Statistics Lie About How Russia's Doing

Finance Minister Alexander Livshits considers 1996 to have been a difficult year.

A government official could have said the same at the end of any of the past five years. Each of the years of reform was difficult for both the government and the people. At the same time, truly independent people have appeared in Russia. The number of people who enjoy a higher standard of living today is not known, but a noticeable part of society has risen to almost a West European level.

My long-standing thesis that people and industries are doing much better than is being reported was recently officially confirmed: Yury Yurkov, the chairman of the State Statistics Committee, said the average monthly wage in Russia is 850,000 rubles ($153). The real average wage, however, said Yurkov, is over 1 million rubles, since an estimated 23 percent of wages eludes tax collection.

The State Statistics Committee promises to regularly report on hidden income. This is very useful information, and I recommend consulting it the next time you read or hear about the difficult position of the population and the economy.

Of course, not all Russian citizens have income that is kept hidden from the tax collectors. And even an added 23 percent to the average monthly wage is hardly enough to make those who do hide their income much happier. In any case, Soviet people who have now become citizens of Russia have very quickly gone from the double standard morality of communist society to a double standard accounting system of the post-communist one.

The Izvestia correspondent who covers northwest Russia recently reported that the inhabitants of the poor, rural Arkhangelsk region bought 251 automobiles this year. This is 20 times more than in 1991. Moreover, this is not a big city, where there is something to steal and widespread corruption and rackets. The consumers of these automobiles in this case live in the deep countryside, where the economy, according to official statistics, is in decline and the wages and pensions are being held back.

1996 was the year when the government became convinced of its inability to collect the minimally necessary level of taxes, and thus pay pensions and wages on time. Even during November, when tax collection figures were at their highest, 50 percent came not in the form of money but mutual credits. Railroads, for example, withheld paying exactly the same amount of taxes as they were owed by the army for transporting troops.

This arrangement between the railroads and the army might be convenient, but military wages must be paid in cash. The debt from the budget incurred from withholding pensions and wages is now around 18 trillion rubles.

It is precisely the pension crisis that arose this year that most threatens the authorities with unpleasant consequences for the next. Of the 12 trillion rubles a month needed to pay out pensions, the Pension Fund has collected no more than 10 trillion. And if the present parliament tries to raise pensions even a little, then in the words of a government minister, Russia can close down as a world power -- It will bankrupt itself.

The apparent fact that people are living better than statistics reveal does not help the position of the government, which owes more than it can pay as it enters the New Year.

Mikhail Berger is economics editor for Izvestia.