Buggered

rossiya This bankrupt agribusiness was called Rossiya (“Russia”). Photo courtesy of Maxim Kemmerling/Kommersant and Republic

“The Data Leaves Us at a Loss”: A Few Figures That Might Surprise the Kremlin
Yevgeny Karasyuk
Republic
April 4, 2019

“Why on shoes? Why a third? Where did they get these figures?”

Dmitry Peskov, President Putin’s press secretary, responded with questions to journalists who questioned him yesterday about Rosstat’s depressing report for 2018.

According to Rosstat’s study, in which sixty thousand Russian households were surveyed, every fifth Russian skimps on fruits and vegetables. Every other Russian family cannot afford to travel anywhere when they have a week’s vacation, while every fourth family does not have enough money to invite people over to celebrate birthdays and the New Year’s holiday.

And, indeed, the report does conclude that 35% of Russians are unable to purchase each family member two pairs of seasonally appropriate footwear.

“I would be grateful to Rosstat if they clarified these figures. The data leaves us at a loss,” Peskov added.

Meanwhile, there are other figures—lots of figures—that would probably also bedevil the Kremlin if they were aired in public. Let us recall a few of them.

Nutrition
Consumer watchdog Rospotrebnadzor concluded that 63% of deaths in Russia were associated with bad food and poor nutrition. According to official figures, Russians spend approximately 35% of their household budgets on food, while independent researchers put that figure at over fifty percent. However, the average Russian household skimps on all purchases and tries to do without everything it can, claim the researchers behind Romir’s Coffee with Milk Index, which charts the quantities of chocolate, coffee, milk, and bottled water purchased by Russians. Researchers at RANEPA recently described the diets of Russians as unhealthy, unbalanced, and lacking in energy.

Health
According to a report by RANEPA’s Institute for Social Analysis and Forecasting, 22% of Russians who live in straitened circumstances face the stark choice of whether to buy the bare minimum of the cheapest produce or the cheapest drugs, drugs they need to survive. It is typical of Russians, not only those below the poverty line, to postpone going to the doctor, if it involves costs, noted researchers at the Institute for Health Economics at the Higher School of Economics.

Education
According to the pollsters at VTsIOM, fifty percent of Russian parents experience serious financial difficulties when getting their children ready for the first day of the school year. Over the past five years, the average sum of money Russians claim to spend getting children ready for school has increased by sixty percent, rising from 13,600 rubles to 21,100 rubles.

Housing
According to the Construction Ministry, the Russian populace’s debts for utilities and housing maintenance bills have grown by five and a half times since 2015. The ministry reported that, as of the end of last year, the total amount of this debt was 1.2 trillion rubles [approx. 16.34 billion euros]. The rates for water, electricity, gas, and other utilities and services increase rhythmically year after year, and yet the real incomes of Russians have continued to fall five years in a row.

Transportation
Forty percent of Russian car owners “try not to use their own vehicles, taking public transport instead.” Another 22% of car owners follow their lead, but do it less frequently. VTsIOM has explained the outcome of its January opinion poll by citing the concern of Russians for the environment while failing to note that the price of petrol has skyrocketed in recent years. Last year, a liter of AI-95 rose in price three times faster than inflation. The government has resorted to artificial, decidedly non-market measures to depress prices, and yet petrol in Russia is now twice as expensive as it was when the decade kicked off.

Only twelve percent of Russians believe that, when it describes the economy and the social sector, the Russian regime always or mostly tells the truth. The Levada Center has done polls on the same subject since 2010. Russian society’s confidence in what the country’s leaders and senior officials say has never been as low as it is now.

By voicing surprise at Russia’s poverty, at least on paper, the Kremlin is, apparently, determined to convince people it inhabits a parallel reality in which Russia makes one breakthrough after another, and the rank and file enjoy “stability” by way of spiting the country’s numerous enemies. Peskov seemed genuinely puzzled by Rosstat’s claim that Russian families have trouble buying shoes, but he probably had not yet read the government’s report on the increase in mortality rates in every third region of Russia. Clearly, something is wrong with the figures. In short, we expect a reaction.

