and if there are really too many of them, to refuse to serve everyone.

“I would not want these wonderful, kind folks to end up beggars themselves because of us poor pensioners,” she says.

Translated by the Russian Reader. Thanks to Comrade Preobrazhenskaya for the heads-up

Poor Russians Up to Their Necks in Debt

ruble coin 2This one-ruble coin, minted in 2014 and sporting the newish symbol for the ruble, adopted in 2013, won’t buy you love or much anything else. 

Poor Russians Go into Debt
Tatyana Lomskaya
Vedomosti
October 11, 2017

Low-income Russians have been unable to wait for an uptick in incomes and have turned to loans to meet their consumer needs. Experts, including the Central Bank, believe such borrowers are a danger to the economy.

The demand of Russians for loans has been growing. In August, their arrears to banks rose to levels not seen since the spring of 2014. Ruble-denominated loans reached their maximum historic high, according to RANEPA’s monthly newsletter Monitoring the Economic Situation in Russia. Banks have been vigourously issuing loans. In July, they provided Russians with 23% more loans than at the same time last year. Consumer loans have been the fastest growing. According to the National Credit History Bureau, such loans increased by 27% over the past eight months.

Loans have been playing a growing role in the budgets of Russian families, notes the newsletter. In the first six months of the year, new loans made up 21% of household final consumption expenditures. This is significantly higher than the crisis levels of the last two years (15–18%), although it is still below the peak levels of 25–27% in 2013–2014. With virtually no increase in the real incomes of individuals, this generates additional risks to their financial circumstances, noted RANEPA’s analysts.

Residents of poor and distant regions are the biggest borrowers of consumer loans at the moment, along with the poorest segments of the populace, notes Natalya Zubarevich, director of the regional program at the Independent Institute for Social Policy. This is how they offset falling incomes. Wages in Russia have been growing since August 2016, but real incomes have continued to fall.

People cannot skimp and save forever. People turn to loans to meet their needs, says Zubarevich. What matters is that banks not issue too many loans, which would raise the specter of a huge number of defaults.

The debt burden has been growing more quickly in regions with the highest poverty levels, according to the FR Group, although the situation varies from region to region, notes project manager Anastasia Zyurkalova.

Russians have been spending more and more of their income on consumption. According to some indications, they have abandoned the savings model of financial behavior, acknowledges Yelena Grishina, head of RANEPA’s research laboratory on pension systems and social sector actuarial forecasting. One of the ways they survive is by taking out loans. Certain segments of the populace have outlived the means they once had for limiting consumption. In the first six months of 2017, a linear dependence bwtween increases in the volume of loans and poverty levels in the regions was observed, says Grishina. Russians are now more positive than a year ago: they have assessed the changes in their welfare, and the percentage of those who skimp on food and clothing has decreased, note RANEPA’s analysts [sic].

The burden of non-mortgage loans is highest in regions with high unemployment and a poorer populace, Alfabank’s chief economist Natalya Orlova wrote last autumn. The middle class [sic] would be unlikely to emerge as the main source of the growth in demand for retail loans, she noted. The average borrower is more likely to be someone with a limited income. Judging by the numbers for the first six months of 2017, nothing has changed, says Orlova. It is still less well-off Russians who want to bring their consumption up to average levels. The increase in retail loans in the poorest regions is likely due to people’s tapping out their savings and and trying to maintain a certain level of consumption, agrees Karen Vartapetov, an analyst at S&P.

A significant portion of the demand for consumer loans comes from people whose incomes are less than the median income in Russia. Often, their incomes are unstable as well, and their debt burdens are high, noted analysts in the Central Bank’s research and forecasting department. (Their opinions may differ from the financial regulator’s official stance.)  Yet banks currently do not really have the capacity for an increase in lending, and so even a moderate uptick in consumer loans is fraught with risks no less serious than during the 2010–2012 loan boom. To limit these risks, the Central Bank has been working out individual debt burden indicators, notes a source at the regulator. The share of an individual’s expenditures on repaying loans should be such she could continue to pay back the loan even if negative events were to occur.

For the time being, the largest banks surveyed by the Central Bank have reported that the percentage of borrowers with increased levels of debt burdens has not grown, and the number of people with monthly incomes of less than 20,000 rubles [approx. 290 euros] who have taken out cash loans has fallen, says the source at the regulator. The banks have been forced to behave more conservatively. Everyone well remembers the wave of late payments in 2012–2013, says Yuri Gribanov, CEO of Frank RG.

