Eat Y’Self Fitter

zeitfur“Time for the girlfriend.”

More bad news from Russia’s Northern Capital:

Количество фитнес–клубов в Петербурге превышает спрос. По данным “ДП” их услугами по–прежнему пользуется небольшая часть населения Северной столицы. В настоящее время в Петербурге спортом в фитнес–клубах регулярно занимаются не более 4,8% населения, в то время как в Лондоне их посещают 20% жителей, в Барселоне — 35%, а в Берлине — почти 60%.

“The number of fitness clubs in St. Petersburg exceeds demand. According to Delovoi Petersburg newspaper their services are, as before, enjoyed by a small segment of the Northern Capital’s populace. Currently, no more than 4.8% of Petersburgers work out in fitness clubs, as opposed to 20% of Londoners, 35% of Barcelonians, and nearly 60% of Berliners.”

ATTENTION! Why do you think this is the case? The first person to send me the correct answer in the comments, below, will get a special prize, dispatched via the mails from Berlin, where I am among the 40% of losers who do not work out in fitness clubs.

Please don’t use Google or other artificial intelligences to answer the question. Instead, use the brains the good Lord gave you.

Photo by the Russian Reader 

Oleg Volin: How Capitalism Kills in Nizhny Tagil

уралвагонFront entrance of the famous Uralvagonzavod Factory in Nizhny Tagil. Courtesy of Vasily Shaposhnikov and Kommersant

Oleg Volin
Facebook
February 20, 2019

Capitalism kills. Overwork, wage cuts, nasty managers, and the lack of a clear future drive workers to kill themselves.

On the morning of February 19, 2019, in Nizhny Tagil, Sergei Chernykh, a young worker, left his boss’s office, put a noose around his neck, and jumped off a raised area, damaging his spine and suffocating in mere seconds. Arriving on the scene, an ambulance crew (who, to top it all off, were not immediately let into the factory) were powerless to save his life.

The situation in Nizhny Tagil is not merely rough but bloody. Chernykh’s suicide was the fifth suicide in the past year by a worker at the Uralvagonzavod plant.

There have been several dozen similar incidents, but Chernykh’s death stands out from them in that he committed suicide at his workplace.

Chernykh could not bear life’s hardships and so he parted with it right on the spot. Whether he meant it or not, he thus focused the public’s attention on the outrageous working conditions endured by Uralvagonzavod workers.

The plant’s press service has not yet commented on the case, but it is obvious the increasing incidents of suicide have been caused by deterioration of socio-economic conditions and the lack of prospects.

Over the last twenty-eight years, Nizhny Tagil’s population has steadily declined, dropping from 440,000 residents to 350,000 residents. It would be strange not to see this as a telltale sign of what has been happening in the city.

Chernykh’s friends and acquaintances mainly say he was “driven” to kill himself. Many residents of Nizhny Tagil could find themselves in similar circumstances, especially if they work at Uralvagonzavod.

A female worker in Forging Shop No. 170, where Chernykh was employed, said the 27-year-old man’s suicide occurred after he attended a meeting of plant managers that he was not supposed to have attended. The employee asked she not be named since, she claimed, everyone in the shop was afraid, everyone needed a job, and she did not want any extra problems.

“Sergei was a rank-and-file worker, a cutter, but since our section foreman and section manager were on sick leave, Sergei was temporarily appointed foreman. And since there was no manager in our section, Sergei was sent to that meeting,” the woman claims. “It’s at these morning meetings that the shop foreman tells everyone what section has to do what and how much they have to do during a shift.”

“There are emergencies, and the shop foreman forces people to hurry up. He could not care less whether are enough workers to do the job or not, whether they have the tools they need or not. All that matters is that the work be done quickly. If you don’t have any workers, you go do the job yourself,” she says.

Marina Pogrebnykh, a distant relative of Chernykh’s, does not know the particulars of his death, but she likewise has no doubt plant management was to blame.

“I’m certain management are to blame for it. I don’t believe he would just take his own life like that, especially since this was not the first such incident,” says Pogrebnykh.

