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Russian gap is growing: the Oligarchs get richer, the poor get poorer

Российская пропасть растет: Олигархи богатеют, бедные нищают

Social inequality in Russia will grow up to 2018, after reached a minimum in 2017. this is stated in the report “Review of the state and business”, which was prepared by Higher school of Economics.

The Gini coefficient (the indicator of stratification, takes values from zero in the case of absolute equality to unity in the case of absolute inequality), which continuously decreased from 2011 to 2017, amounted to 0,41. Below he dropped only in 2005 (0,409), and reached a maximum in 2006 (0,422). However, for the first nine months of 2018, the level of inequality increased again (in comparison with January-September 2017 — to 0,400 0,402). This resulted in faster growth of income of 20% of the richest population in comparison with the income of the poorest 40 per cent of citizens (4.84% and 3.08 per cent respectively).

Here’s how, according to the Center for development HSE, changed the structure of population income in January-September 2018. The highest growth of wages, including wages gray (6,33%). Lower was the growth rate other income (4.4 per cent), social benefits (2.52 per cent) and income from entrepreneurial activities (1,55%). Property income decreased by 7.41%. Drivers of growth of incomes of the richest groups of the population were wage or “other income”, according to analysts.

At the same time for the first three quarters of this year, low inflation (2.5% is the minimum value for the post) was accompanied by lower inflation for the poor (1.2 percent). In 2017, this situation was one of the factors reducing inequality.

As the author of the report, the expert of the Center of development of Svetlana Misikhina, lower inflation for the poor in the Russian economy occasionally been observed before (e.g. in 2011), but regularly observed only in 2016. In 2017, the consumer price index was 3% and the minimum subsistence level — 1%. By 2018 the consumer price index could be around 4%, which may lead to increase in social differentiation.

According to the forecast of the Center in 2019, consumer price inflation may accelerate to 5.1%. Note, the Central Bank expects by the end of 2019 inflation of 5.5%. However, according to the forecast of Ministry of economic development, the growth of real wages in 2019 would slow down to 1.4% after the expected 6.9 per cent in 2018.

The acceleration of consumer inflation and slowing wage growth will provoke the increase of inequality, analysts say.

Recall: the proportion of poor in the population of the Russian Federation in 2017 amounted to 13.2%, and now the government calls it a priority to its reduction by half over the next six years. According to audit chamber, it is almost impossible, as the main factor to reduce the rate of growth of wages in the years 2019-2024 will not exceed 1-2,5% per year.

In reality, as is the case with inequality and also with the prospects of property stratification of society?

— In the global “table of ranks”, in terms of stratification of the population by income, Russia is very important, — says doctor of economic Sciences, independent expert on social policy Andrey Gudkov. In fact, according to this indicator we are on the level of African countries. The fact that the Gini coefficient always becomes high if the country lacks a progressive income tax. In this case, the state lacks funds for social protection and social transfers are always low. Let me remind you to the classic symptom of the welfare state: the budget of the social insurance system, plus the budget of social support should be more than the state budget.

“SP”: — In Russia it not so?

— Far from it. We have a difference between the expenditures of the state budget on the one hand, and the budgets of social insurance and of social support on the other — are enormous. First of all, because in Russia very low insurance rates.

For example, I repeatedly said that the Russian problems with pensions — especially man-made, and they are associated with the social reforms of the last decade. When the rate of insurance premiums from 29% was lowered to 20%. Then it was raised to 22% – while adequate equilibrium rate is 26%. Due to the fact that tariffs are not enough of these 4%, and the result is a deficit in the Pension Fund.

The situation with the stratification exacerbates a flat income tax that does not allow to feed the bodies of the state social support in the regions. Regions, notice I don’t have the funds that they receive for these purposes from the Federal budget and of its own. Still in Russia, most of the regional budgets deficit.

“SP”: — How are the prospects of rising inequality?

— Know the position of the Ministry of Finance and government: the current system of taxation will not be changed. We have 2019 begins only tax maneuver, which is the gradual abolition of export duties on oil and oil products (from the current 30% is five percentage points per year for six years) with the simultaneous increase in mineral extraction tax. But the maneuver is fundamentally a picture of taxes does not change.

It means Russia has all the prerequisites to enhance stratification at the level of real income.

“SP”: — the Higher school of Economics believes that the increase in pensions will slow down the process. Is that so?

Yes, President Vladimir Putin, in his televised address of August promised that by 2024 pensions will grow to 20 thousand rubles. According to him, in the next six years the pension will increase on the average on 1 thousand.

But here we need to understand that pensions will be increased only for non-working pensioners and working pensioners will not get indexed. Plus, the group of working pensioners will be reduced, because it will increase the retirement age.

So agree with the HSE in this moment — the inhibition of the process of separation by increasing pensions — I can’t.

In General I must say, when these calculations included the gray income, such as foreign ownership — they are always estimated. This means that the findings of the HSE on the reduction of property stratification in recent years — solely model performance. They can be as close to reality and very far from it.

In my opinion, hopes to reduce social stratification in Russia are not too reasonable. At least as long as the current order: a citizen with an income up to 85 thousand rubles per month carries a tax burden of 40%, while income exceeding 1 million rubles is just 26-27%. It turns out, the richer people in Russia, the less it has a social responsibility. This mechanism only encourages social stratification.

— It is noteworthy that one of our main liberal research centres — HSE — interested in social inequality, — said Dean of the faculty of sociology and political science of the financial University under the government of the Russian Federation Alexander Shatilov. The sooner the liberals these questions let down. And only now, when the problem became acute for the political regime of Russia, she suddenly began to be discussed along the line of the liberal community. I think our liberals have decided to play against the statists and the social field.

Now the balance of the income and social opportunities in the modern Russian society. The income gap of the population in Russia, no doubt, be felt greatly. Statistics confirm that the super-rich we get richer, despite the crisis and the poor get poorer.

But in fairness, I note that in many sociological researches on this subject present the formal objectivist approach. Like, here are the polls, here are the statistics — and the figures confirm that the gap between rich and poor has grown.

In fact, there is nothing more evil than statistics. Public opinion polls also often do not show the real balance of forces. For example, if talking about material well-being of Russians, now the situation of ordinary citizens, and even the poor is not comparable with what it was in the “dashing 1990s”. Today this situation is much more favourable — from the point of view of earnings, and the availability of jobs, because unemployment is a fraction. I’m not even talking about that part of the population of Russia today has its own “safety cushion” in the form of savings made in the “fat 2000s”.

In fact, the key problem is that our oligarchs are not in a hurry to share with the community, and the government lacks the political will to knock on the table with his fist. But while this issue is not critical for the authorities and does not bear the risk of political and social instability.

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