Ever since President Putin declared war on poverty in his message to the Federal Assembly two years ago, the fight has remained uppermost in the public mind. Are we gaining ground against this scourge?
Petrodollar Windfall No Help
The Statistics Agency of the Russian Federation (or Rosstat) affirms that there was some progress in 2005 as compared to 2004 in terms of people's living conditions. With the real incomes of the population up 8.8%, fewer people are living below the poverty line. The number of people who earn over 7,000 rubles per month has definitely increased (see Table 1).
While statistics indeed point to fewer poor people, we see an alarming trend even in optimistic figures. Natalia Orlova, the Alfa Group's chief economist said,: "The situation regarding the number of poor people has improved, but not much.
Those who already had decent wages are now getting more. As for the poor, they can now buy two instead of one loaf of bread. Their condition, however, has not improved dramatically - they have not climbed from their social group to a higher one. According to figures from the State Agency for the Preservation of Bank Deposits, 41 percent of the population does not use banking services, and only 32 percent have a deposit account with a bank. In the West, people who do not have a bank account fall into the poor category.
It would seem that over these past years, Russia has had every reason to stop calling itself a poor country: the state budget is overflowing with windfall petrodollars, and the country's gold and foreign-exchange reserves and stabilization fund are swelling at fantastic rates. These achievements, however, have had little or no impact on the living standards of the majority of the population. The per capita share of Russia's national wealth is 17 times smaller than the figure for Switzerland, the world's richest nation, and 13 times smaller than that of the United States. By per capita GDP share, Russia stands at the bottom of the list of the Group of Eight industrialized nations, the rotating chairmanship of which is currently held by Russia (see Table 2).
Apart from that, the unbridgeable income gap divides Russians into two unequal groups. Here the Gini coefficient (the indicator of the income gap between 10 percent of the richest section of the population and the poorest social group) is greater than in the developed countries by a level of magnitude: there this coefficient is five to eight; here it is 20 to 25. The wealthiest 10 percent of Russians receive 29.7 percent of the country's total amount of income, while the poorest segment gets two percent of that total. Today, nonmaterial assets in Russia (which include technology, human factor and the quality of social institutions) amount to $5,900 per person, or to 15 percent of the GDP; in the developed nations these assets amount to 63 percent to 87 percent of GDP.
Political Will Is Needed
It is most unfortunate that in spite of all its economic achievements in the recent years, Russia remains a raw-materials producing appendage of the developed nations, and now of China and India too. This is due largely to our Soviet heritage: the economy we inherited from the USSR was deformed by the hopeless pursuit of world domination. To make matters worse, over the last 15 years post-Soviet Russia has lacked a sound and clear-cut economic policy and competent economic authorities. According to Natalia Orlova (The Alfa Group): "Unfortunately, the country's leadership does not have a long-term strategy to eliminate poverty. It only gives handouts to the poor, failing to see that if poverty is to be wiped out, it must increase the number of well-paid jobs instead of whipping up inflation by paying out cash benefits."
Poverty in Russia differs from poverty in the developed and even in the developing countries. Who is considered poor there? The unemployed. Who are poor here? Both the jobless and those who have jobs, for the average monthly wage in Russia is $200 to $250. The rich in Russia are not those who work hard manufacturing marketable products, but those to whom the state has given away the nation's oil and gas production assets, and bureaucrats with lucrative jobs. In other words, we must admit that the source of wealth of Russia's business tycoons remains extremely dubious, if not criminal.
As for the country's poor who form a sizable section of the population, they are not only a cause of growing social tensions; they also pose a danger of economic crisis. While poor people can afford only a minimum of consumer goods, domestic manufacturers can't consider them as would-be customers; consequently, our manufacturing industries are cash-starved as they are shunned by investors. Moreover, widespread poverty keeps the country technologically backward since quality education and good medical service are beyond the reach of the poor. Poverty is also the cause of the country's dwindling population. When the population of a country keeps shrinking, it is in danger of losing its statehood. It's high time the ruling establishment realizes that it must ensure better living conditions for the citizenry for the sake of the sheer physical survival of the nation.
All that is needed to raise the citizenry's living standards is political will. We already have the key material means necessary for the elimination of mass-scale poverty, namely, our ever-increasing Stabilization Fund. The Fund could finance promising projects that would create numerous well-paid jobs and rid the country of dependence on world market prices for hydrocarbons. MN
Table 1. Monthly Incomes of the Population in 2005
Incomes % of the population rbs. per pers. Less than 1000 0,9 1000 - 1500 2,4 1500 - 2000 4 2000 - 3000 10,8 3000 - 4000 11,8 4000 - 5000 11 5000 - 7000 17,8 7000 and higher 41,3
Table 2. Average Annual Income per Person Country $/pers. USA 34142 Canada 27840 Japan 26755 Germany 25103 France 24223 Italy 23626 Britain 23509 Russia 8377
Nu, zayats, pogodi!
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