The anonymous female worker at Uralvagonzavod confirmed Chernykh was the third plant employee to have killed himself in the past three months. On the social networks, there has been talk there may have been more such incidents.

“We are under extreme pressure at work. You can make good wages, but you have to live on the shop floor to make the good money.

“Our section foreman killed himself. Yes, of course, it was a personal situation, but I can say that if he hadn’t drunk he would be alive. But when he was foreman in another shop he never drank, although the workload was huge. So, it’s a little hard to believe in coincidences.

“Our current section foreman, a woman, quite often comes back from meetings with management completely stressed out. She’s already getting up there in terms of age, but they yell at her like they yell at everyone else,” says the late Chernykh’s female coworker.

Two weeks ago, twenty-five Uralvagonzavod workers filed suit against their employer over new rules for calculating wages. According to the workers, the new rules have cut their pay in half while their workload has increased. Although these rules came into force in 2018, the workers have only now decided to file suit.

“Management tells us the the plant has been modernized. Due to this modernization, our workload has decreased, allegedly, meaning we should produce more. It’s on paper that things look good to them. On the contrary, we haven’t noticed any changes,” say the workers by way of explaining why they have sued olant management.

“On the contrary, we now have additional functions, but our wages have been halved.  This happened despite the fact that previously we had one of the highest pay grades at the plant due to occupational hazards and the heavy physical workload,” they say.

Nizhny Tagil’s Dzerzhinsky District Court has not yet made a ruling in the case.

Founded in 1936, Uralvagonzavod manufactures military equipment, railroad cars, and road construction equipment. In 2016, the company was merged with the Russian state corporation Rostec.

Poverty and overwork have led workers to hang themselves. It is all quite sad. Workers must realize they need to fight together to improve their condition. They must organize themselves, go on strike, and take other actions.

The nooses should be reserved for other heads.

This text is based on media reports.

Thanks to Tom Rowley for the heads-up. Translated by the Russian Reader

Postage Stamps and Gunpowder: Syria and the Russian Economy

embrace

Postage Stamps and Gunpowder: How Important Is Syria to the Russian Economy?
The Kremlin has been trying—unconvincingly—to repackage its military campaign in this devastated country as a long-term investment project. 
Yevgeny Karasyuk
Republic
February 27, 2019

The economy was probably the last thing on the Kremlin’s mind when it decided to get involved in a civil war in the heart of the Arab world. But now that Russian military forces have been in the region for several years, the Kremlin has been increasingly trying to spin its support for Bashar Assad’s regime as a sound investment, a contribution to a prosperous trading future between the two countries.

Russia has claimed it is willing to export to Syria anything it can offer in addition to weapons, from wheat to know-how for preventing extremism on the internet. Along with Iran, the country has big plans for taking part in the postwar restoration of Syrian cities and Syrian industry, including the energy sector. Russia’s governors speak touchingly of their readiness to go to Damascus at the drop of a hat to negotiate with the Syrian government.

“When the talk turns to Syria, I immediately catch myself thinking I need these meetings,  I need to see those people again and again, and I need to be useful,” Natalya Komarova, head of the Khanty-Mansiysk Autonomous District said at the Russian Investment Forum in Sochi two weeks ago.

The expenses Russia has incurred during the Syrian campaign are shrouded in mystery. Analysts at IHS Jane’s calculated in October 2015 that Russia could have been spending as much as $4 million a day.  In July 2017, the opposition Yabloko Democratic Party published its estimate of the overall bill: as much as 140 billion rubles [approx. 1.87 billion euros], but this total did not include associated costs, including humanitarian aid. In 2017, according to RANEPA, 84% of Russia’s official total of disbursed humanitarian aid ($19.6 million) went to Syria. What kind of economic cooperation could justify such figures?