Translated by the Russian Reader

Falling

200 ruble note-1

200 ruble note-2A year ago, Russian Central Bank chief Elvira Nabiullina triumphantly introduced the new Crimea-themed two hundred ruble banknote into circulation. Since the economy is shaped more by flows of goods, resources, people, services, knowledge, and money, and the actions of ordinary people, decision makers, and the snake oil salesmen known as capitalists, and less by puerile revanchist neo-imperalist symbolism, the new banknote, pegged at €2.90 by Deutsche Welle only a year ago, is now worth a mere €2.65. I am keeping my specimen as a souvenir of the current bad times until better days arrive. Image by the Russian Reader

Fall in Real Incomes of Russians Accelerated Sharply in September
Economists Say Government’s Forecast No Longer Realistic
Tatyana Lomskaya
Vedomosti
October 17, 2018

Real incomes of Russians have declined for a second month in a row, Rosstat has reported. Their decline accelerated in September to 1.5% in annual terms after falling by 0.9% in August. Prior to that, they had grown for seven months, from the start of the year, by 1.7%. (This figure excludes the one-time 5,000-ruble payments made to pensioners in January 2017.) Real wages accelerated their growth in September, from 7.2% to 6.8% in the previous month.

Incomes of ordinary Russian had been falling for four years in a row, from 2014 to 2017, resuming growth only this year. In the first half of the year, they increased by 2.6%, mainly due to wage increases, notes Igor Polyakov from the Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP). Business income increased only by 0.7%, while social transfers (excluding the one-time payment to pensioners) increased by 1.2%, which was significantly weaker than all incomes generally. Other sources of income decreased. There was a slight increase in incomes derived from property, but incomes received from securities and deposits decreased, as did, apparently, incomes from unreported activity, says Mr. Polyakov. He argues it is unlikely circumstances have changed considerably in recent months.

But the anxiety of Russians caused by the volatility of financial markets has increased, says Mr. Polyakov. People have taken to withdrawing cash from foreign currency accounts and transferring it to safe deposit boxes, as well as spending it abroad on holiday. Rosstat cannot register these expenditures and thus reduces its assessment of miscellaneous income. In August, the public’s net demand for US dollars grew by comparison with July from $0.8 billion to $1.7 billion, an increase of nearly 53%, the Central Bank reported.

Retail growth slowed in September to 2.2% in annual terms from 2.8% a month earlier. It is likely the public preferred buying foreign currency while curtailing consumption, argues Mr. Polyakov.

The drop in incomes combined with the serious increase in wages [sic] remains a mystery, writes Dmitry Polevoy, chief economist at the Russian Direct Investment Fund. The growth in real incomes in the first half of 2018 was mainly due to the presidential election campaign, notes Vladimir Tikhomirov, chief economist at BCS Global Markets. Salaries in the public sector and pensions increased rapidly. [That is, the Kremlin bribed Russians directly dependent on its largesse to get out the vote for President-for-Life Vladimir Putin—TRR.] After the election, growth stalled. And, after a palpable devaluation of the ruble in April and accelerating inflation, a dip in incomes was anticipated, argues Mr. Tikhomirov. In September, prices for imported goods rose. In addition, the seasonal discount on fruits and vegetables ended, and the July increase in utilities rates made itself felt, explains Mr. Tikhomirov.

By the end of the year, the incomes of Russians will gradually decline a little, while overall incomes will grow less than 1% on the year, predicts Mr. Tikhomirov. Real incomes might grow by 2% on the year, counters Mr. Polyakov. In any case, this is noticeably lower than official forecasts. The Russian Economic Development Ministry anticipated a 3.4% growth in real incomes in 2018.

Real incomes of ordinary Russians fell by 1.7% in 2017, although the government had forecast a 1.3% increase, the Federal Audit Chamber noted in its opinion on the draft federal budget for 2019–2021. When the forecast was corrected, incomes had decline dsteadily from the beginning of the year, and there were no preconditions for rapid growth by year’s end, the auditors write.

Income growth depends on whether private enterprise will increase wages, argues Mr. Polyakov, but thos wages will be subject to the planned rise in the VAT to 20% in 2019.

President Putin has set a goal of halving poverty by 2024. (The official poverty rate last year was 13.2% of the populace.) The Economic Development Ministry’s forecast significantly increased the growth rate of real wages and anticipated higher growth rates for real incomes, which has raised doubts at the Audit Chamber. There is no wage increase for public sector employees planned in 2019, while the growth of wages in the private sector will depend on growths in productivity.

Rank-and-file Russians have been forced into debt, write analysts from RANEPA and the Gaidar Institute in their opinion on the draft budget. By mid 2018, Russians owed banks 13.7 trillion rubles (approx. 181 billion euros), an increase of 19% from the previous year, they write, and an amount that significantly outpaces the increase in nominal incomes. It is an alarming trend that means an increase in the amounts of money ordinary Russians spend servicing loans, experts warn.

