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. Last Updated: 07/27/2016

Poverty Still Widespread Despite Modest Growth

The economy may have posted modest growth last year but there were few signs of any trickle-down effect. Russia's citizens became poorer on average over the course of 1999, even as wage arrears and numbers below the poverty line edged downward, according to the Russian Statistics Agency.

"The average level of Russians' real cash incomes - incomes adjusted to account for inflation - decreased 15 percent," said Yelena Frolova, head of the agency's department for tracking incomes.

However, Frolova refused to release any concrete figures until a report set for release Jan. 24 on the socioeconomic situation in Russia is officially made public.

"This figure - 15 percent - of course says that Russians became poorer, but to what extent I can't say because we are not able to register all sources of income."

Nevertheless, some officials found cause for optimism, claiming that the decline in living standards had stabilized and was likely to be slowly reversed.

"By the end of 1999 we see that incomes started to stabilize," said Marat Baigireyev, head of the Labor Ministry's personal incomes department.

"Compared with the difference in incomes in 1997 and 1998, in 1999 the problem with the decrease of incomes is not so sharp. People have adapted to the new economic conditions.

"The Russian Statistics Agency reported that in the last quarter of 1999, the number of people living below the poverty line decreased from about 50 million people in the third quarter to about 41 million people. In the year 2000 we expect that incomes will increase because the economy is on the rise and social allowances and pensions will also be raised."

Meanwhile, the Russian Statistics Agency also released figures showing that average nominal monthly wages for economically active individuals - without adjustment for inflation and calculated in rubles - were up about 68 percent in November 1999 compared to November 1998. In dollar terms, wages were down 4.1 percent.

The statistics agency also reported that per capita incomes were up 65 percent on a monthly basis in November, 4.7 percent down on per capita income a year earlier in dollar terms.

Despite all the figures, Russian statisticians admit that they are only able to provide a rough guide to the state of the nation's economy. Much of the lack of clarity stems from difficulties in estimating - or guesstimating - hidden incomes derived from Russia's booming gray and black markets.

"The quality and validity of the information base that we have is very low and we don't deny it," Frolova said. "We assume that hidden wages account for about 20 percent of Russians' total incomes."

In order to try to fully estimate real cash incomes, her department bases its calculations on information collected on consumer spending, a figure which "can be easier measured and controlled," she added.

Frolova's department therefore monitors all markets for goods, from major supermarkets to rynoks, or farmers' markets, and even sites where babushkas sell bread and cigarettes on street corners and outside metro entrances.

However, the government decision to assume that consumption equals income further calls the state statistics into doubt, economists said.

Such an approach is not totally correct because it does not take into account Russians' savings, said Georgy Pavlov, an economist with the Russian European Center for Economic policy.

Meanwhile, Russia has also reportedly decreased its appalling wage arrears problems.

"Wage arrears, especially those that depend on budgetary funding, are becoming smaller," said Natalya Antonova, deputy head of the Labor Ministry's department for personal incomes and living standards.

Total wage arrears stood at 50.9 billion rubles (then worth $1.95 billion) - including 12.4 billion in state arrears - as of December 1999, down from 84.9 billion rubles (then worth more than $4 billion) in December 1998, of which 22 billion rubles were government arrears.

The Labor Ministry's optimism is apparently shared by a growing share of the population, according to recent opinion polls.

A survey conducted in late December by the Agency for Regional Political Investigations showed that 42 percent of those questioned believed 2000 will be a better year for them in economic terms. Just 10 percent of respondents said they expected their situation to worsen, while 28 percent expected no change and the remaining 20 percent found it hard to answer.

ARPI polled 3,000 people in more than 220 towns and villages across all the regions of the Russian Federation. The survey was published on the organization's web site -

Most of those told ARPI that 2000 will be a better year for residents of Moscow, St. Petersburg, northwest Russia and the Volga region.


On the breadline

Average nominal monthly wages for economically active individuals

(broken down by sector)

Oct. 1997 Oct. 1998 Oct. 1999

rubles $ rubles $ rubles $

Industry 1,195 203 1,348 85 2,128 83

Agriculture 444 76 477 30 699 27

Transport 1,479 252 1,625 102 2,530 99

Finance 1,590 271 1,956 123 3,213 125

Health 644 110 696 44 1,028 40

Education 619 105 663 42 967 38

Culture 586 100 646 41 957 37

Science 935 159 1,050 66 1,848 72

Government 1,447 246 1,447 91 2,029 79

Average 1,006 171 1,123 71 1,717 67

Monthly personal income per capita

November 1997 November 1998 November 1999

rubles $ rubles $ rubles $

939 159 1,127 69 1,719 65

Wage arrears as of Dec. 1 (billions of rubles)

1998 1999

Total 84.9 50.9

Budget Underfunding 22.1 12.4

of which, by sector:

Industry 1.7 19.8*

Agriculture 0.2 8.6**

Health 3.6 1.8

Education 6.3 2.6

Science 1.1 1.0

Police 0.8 0.5

* - 18.6 billion rubles was underpaid because of the absence of state enterprises' own, nonbudgetary funds.

** - 8.4 billion rubles was underpaid because of the absence of state farms' own nonbudgetary funds.

Sources: Russian Statistics Agency, MT