It would be pointless even to try and find an answer in recent trade trends between the two countries. Its volumes are negligible. During the first nine months of 2018, Syria’s share of Russia’s exports was 0.09%, while Syria accounted for 0.002% of imports to Russia during the same period. This has always been more or less the case.

trade

“Trends in Russia’s trade with Syria (in billions of US dollars).” The pale violet line indicates Russia’s exports to Syria, while the blue line indicates Russia’s imports from Syria. The data for 2018 is only for the first nine months of the year. Source: Russian Federal Customs Service. Diagram courtesy of Republic

The largest transaction in the history of the economic partnership between the two countries was Moscow’s cancellation of $9.8 billion dollars in debt, 73% of what Syria had owed the Soviet Union. At the end of the 2005 meeting at which this matter was decided, Bashar Assad and Vladimir Putin also spoke publicly of the idea of establishing a free trade zone. Subsequently forgotten, the undertaking was mere camouflage for the political bargain reached by the two men, which was and remains support for the Syrian dictator’s regime in exchange for the dubious dividends the Kremlin has received by increasing its influence in the region. It is believed Russian strategic bomber saved Assad, who had already been written off by the west. But explanations of what Russia has ultimately won for its efforts and what its economic strategy might look like have been more muddled and contradictory than before.

In an October 2018 interview with Euronews, Russian Foreign Secretary Sergei Lavrov avoided directly answering a question about joint economic projects. During his tenure as head of the Russian Export Center, Pyotr Fradkov (not to be confused with his father former PM Mikhail Fradkov, the current head of the Russian Foreign Intelligence Service or SVR) talked about Russia’s potential involvement in developing the “high-tech segments of Syria’s economy.” A month ago, however, the selfsame Russian Export Center placed Syria at the bottom of its ranking of 189 countries in terms of their favorability for foreign trade.

The Syrian economy, in turn, can currently offer Russia even less. Mainly, its exports boil down to fruit, but in such small and unstable quantities that they cannot seriously compete with deliveries from Turkey. Russia has been promised priority access to the development of natural resource deposits in Syria, which are teeming with oil, natural gas, and phosphates. But the smoldering war and the lack of security guarantees for investments have hampered implementing these plans.

Russian experts pin their hopes on the surviving remnants of industry in the government-controlled areas of Latakia, Tartus, and Damascus. Based on the fact that “the level of production that survived has enabled Assad to almost fully provide himself [sic] with food during five years of war,” Grigory Lukyanov, a political scientist at the Higher School of Economics has concluded the Syrian government “depends on a well-developed business community.”

Syria, however, seemed like a nightmare for investors well before the country was turned into an open wound. “Only a crazy person would go into Syria at his own behest,” Vedomosti quoted a source at a major company that was involved in negotiations with the Syrian government in the summer of 2012. Suffering from international sanctions, Syria proposed that Russian companies take part in construction of a thermoelectric power station in Aleppo. Four years later, one of Syria’s largest cities had been turned into ruins by heavy bombardment.

The Rothschilds [sic], who made fortunes on wars, thought the best time to invest was when blood was flowing in the streets. Their approach might seem to resemble the Kremlin’s strategy. But let’s not kid ourselves: unlike the famed financiers, President Putin is completely devoid of insight when it comes to the economic consequences of his military escapades. Business plans are not his strong suit.

Photo courtesy of Mikhail Klementyev/AP and the Washington Post. 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

Macaroni Is a Vegetable

“3,500 rubles.” Graphic courtesy of Vedomosti. At the current exchange rate, 3,500 rubles is worth approximately 46 euros.

Some Can Only Afford Macaroni, But Some Cannot Even Afford That
Saratov Official’s Suggestion to Spend 3,500 Rubles on Food a Month Is a Reality for Millions of Russians
Tatyana Lomskaya
Vedomosti
October 19, 2018

The statement by Natalya Sokolova, minister for labor and employment in Saratov Region, that 3,500 rubles a month was enough for the “minimum physiological needs” of Saratov pensioners so angered the public that she was made an ex-minister in a matter of days. Ms. Sokolova had insisted it was not worth raising the monthly minimum cost of living for unemployed pensioners by 500 rubles: an increase of 288 rubles would be enough.

“Macaroni always costs the same,” she said.

Ms. Sokolova, however, refused to go on such a diet by way of an experiment. Her status supposedly did not allow it.