Translated by the Russian Reader

Twenty Percent of Russian Schoolteachers Contemplate Quitting

Twenty Percent of Russian Schoolteachers Contemplate Quitting
Salaries Lower than Official Rates, While Workload Is Extremely Heavy
Yelena Mukhametshina
Vedomosti
June 27, 2018

russian teacher salariies

“How Much Schoolteachers Are Paid.” Orange = average monthly salary according to ONF survey, in rubles; blue = average monthly salary according to Rosstat (Russian State Statistics Service), in rubles. From top to bottom, the two sets of figures are provided for Moscow, Arkhangelsk Region, St. Petersburg, Moscow Region, Leningrad Region, Murmansk Region, Krasnoyarsk Territory, Orenburg Region, Volgograd Region, Vladimir Region, Voronezh Region, Pskov Region, Kostroma Region, and Rostov Region. The figures given are for the period January–March 2018. Courtesy of Vedomosti

A third of Russian schoolteachers do not know how their salaries are calculated or whether incentive payments and reimbursements are added to their paychecks. This was one finding of a survey carried out by the Russian People’s Front (ONF) in May 2018, during which researchers interviewed more than 3,000 teachers in 82 regions.

“Wage growth remains insignificant, making it impossible to attain the wage levels claimed by Rosstat,” the ONF concluded.

In Murmansk Region, for example, the survey showed teachers earned an average of ₽36,382 a month [approx. €495 a month], while official statistics showed they earned ₽50,560 a month [approx. €688 a month].

But even the salary the teachers earn comes at the price of an extremely heavy workload, the researchers stressed. The workload was heaviest in Kemerovo, Kostroma, and Samara Regions, where teachers averaged over thirty classes a week.

A quarter of schoolteachers have second jobs or hold additional positions at the same school, while twenty percent think of quitting the profession due to the heavy workload. Seven percent of the teachers surveyed spoke of not having been paid at all or paid in full at times. Twenty-three percent said their paychecks had been miscalculated, while fifty-seven percent had not been paid for overtime or additional duties.

Lyubov Dukhanina, deputy chair of the State Duma’s education committee and a member of the ONF’s central staff, argues the current nontransparent system of calculating salaries, which divides salaries into basic pay and incentive pay, should be abandoned. Instead, teachers should receive a guaranteed salary for their work. She also notes that, according to many teachers, incentive payments are unfair and opaque, and the amount of these payments can vary wildly from month to month.

Igor Remorenko, rector of Moscow State Pedagogical University and former deputy education minister, said all systems of compensation include guaranteed basic pay.

“In organizations undergoing reform, the lower the guaranteed basic pay, the better, because it enables you to rotate employees. In stable organizations, the constant part of the paycheck is more important, because it motivates employees. We need to move in the direction of having teachers sign annual contracts and feel confident in the future, while accepting the possibility of being paid different amounts depending on differing workloads from month to month,” said Remorenko.

The ONF’s survey actually embellished the real picture, noted Vsevolod Lukhovitsky, co-chair of the Teacher Trade Union.

“There are legal means of turning tiny salaries into big salaries on paper. For example, in Moscow, until 2018, the statistics included only full-time employees who had open-ended contracts, while the part-timers, who earned less money, were not included in the stats,” said Lukhovitsky.

According to Lukhovitsky, a law bill would be tabled in the State Duma this autumn that would establish a guaranteed minimum salary, equal to at least two minimum wages, for eighteen academic hours.

“It’s nice a large organization like the ONF has supported our conclusions four years after we started talking about going back to a fixed salary,” said Lukhovitsky.

Naturally, teachers are dissatisfied with their salaries. They are thus fertile ground for the ONF, argues political scientist Konstantin Kalachev. Teachers play a key role in elections and the entire political system.

[The ONF is a pro-Putin, astroturfed “populist” front organization. Teachers are critical to the Putin regime because many of them serve as polling station workers during elections, due to the fact that polling stations are commonly set up in schools. Teachers are thus often involved in the systematic vote rigging and electoral fraud that have helped keep Putin and his allies in power for twenty yearsTRR.]

“The current system of governance sometimes needs to let off steam. There is nothing frightening about the fact the stats are fudged, and the president’s May decrees are not fully implemented. The president sets tasks, and if they are not solved that is the problem of the people trying to solve them,” said Kalachev.

It is pensioners, teachers, and physicians who have the most impact on approval ratings, “so it makes sense the powers that be are focused on worrying about teachers,” he concluded.

Translated by the Russian Reader

Raising the Retirement Age in Russia

zenit arenaRussia has the money to build stadiums like Zenit Arena, in Petersburg,  the world’s most expensive football stadium, and stage incredibly expensive mega events like the 2018 FIFA World Cup and the 2014 Sochi Winter Olympics, but it cannot afford to pay its workers decent pensions without raising the retirement age beyond the current life expectancy for forty percent of Russian men. Photo by the Russian Reader

Alex Gaskarov
Facebook
June 4, 2018

It is quite likely a draft law on raising the pension age will be tabled in the State Duma in the very near future. The authorities probably want to take advantage of the restrictions on large-scale rallies during the 2018 FIFA World Cup. Raising the retirement age is not entirely an economic issue. The Pension Fund has been running a huge deficit because 40% of wages are paid under the table. This is a colossal amount. Even the most incompetent revenue service could easily reduce this figure.