After the crisis of 2015, the quality of loan applicants has not improved considerably, notes Sergei Kapustin, deputy board chair of OTP Bank. There are still many people with problematic debts that have not been managed and refinanced at another bank. According to certain channels, the share of such debts is ten percent, and banks have been forced to lower the number of loans they issue. In addition, a number of bankers issue unsubstantially large loans to people who have borrowed money at other banks in amounts disproportionate to their incomes.

The demand for consumer loans is currently quite high, says Mikhail Matovnikov, Sberbank’s chief analyst, and there are still a lot of extant bad loans at high interest rates, especially among low-income Russians. This not at all what the economy needs, and it is bad for borrowers, too, he argues.

The banks’ fight against such loans has pushed borrowers into the arms of microfinance institutions, where the circumstances can be even worse. This year, the microlending market has grown from 186 billion rubles to 242 billion rubles [approx. 3.5 billion euros]. The banks have not met the steadily growing demand for loans, according to research by microlender Home Money.

home money

A screenshot from Russian microlender Home Money’s website. “It’s simpler to make a phone call than to borrow from somebody! Call if you need to! New services: personal legal consultant; home protection; credit history.”

Measures to limit interest rates cooled the consumer lending market in 2015–2016, notes Dmitry Vasilyev, an analyst with Fitch. Currently, the portfolio’s growth matches the nominal growth in incomes of Russians (2–3% during the first sixth months of 2017) and the percentage of risky and unsecured loans has lowered. Some borrowers have drifted to the microlenders, while some banks have been weeded out due to noncompliance with tougher standards, says Vasilyev.

Orlova points out the banking sector is at a crossroads. Maintaining quality lending means not taking on as clients people working in the informal sector and incapable of confirming how much they make and microlenders currently lending at very high rates. Or banks could increase their appetite for risk and take on inferior borrowers to increase their market shares and loan portfolios. Banks have to earn money. If there are no borrowers willing to pay (for example, the government, which would have to become much more active in the state debt market), the issue would become particularly critical. Prospects for income growth in the coming year are worsening, and the risk that not very well-off people would not be able to service their loans is growing, warns Orlova. Poverty will not seriously decline in Russia in the coming year, if we believe the government’s three-year macro forecast, as submitted to the State Duma. It will drop from 12.8% of the populace this year to 11.2% in 2020, i.e., it will not drop to the levels of  2012–2013 (lower than 11%).

Translation and image of the ruble coin by the Russian Reader. Thanks to Comrade Koganzon for the heads-up. The original article, as published yesterday by Vedomosti on the front page of its paper edition, was behind a paywall. Thanks to Press Reader for providing me with the text of the article.

Suck in Your Gut

d9ZhG1F.jpg
Russian soldiers shopping in a Crimean grocery store. Photo courtesy of Imgur

Rosstat Records Sharp Rise in Price of Minimum Grocery Basket
RBC
June 26, 2017

The price of the minimum monthly grocery basket in Russia has risen from the beginning of 2017 by 9.4% to 4,037 rubles [approx. 61 euros] , according to figures published on Rosstat’s website.

Significant growth was recorded in May. Compared to April, the cost increased by 4.2%, the report says.

The cost of the grocery basket in Moscow grew by 5% in the period from April to May and amounted to 4,946 rubles. Since the beginning of the year, it has increased by 11.1%, according to Rosstat. In St. Petersburg, the minimum produce basket has risen in price since January 2017 by 9.8%.

According to the agency, a significant impact on consumer price growth in May was due to higher prices for vegetables and fruits. The price for white cabbage increased 1.4 times, annd for onions, carrots, beets and potatoes by 1.2–1.3 times. At the same time, the cost of lemons increased by 11.1%, and apples, by 7.5%.

At the same time, as Rosstat noted, the price of cucumbers and tomatoes fell by 26.4% and 11.5%, respectively.

In January, Rosstat reported that, in 2016, the most expensive grocery item was butter. Its priced had increased by more than 20%. At the same time, the price of other dairy products increased by an average of only 9.5%.

In addition, a significant increase in prices was recorded for fish and seafood. They rose in price by an average of 8.6%.

TRANSLATED BY THE RUSSIAN READER