But is it only Saratov pensioners who subsit on such a meager diet? Let’s compare them with other regions.

The authorities calculate the amount of the mountly minimum cost of living on the basis of the cost of the monthly minimum food basket. They add to its cost (which is 3,500 rubles in the case of Saratov pensioners) the exact same amount of money for paying for non-food items and services, for example, clothing, housing, and utilities. The monthly minimum cost of living for pensioners in Saratov Region was therefore 7,176 rubles (95 euros) in the second quarter of 2018. It was 9,354 rubles (124 euros) for the region’s able-bodied residents, and 9,022 rubles (120 euros) for its children.

That is not much, but there are even poorer regions in Russia. For example, in Belgorod Region, an able-bodied resident should be able to live on 8,995 rubles (120 euros) a month, while a pensioner should be able to survive on 6,951 rubles (92 euros) a month. In Mordovia, the corresponding figures are 9,132 rubles (121 euros) and 6,975 rubles (93 euros) a month; in Chuvashia, 9,248 rubles (123 euros) and 7,101 rubles (94 euros). The federal monthly minimum cost of living is 11,280 rubles (150 euros) for an able-bodied person, 8,583 rubles (114 euros) for a pensioner, and 10,390 rubles (138 euros) for a child. Meaning that, on average, the monthly diet in Russia as a whole is only a little more expensive than the Saratov diet: between 4,000 rubles (53 euros) and 5,500 rubles (73 rubles).

The monthly minimum food basket includes the cheapest groceries. It is meant to provide an individual with the necessary amount of protein, fats, and carbohydrates for a month, explains Liliya Ovcharova, director of the Institute for Social Policy at the Higher School of Economics. The basket mainly contains baked goods, a few eggs, lots of porridge, milk, and an altogether small amount of meat. According to Ms. Ovcharova, the diet will keep a person alive. It is another matter that it is “tasteless” and below rational norms of consumption, flagrantly lacking in meat, vegetables, and fruit. It is not surprising people find this diet unacceptable.

In 2017, however, the incomes of 13.2% of Russians were below the minimum cost of living, meaning that 18.9 million people in Russia could not afford even the macaroni snubbed by the ex-minister in Saratov. This figure includes children: one in five Russian children lives in family whose per capita income is below the minimum cost of living. Among old-age pensioners, however, there is practically no one who is officially poor. If their incomes are below the minimum cost of living for pensioners, they receive an additional payment to help them top up to the minimum. Children in large families are not eligible for these additional payments.

The question is what is now the more realistic approach: making the diet more humane or reducing the number of people who cannot afford even an inhumane diet. For example, the government could first reduce the number of children in need to 5%, and then improve the diet. Vladimir Putin ordered the government to reduce the number of needy people by half by 2024. If we now increased the minimum cost of living by 50%, the number of poor people would, on the contrary, double, Ms. Ovcharova estimates.

But the number of poor people can be measured not only on the basis of the minimum grocery basket, a standard that was introduced back in the 1990s. In European countries, for example, people with incomes of 50% of the median have been considered poor since the 1950s. At the same time, the Europeans base their calculations not on minimal but on rational norms of food consumption, Ms. Ovcharova notes. They compute how many specific vitamins, minerals, iron, and calcium a person needs. This food basket is much pricier and presupposes a completely different level of consumption and well-being.

It is probably best not to count how many Saratov pensioners can afford this food basket until 2024.

Translated by the Russian Reader

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

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

________________________________

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.

Mort à crédit

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Voronezh Region Residents Took Out Nearly 55 Billion Rubles in Loans over Six Months
Ilya Makar
Kommersant
September 28, 2017

From January to July 2017, Voronezh Region residents borrowed 54.7 billion rubles [approx. 800 million euros] from banks, reports the Central Bank’s Central Federal District regional office. Of this total, 43 billion rubles [approx. 630 million euros] were loaned for consumer needs, a figure almost 30% higher than for the same period last year. As of August 1, 2017, residents of the region owed banks 138.4 billion rubles [approx. two billion euros] in loans.