It appears there is an implicit consensus between the regime and a segment of the business world that the latter agrees not to get involved in politics, while the regime agrees not to try very hard at auditing businesses. It is a commonplace that only suckers pay taxes to the current regime. Admittedly, there are grounds for this.

Nevertheless, wage laborers are the clear losers, and it is also obvious why. If the majority of people are so easily gulled during elections, as we saw recently, what reason does the regime have to keep its campaign promises and bother about reducing poverty?

I really hope liberals will also support the campaign against raising the pension age. There are market-based means of fixing the problem, for example, reducing mandatory pension deductions while simultaneously raising the corporate profits tax. When salary deductions come to 43%, while the corporate profits tax is 20%, it makes financial sense to understate salaries even without resorting to illegal gimmicks.

The trade unions have launched the campaign, but everyone is free to join it.

*********

KTR Launches Campaign against Raising the Retirement Age
Confederation of Labor of Russia (KTR)

The Executive Committee of the Confederation of Labor of Russia (KTR) has issued a statement concerning plans by the Russian federal government to raise the retirement age. […] To sign the statement and join the grassroots campaign in your city, write to  ktr@ktr.su or call +7 495 737-7250 or +7 903 140-9622.

Statement by the Executive Committee of the Confederation of Labor of Russia (KTR) on Plans by the Russian Federal Government to Raise the Retirement Age 

On May 8, 2018, during a plenary session of the State Duma, Dmitry Medvedev spoke of the need to make a decision about raising the retirement age. Currently, various government proposals for implementing a decision are vigorously being discussed in the media.

The Executive Committee of the Confederation of Labor of Russia (KTR) argues that plans to raise the retirement age are not based on the available official statistics and do not meet the objectives set by the Russian president for the government. The KTR does not support solutions of this sort and announces the kickoff of a broadly based grassroots campaigns to oppose their implementation.

According to the Russia Federal Statistics Service (Rosstat), the average life expectancy in sixty-two regions of the Russian Federation is less than 65 years for men, while in three regions it is less than 60 years. If overall demographic trends in Russia remain generally the same, 40% of men and 20% of women will not live till the age of 65. Enacting proposals to raise the retirement age mean a considerable number of Russians will not live to enjoy retirement.

For many years, the Russian government has pursued an economic policy that has produced a deficit of 40–45 % in the Pension Fund. The KTR believes the deficit emerged primarily because a huge number of employees work without the benefit of an employment contract. Their wages are paid off the books, and mandatory pension contributions are not deducted from their wages. The Pension Fund’s managers estimate that regular deductions are made for only 43.5 million people out of a total working-age populace of 77 million people.

Rosstat has estimated that 10 trillion rubles in wages are paid under the table annually. This means that, annually, at the current rate of 22%, the Pension Fund does not receive 2.2 trillion rubles in deductions.

So, the current rate of deductions could be maintained and the Pension Fund would not show a deficit if all employment were legal and on the books. Moreover, average pension payments could be increased.

Illegal employment is grounded in the disenfranchisement of workers due to ineffective procedures for protecting their right to employment contracts and collective bargaining. The KTR argues that positive outcomes could be generated by increasing the liability of employers who pay employees off the books and fail to make tax and pension deductions. Overcoming powerlessness, however, necessarily involves changing the laws and restoring real rights to organize and join a trade union, bargain collectively and strike, and protect trade union organizers from summary dismissal.

The fight against informal employment must be the primary solution to the Pension Fund’s deficit.

If plans to raise the retirement age are enacted, the absence of government-funded retraining programs, automation of production, and the bleeding of low-skilled jobs from the labor market will generate a millions-strong army of elderly people who have no jobs and no pensions.

As an association of independent trade unions, the KTR appeals to all forces in society, political parties, and social movements to oppose the increase of the retirement age and get involved in the grassroots protest campaign.

We propose organizing an open headquarters for running the national campaign to protect the rights of workers to pensions.

June 1, 2018, Moscow

Boris Kravchenko, president, KTR
Igor Kovalchuk, chair, KTR Executive Committee
Sergei Kovalyov, secretary general, KTR; president, Russian Federal Flight Controllers Union
Oleg Shein, vice-president, KTR

Translated 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

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