Published in the Guardian
The richest slice of Russian society has doubled its wealth in the past 20 years, while almost two-thirds of the population is no better off and the poor are barely half as wealthy as they were when the Soviet Union fell, according to researchers.
Experts at Moscow’s Higher School of Economics (HSE) found that the purchasing power of the average Russian has grown by 45% since the early 1990s, but income disparity is widening by the year. The report reinforces a widely held view that oligarchs got rich quick by snapping up the country’s choicest assets in the turbulent post-Soviet period.
Yevgeny Yasin, scientific director of HSE and a former economics minister, said: “The principal issue for Russia‘s economy and society today is the level of inequality. Only the best-off 20% of the population is successfully participating in the rise in prosperity which became possible as the result of creating a market economy.”
Food is slightly cheaper relative to income and simple pleasures have become more accessible. The average adult buys more vehicles and televisions and can afford more alcohol and cigarettes than at the beginning of the 1990s. “Drinking, smoking and burning around in a car have become a lot cheaper,” the report found.
But most Russians can only stare in envy at the super-wealthy with their Bentleys and dachas. According to the report, income inequality between the mid-1980s and the mid-2000s has increased eight times more than in Hungary, and five times more than in the Czech Republic. The huge gap between rich and poor “largely negates the economic and social achievements of recent years,” the HSE report said.
Yasin added that the study indicated there were “two Russias”. The wealthiest fifth of the population received a pay cheque equivalent to 198% of its value in 1991, while the poorest fifth made only 55% in real terms. In total, 60% of the population has the same real income or less than the average 20 years ago. “Many things are required to change this,” said Vladimir Gimpelson, one of the authors.
“We need more political and market competition, enforcement of property rights, rule of law, systemic change in labour market institutions and stronger social protection for the needy.” The widening gulf comes as the World Bank recorded an overall drop in poverty. A report by the bank published on Sunday found the percentage of people in Russia living below the poverty line – meaning those who earn less than 5,900 roubles (£130) per month – fell from 13.2% in 2009 to 12.7% last year. It attributed the fall to increased pensions, public sector wages and benefits for job seekers, and predicted that continuing economic growth would push the figure down to 11.2% this year and 10% next year.
However, the report repeated a past admonition that Russia must diversify its economy to reduce its reliance on oil and gas exports. Two prominent Russians much richer today than they were 20 years ago have published income declarations, showing their earnings dropped between 2009 and 2010. Prime minister Vladimir Putin declared £104,000, compared with President Dmitry Medvedev’s £70,000.