Thanks to Nikolay Mitrokhin for the heads-up. Translation and photo by the Russian Reader

Your Money Is Safe with Us

 

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Mezhtopenergobank. Photo courtesy of Alexei Zotovo/Kommersant & RBC

I love the names of Russian banks, nearly all of them fronts for the global machinations of the Kremlin, its oligarchs, and their minions.

“Mezhtopenergobank (rated among the country’s top hundred banks in terms of assets) has admitted it lacks liquidity. The difficulties arose because ‘negative information about the bank’s financial state’ had been making the rounds.”

Source: RBC Facebook News Feed

* * * * *

PRESS SERVICE

July 2, 2017

Mezhtopenergobank PJSC reports difficulties in completing transactions due to lack of available liquidity

Mezhtopenergobank PJSC, a commercial interregional fuel and energy bank, reports difficulties in completing transactions due to a lack of available liquidity.

The bank’s financial condition has become less stable due to a number of factors caused by negative market conditions, in particular, in the construction sector. A reduction in profits and an increase in the volume of overdue debts have also resulted from the refusal of major borrowers to fulfill their obligations.  In addition to the need to generate significant reserves for problem loans, as required by the supervising authority, the postponement of the scheduled refinancing of a number of client projects and the revision and tightening of the repayment schedule by the Small and Medium Enterprises Bank (SME Bank) have also been negative factors in the bank’s business.

Despite the worsening of a number of financial indicators, the bank was fulfilling client requests in a timely manner, maintaining liquidity at the required level, until last week. The bank’s operations also continued to generate a stable income.

The rapid loss of liquidity was triggered by the vigorous dissemination of negative information about the bank’s financial condition, which resulted in a sharp increase in the number of client withdrawal requests. Consequently, the load on information systems increased. They could not handle the critical volume of requests, which led to failures and affected the speed and possibility of completing transactions. Nevertheless, until July 2, the bank continued to perform transactions at its offices, via remote banking, and through ATMs.

The bank reminds its clients that all funds in accounts are fully accounted for in the bank’s information systems, balance sheets, and mandatory registers, despite the fact that the ability to dispose of these funds is currently impeded. Mezhtopenergobank PJSC is a participant of the Deposit Insurance System and has insured all funds in the accounts, cards, and deposits of private individuals and individual entrepreneurs in the amounts stipulated by law.

We would also remind borrowers and co-signatories that all payments under current obligations to the bank will be received and processed as usual, and must be sent to Mezhtopenergobank PJSC by the due dates, as stipulated in agreements.

Remote client services are operating in informational mode. Clients will have full access to bank account balances, transaction records, and electronic statements.

Customers and co-signatories will be informed about further actions as additional information becomes available.

Source: mteb.ru

Translated by the Russian Reader

Russia’s Economic Performance: Fudging the Stats

“The Country’s Leaders Are Relying on Erroneous Economic Data”
Economist Grigory Hanin Explains How the Official Figures Are Deceiving 
Alexander Trushin
Ogonyok
February 11, 2017

The article “Russia Cannot Be Understand by Labor” (Ogonyok 3, 2017), which dealt with low workforce productivity in Russia, struck a huge chord with readers. Serious academics responded to it, including Grigory Hanin, a professor at RANEPA’s Siberian Institute of Management, and Dmitry Fomin, an assistant professor at the Novosibirsk State University of Economics and Management. They are convinced the official figures on which both government agencies and the authors of the above-mentioned article rely do not jibe with reality.

We quote the letter they sent to us:

“Your magazine has been promptly sounding the alarm as to Russia’s lagging behind in terms of workforce productivity. Your focus on the obsolescence of Russia’s production facilities is also justified. But the stance adopted by the authors is weakened when they rely on figures from Rosstat, which embellish the real state of the economy, as the Soviet Central Statistical Directorate (TsSU) used to do. We have produced alternative estimates of macroeconomic indicators for the Soviet Union since the early 1970s and now for the Russian Federation, based on a number of more reliable figures from Soviet and Russian statistics. We have been able to refine Rosstat’s estimates. The gap in workforce productivity between Russia and the developed countries is greatly underestimated in the article. If instead of the quite dubious cost data cited there, you use the genuine data, you find a gap of five to seven times or more, sometime as much as ten times.

