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. Last Updated: 07/27/2016

Pensioner Balances Budget on 6 Rubles a Day




SOLNECHNOGORSK, Moscow Region -- Antonina Khrymova, 72, has the challenging task of living on a pension of only 430 rubles ($17.20) a month.


That may sound bad, but it gets worse. After taking out 100 rubles a month for utilities and rent on her flat and another 150 rubles for health costs, she is left with only 180 rubles - just 6 rubles a day - to buy food.


"On a regular day I eat cabbage soup and porridge. And I haven't bought a single gram of butter since the crisis," says Khrymova, who lives only about 50 kilometers from downtown Moscow. As a treat, she buys three or four chicken legs a month and boils them up to make them last.


Khrymova is typical of Russia's pensioners who have been among the hardest hit by the fall in the ruble and the high inflation since Aug. 17 last year.


While prices have risen by about 100 percent since last July, the average pension in Russia has remained unchanged at 403 rubles. Khrymova's pension is now worth about half its value 10 months ago.


This week brings the pensioners some rare good news. Starting May 1, the government has announced it will increase pensions by 12 percent, the first rise since February last year.


For Khrymova, this will mean a modest increase of about 40 rubles a month. She says she will use the extra cash to buy more medicine.


But Russia's 38 million pensioners, who play a crucial role in Russian politics, will still be struggling with a massive cut in their real income and this poses a major dilemma for the government of Prime Minister Yevgeny Primakov.


Peter Westin of the Russian European Center for Economic Performance says that cuts in the real value of payments to people like pensioners have allowed Primakov to keep a tight budget and claim a measure of financial stability.


The government has been able to hold social spending fixed while higher inflation has pushed up its tax revenues, in nominal terms at least.


But pensioners' patience cannot last forever and the government may be forced to buckle. Alexei Ulyukayev, deputy director of the liberal Institute for Economies in Transition, says Primakov and his communist allies are currently squeezing pensioners because they feel confident of their support.


"The government is converting a political resource into a mechanism for limiting the money supply. The question is how big the resource is," Ulyukayev said.


The State Statistics Committee estimates how much a pensioner in Russia needs to maintain a very basic subsistence level with no luxuries. For example, the estimate assumes that a pensioner will need to buy a winter coat only once every seven years and a pair of shoes only once every five years.


But even by this meager standard, pensioners have been short-changed over the past year. Back in July last year, the average pension was 30 percent above the subsistence level of 309 rubles. Today, it is only 70 percent of the official subsistence level of 589 rubles a month.


The 12-percent increase in pensions across Russia due May 1 will not come anywhere near to closing this gap. But the government justifies its slowness in raising pensions on the grounds that benefits are now by law linked to the average wage.


With the financial crash, the average wage fell and it only recorded its first rise in the March quarter, climbing to a quarterly average of851 rubles, its first rise since the March quarter last year when it was 760 rubles.


Tatyana Popkova of the pension system development department of the Ministry of Labor and Social Development said the government had actually considered cutting pensions last fall to match the decrease in the average wage but decided that this would be too unpopular.


The Primakov government came to power promising to end arrears on pensions which built up under the previous government but, despite the cut in the real value of the pension, the government has only partially fulfilled this pledge.


Arrears on pensions have fallen but they were still 18 billion rubles at the start of April, down from 30 billion rubles at the start of the year.


Sergei Kiselyov, a Deputy Labor and Social Development Minister, said pensions are still two or three months in arrears in many regions, for example, Rostov, Volgograd and Smolensk.


In most regions, the government is trying to keep up-to-date with current monthly payments but it is not paying off arrears on old debts. "In many regions, current pensions are being paid. The debt concerns the pensions which were due a few months ago," Kiselyov.


The situation is a little better in the city of Moscow where Mayor Yury Luzhkov supplements pays pensions on time and tops them up to a minimum of 450 rubles per month. From May 1, this minimum will be raised to 500 rubles.


Kiselyov said the government is planning to increase pensions again in September, perhaps by 15 percent.


He admits that pensioners will have trouble surviving till then but says children should help out. "Yes, we know that pensions are small. But many pensioners have grown-up children and it is normal for children to help their parents and vice versa," Kiselyov said.


However, for Khrymova, the deputy minister's advice was cold comfort. "I have two grown-up children and although they both have higher education, they have very basic low-paid jobs," she says. "My son is a night guard and my daughter is a cleaner. They simply have no money to spare."