22 January 2016•Update: 22 January 2016
by Zaki Shaikh and Andrew Jay Rosenbaum
LONDON
More than 30 percent of Russians could sink into poverty as recession takes hold in the country, experts said.
Already 39 percent of Russians live at bare subsistence levels, according to a report by the Russian Public Opinion Research Center (RPORC) released on Jan. 13.
In 2015, the share of "poor" households (those with not even enough money for food, and those with enough money for food, but not to buy clothes) jumped to 39 percent from 22 percent in 2014.
The threat to household incomes is exacerbated by increasing amounts of unpaid wages. As of December 2015, according to official statistics, there were RUB 3.89 billion ($47.3 million) in unpaid wages nationwide, а number that has been steadily growing since June 2012, Russian Prime Minister Dimitri Medvedev said in a speech on Jan. 18.
Protests by teachers, nurses and factory workers over unpaid wages are spreading across the country, the latest by teachers in Siberia on Jan 17.
The National Agency for Financial Studies (NAFS) reported in late December 2015 that 85 percent of Russians are feeling financial pressures.
In particular, 48 percent of respondents to the NAFS survey said that the inflation has severely hurt their buying power, and another 37 percent said that price increases forced them to limit their spending even on food.
Moreover, according to the survey by the RPORC, 34 percent of Russians expect their financial situation to deteriorate in 2016, and another 31 percent anticipate that their situation is not going to get any better.
Surveys suggest that many Russians struggle to meet their day to day basic needs, and people fear that rising inflation will make matters worse.
“Almost half of the people in Russia reported a decline in their well-being. About 34 percent of respondents did enjoy the start of the New Year, but dreaded that in 2016, their financial situation would get even more dismal. A fear of high inflation is the reason behind this fiscal pessimism. People believe that the price of goods and services will continue to rise,” an RPORC survey released on Jan. 4 reported.
Meanwhile, the majority of people in Russia do not have sufficient savings to survive the hard times. According NAFS survey cited above, about 60 percent of Russians have enough saved to stay afloat no longer than three months. At the same time, about 26 percent could only survive about four weeks, while 16 percent reported that they could last no more than a week.
And conditions are expected to worsen, as real wages are expected to drop by 3.5 percent in 2016, according to a Jan. 15 report by the Rosbalt Agency citing the most recent estimates by the Russian Economic Development Ministry. Average income is forecast to shrink by 4 percent, and unemployment is predicted to rise to 6.3 percent from the current 5.8 percent.
The fall in the value of real wages will be accompanied by reduction in pensions and reduced social welfare payments.
Lilya Ovcharov, director of Center for Analysis of Incomes and Living Standards at Russia’s Higher School of Economics told the Komsomolskaya Pravda Radio on Dec. 25: “In 2016 we may witness the highest level of poverty in the past 10 years. And this is linked, first, to the fall in real wages, second, to the reduction of pensions. A third factor is a reduction in social benefits other than pensions while the fourth factor is risk of job losses for elderly or part-time employees.”
In general, families with children will be worst affected by the declining living standards,” Ovcharov said. “These families remain most vulnerable to poverty risks compared with the general population. And this trend will continue.”
But the government does not have the means to respond to this crisis, the director of the Social Analysis Institute of the Russian Academy for Public Economy Tatiyana Maleva told Gazeta.ru on Jan. 13. “This is a major challenge at a time of insufficient public funds to respond to the crisis of increasing poverty,” she said.