“The authors have greatly underestimated the deterioration of physical capital. We have made alternative estimates of the depreciation of fixed assets in the Russian Federation from 1991 to 2015, taking into account the real value of fixed capital during this period and the preceding Soviet period. The estimates have shown that the depreciation of fixed capital amounted to 64.4% in 2015, rather than the 49.4% indicated by Rosstat. […] For a better understanding of our country’s problems with regard to the depreciation of physical capital, we should factor in the depreciation of human capital, the disastrous decline in education from the 1970s to the present. The objective of navigating a way out oof Russia’s backwardness in terms of workforce productivity is extremly complex, requiring colossal efforts and sacrifices from the entire society[.]”

Ogonyok asked one of the letter’s authors, Grigory Hanin, to explain what was wrong with the statistics cited by everyone from government agencies to ordinary people.

What is the difference between the official figures and your estimates of Russia’s macroeconomic indicators?

According to the longitudinal research Dmitry Fomin and I have been doing, Russia’s GDP has not grown by 13.4% from 1992 to 2015, as Rosstat claims, but has decreased by 10.2%. During the same period, Russia’s workforce productivity has fallen by 30.1% instead of having grown by 9.2%, as the official figures claim. Basic fixed assets (buildings and plant, machinery, machine tools, and other assets involved in production) have decreased by 29.2% in terms of their full book value, although the official figures claim they have increased by 50.9%.

How do you explain this discrepancy?

The official figures deal with basic fixed assets incorrectly. We are talking about physical capital, a vital economic resource. Along with human capital, it defines the level of economic development and shapes GDP’s performance and value and other macroeconomic indicators. No other indicator has been distorted as much in statistics in the Soviet Union and Russia as this one. It is a fairly complicated indicator. Many countries have problems with it, even the World Bank, which does its estimates based on the official data submitted by each country, including Rosstat.

How important is the erroneous estimate of fixed assets?

First of all, when there is inflation, which there has almost always been in the Soviet Union and Russian Federation, the underestimation of fixed assets has always led to exaggerating their performance, since old and new assets are valued in terms of different rubles: old assets in terms oof expensive rubles, and new assets in terms of cheap rubles. All of this impacts the underestimation of the value of depreciation and production costs. Consequently, profits are exaggerated.

Meaning, we cannot get a fix on the real state of the Russian economy?

It’s a problem that has been dragging on since the late 1920s, when assets were, according to my calculations, undervalued by almost half. Consequently, resources spent on refurbishing the assets were not take into account, nor was the increase in production costs. In the 1930s and 1940s, the underestimation continued to grown, despite reevaluations in certain sectors. Only in 1960 was a general reevaluation of fixed assets carried out, but it was chockablock with mistakes. Afterwards, due to ongoing inflation, the error in calculating the value of fixed assets continued to grow. By the late 1980s, it had grown by four and a half times. By 2015, the fixed assets were underestimated by 7.3 times, according to our calculations.

In the Soviet economy, all cost data that reflected productivity and national income growth, including the value of fixed assets, were distorted. Soviet production figures given in physical terms (tons, units, etc.) can be considered more or less reliable, because the central planning process was based on them.

But the problem persisted when we switched to a market economy in the 1990s?

In the early 1990s, Russian statistics switched to international standards. We seemingly had rid ourselves of the shortcomings of Soviet statistics, but new ones emerged. Several attempts were made in the 1990s to reevaluate fixed assets, but the official figures on the trends in fixed assets still turned out wrong.

What is your estimate of the scale of the disaster?

It was only this year we finished a full year-by-year estimate of the performance of fixed assets from 1991 to 2015. I have to confess the outcome was surprising. I should emphasize from the outset that our calculation does not claim to be totally precise. (There is no such animal in macroeconomic statistics.) But we are confident of its objectivity. So, the volume of fixed assets in terms of depreciation had decreased approximately twofold by 2015 compared to 1991. [This figure differs from the total book value, which is based on the original cost of the assets, to which upgrading costs have been added — Ogonyok.] This is much more than the damage incurred by the Great Patriotic War [i.e., WWII]. The decrease then amounted to 33.5%. Here is another figure. The Russian economy has lost a total of 422.5 trillion rubles in fixed assets, taking into account their depreciation over the last 25 years. This sum is equal to Russia’s GDP for the last five years. The reduction of fixed assets has occurred because capital investment during the post-Soviet period has been less than the scale of asset retirement. Rosstat, however, does not take this into account attempting to persuade us the reverse is true: that physical capital has increased by 51% since 1991. This radically alters how we evaluate the economy’s profitability, because it dramatically increases the costs of depreciating fixed assets. According to our estimates, in the early 2000s, their overestimation led to huge losses for the major manufacturing industries, while the commercial services sectors were highly profitable. Guided by official data on income, however, the tax authorities collected taxes mainly from the loss-making manufacturing sectors, thus exacerbating their financial difficulties, while exacting a minimum of taxes from the service industries.

How does the Russian economy look nowadays?

Let’s begin with the fact that half the fixed assets are left. I should note they are used better now in certain industries where the market economy has had a positive effect. The greatest reduction of fixed assets has occurred in manufacturing, but they have grown in the commercial services sector. At the same time, we have two industries that were almost wholly revived by foreign capital, beer brewing and confectioneries manufacturing. The services sector has increased almost twofold in Russia since 1991. This applies to the private sector of the economy: retail and wholesale trading, food services, hotel management and tourism, vehicle maintenance, private medical care, communications, public information services, and so on. In the public services sector—public healthcare, science and education, sport and physical education, housing and public utilities, the public road system—fixed assets have declined, but not as much as in industry. In Soviet times, there was a disproportion: an emphasis on heavy industry alongside underdeveloped service and consumer sectors. Now we see the hypetrophied growth of commercial services and the underdevelopment of the economy’s investment sector.

How has GDP’s performance fluctuated during this period, according to your calculations?

We have still not reached the level of 1991 in comparable prices, whereas Rosstat shows a surplus of 13%. However, in the 1990s, Rosstat even undervalued the drop in GDP a bit, because it gave insufficient weight to the gray economy. GDP was greater in the 1990s than Rosstat has claimed. On the other hand, from 1998 to 2007, the official figures greatly exaggerated the growth in GDP: 82%. According to our figures, growth amounted to only 48%. The upsurge in the early noughties, aside from a rise in the oil price, was due to the use of the reserve production capacity and manpower that had formed in the 1990s. By 2007, however, these growth opportunities had been tapped out. Stagnation and then a decline in economic growth inevitably had to set in. Which was what happened.

And things are also not kosher with the official inflation estimates?

Exactly. The underestimation of inflation levels is determined, albeit roughly, by the difference between Rosstat’s GDP performance stats and ours. This difference amounts annually to around two percentage points. Instead of 5% per year, say, it amounts to 7%.

Why do we need to calculate inflation accurately?

It affects social spending by the state: pensions, benefits, and all other payments that the state should index for inflation. And besides, there are the state’s investment costs, which have to account for inflation. But if accurate figures do not exist, then there is not enough money for new projects, which happens quite often.

Have foreign experts provided more accurate assessments of the state of the Russian economy?

No, they have all been mistaken, because they used Rosstat’s figures for their estimates. In the 1990s, they thought that since Rosstat had switched to international standards, they would not need to recalculate anything. On the other hand, the World Bank monitors two hundred countries, and it is simply physically incapable of recalculating the data for every country’s economy.

You have claimed that workforce productivity in Russian is lower than in developed countries, by five to seven times, or even ten times. What is the basis for these estimates?

There are two types of economists: macroeconomists and industrial economists. And there are methods of estimating workforce productivity. The first focus on price indicators, while the second focus on non-monetary indicators. The first calculation is often wrong due to the dubiousness of the ruble-to-dollar conversion factors. But you can use non-monetary indicators for certain industries, and then you obtain different outcomes. For example, petroleum production. Divide the volume of production by the number of people employed in the industry, and you get output per worker. You can do the same thing with metallurgy, machine building, agriculture, and all industries, and then compare them with other countries. That was how we got the outcome about which we wrote to you. The estimate was derived from numerous Russian industry publications.

How do you assess the state of human capital in Russia?

We suffered huge demographic losses in the twentieth century through wars, purges, famine, emigration. According to my estimates, we lost between 70 and 80 million people. Moreover, the losses affected the intellectual segment of the populace more: such people were more likely to die in wars and more likely to emigrate. Three of the four living Russian Nobel Prize winners work abroad. Add to that the degradation of secondary and higher education that has been observed since the 1970s. Plus the stupefaction of the populace by the media, especially the electronic media. I go to our library in Novosibirsk, one of the largest libraries in Russia. The reading roooms are nearly empty: there are more librarians there than readers. Recently, I visited the Bavarian State Library. Tears welled up in my eyes. I saw an enormous reading room, nearly a kilometer long, chockablock with people. If you go into our main bookstore in Novosibirsk you’ll find ten to fifteen shoppers, while in Munich they have a seven-storey bookstore. There are something like two hundred people people browsing the shelves, picking out books, sitting on couches, sipping coffee, and chatting.

Can we bridge the gap with the developed countries?

Bridging the gap is unthinkable. Imagine you are standing at the starting line, and your competitors have taken off and have a five-kilometer headstart on you. The government relies on erroneous economic data and underestimates the depth of problems. The illusion is generated that economic recovery is possible without serious costs. We have estimated that, in terms of 2015 prices, 14.6 trillion rubles in investments would be required to maintain fixed assets and grow them by 3%. Plus, we would need 900 billion rubles for working capital. To develop human capital—education, healthcare, research—we would have to invest 10.3 trillion rubles. This would amount to 25.8 trillion rubles a year, which is a third of Russia’s annual GDP.

And nothing can be done?

It’s possible to narrow the gap. To do this, we would have to redistribute incomes to physical and human capital, and to the neediest segments of the populace. But even that would require enormous efforts. We could, for example, redistribute incomes to narrow the social differentiation among decile groups from the current ratio of 30:1 to 6:1, that is, the figure that exists in most Western European countries. But this would all take many years to accomplish.

***

Ogonyok asked Rosstat to comment on the divergence in key economic development indicators for Russia. We are waiting for a response to this request.

Business Card

An  Economist with a Stance

Grigory Hanin finished graduate school at the Leningrad Finance and Economic Institute in 1962, and then worked at Novosibirsk State University. In 1968, he successfully defended his candidate’s dissertation, but the Higher Attestation Commission (VAK) refused to approve it due to its “market-based approach.” In 1972, Hanin was dismissed from the university for his dissenting views on the economy, which were, allegedly, “negatively affecting” students in the economics department. Hanin could not be expelled from academics, however. He successfully defended his candidate’s dissertation at the Institute of World Economy and International Relations of the Russian Academy of Sciences (IMEMO RAN), and then his doctor’s dissertation at the Central Economic and Mathematical Institute of the Russian Academy of Sciences (TsEMI RAN). Hanin did research on alternative macroeconomic estimates of the Soviet economy. In 1987, Hanin and journalist Vasily Selyunin published the famous article “Tricky Numbers” in the journal Novy Mir, causing a huge public outcry. Hanin is currently a professor at RANEPA’s Siberian Institute of Management, where he researches recent Russian economic history.

The Numbers

A Big Difference

How official and alternative estimates of Russia’s macroeconomic performance vary

Rosstat’s figures Alternative estimates
GDP* 113.4% 89.8%
Productivity* 109.2% 69.9%
Inflation** 5.38% 7.38%

* In 2015, relative to 1991

** In 2016

Translated by the Russian Reader. Thanks to Sergey Shpilkin for the heads-up