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Earnings differences in Russia


Income situation in Russia
Income inequality situation: occupational, regional and age factors



According to the resent investigations there is still a great difference in earnings among different groups of the Russian population. These differences are connected with such factors as age, regions, and occupations.
For estimating earnings difference the data are usually taken in the form of averages. Of course, it is obvious that average indicators do not give precise picture and the real situation can be different from that drawn by means of use of average numbers. Nevertheless, for acquiring at least a general idea it is enough to observe average indicators. Thus in this essay mostly averages were used in order to show the difference in earnings in Russia.
Current income situation in Russia
According to the data provided by Goscomstat RF, in the 1st half of 2008 per capita monthly money income was 13,620.0 roubles and rose in comparison with the 1st half, 2007 by 24.6% and money expenditures and savings came to 13,631.2 roubles and increased by 26.7% respectively.
Real disposable money income of population (income excluding compulsory payments corrected by the consumer price index) in the 1st half, 2008 increased by 8.0% in comparison with corresponding period of 2007.
Compared to the respective period of 2007 the share of income of population from the labour remuneration and social payments increased during the 1st half 2008, while the share of income from property and entrepreneurial activity decreased.
The average nominal accrued monthly wages for the 1st half, 2008 accounted for 16,187 roubles and rose compared to same period of 2007 by 28.6%, the actual wages and salaries increased by 12.9%.
The average monthly fixed pension amounted to 3,933.6 roubles (provisional data) and increased by 32.5% compared to the 1st half of 2007 and the actual value of monthly fixed pensions also increased by 16.4% in comparison with the respective period of 2007.
And finally, according to the preliminary data in the 1st half of 2008 10% of well-off population received 30.5% of the total money income and 10% of less secured population only 1.9% (in the 1st half of 2007 the figures were 30.2% and 2.0% correspondingly). [1]
Income inequality in Russia: occupational, regional and age factors
Again according to the data of Goscomstat RF, the population of the Russian Federation can be divided into groups according to the volume of average income (in percentage comparing with the total). Then the situation is the following:
Table 1. Inequality of the distribution of income in Russia
2004 2005 2006 2007
Whole population 100 100 100 100
including those with average monthly income, RUR
up to 2000,0 12,3 7,1 4,3 2,6
2000,1 – 4000,0 28,1 21,9 16,2 11,9
4000,1 – 6000,0 21,1 20,3 17,7 14,9
6000,1 – 8000,0 13,4 14,8 14,7 13,6
8000,1 – 10000,0 8,4 10,3 11,2 11,3
10000,1 - 15000,0 10,0 13,9 17,1 19,1
15000,1 - 25000,0 5,2 8,6 12,7 16,5
more than 25000,0 1,5 3,1 6,1 10,1
Source: Goscomstat
Thus, we can see that only about 20% of the population of the Russian Federation earns from 10 to 15 thousand roubles, which is close to the average level. Some 55% of the population earns less than average. The fact that about 10% of the Russian population earns more than 25 thousand roubles just proves the previously mentioned data about the inequality in the distribution of incomes. It is also worth mentioning that even in this group there is a great inequality and the difference in incomes can be tens or hundreds of times.
These average monthly wage statistics reveal a major inequality between Russia’s rich and poor. According to the results of the research given by Russian newspaper Novye Izvestia from October 20, 2008, in Russia the poverty line is defined as monthly income less than 5,758 roubles ($230) per month. According to experts, 18.9 million Russians, or 13.4% of the population have incomes below the poverty line.
In contrast, the number of Russian billionaires increased in the year 2006 from 60 to 110. Further, in 2007 approximately 136,000 Russian citizens were worth more than $1 million US. [2]
Considering average earnings in the Russian Federation by economic activity for the year 2007, a Russian newspaper The Moscow Times gives the following data (in roubles, with percentage increase over 2006):
• Agriculture, hunting and forestry - 6,144 (34.4%)
• Construction - 14,333 (31.8%)
• Education - 8,778 (25.7%)
• Electricity, gas and water supply - 15,587 (21.5%)
• Financial Intermediation - 34,880 (25.1%)
• Fishing - 14,797 (20.1%)
• Health and social work - 10,037 (24.5%)
• Hotels and restaurants - 9,339 (24.1%)
• Manufacturing - 12,879 (26.2%)
• Mining and quarrying - 28,108 (21.4%)
• Public administration and defense - 16,896 (25.3%)
• Real estate, renting and business activities - 16,642 (30.4%)
• Transport, storage and communications - 16,452 (22.8%)
• Wholesale and retail trade, repair of vehicles, personal and household goods - 11,476 (39.3%)
• Other community, social and personal service activities - 10,392 (29.9%)
• Extra-territorial organizations and bodies - 30,339 (12.4%)
A regional component of wage inequality also exists. For instance, the average income in Moscow is 30,818 roubles per month, while in Dagestan, the country’s poorest region, average income is only 6,923 roubles per month.[3] If we consider averages calculated by Goscomstat RF to July and September, 2008, we will get the following:
Table 2. Distribution of income by regions (roubles, July-Sept.2008)
July September
Russian Federation 15953,9 16235,8
Central District 22455,8 18242,3
North-West Dist. 15733,9 15476,1
South Dist. 11829,2 12153,4
Privolzhsky Dist. 13060,5 12929,0
Uralsky Dist. 19795,1 19491,2
Siberian Dist. 13308,1 13159,6
Far Eastern Dist. 16428,3 16587,2
Source: Goscomstat
According to the same source, in 2006 the number of population with the income lower than the living wage was 21.6 mln people, which is 15.3% of the total population. At the same time the deficit of income accounted to 275.5 mln roubles and was 1.6% of the overall volume of income of the population. According to the data published in the Moscow Times with the reference to the Russian Academy of Labor and Social Relations, about 65 percent of the population of the Russian Federation lives on less than 8,000 roubles per month, and 50 percent earn less than 6,000 roubles in the year 2008.
Concerning the age difference in earnings, sociologists came to conclusion that the maximum level of income of employees falls on the age from 24 to 34 years old. Then incomes steadily decline.
It is not worth expecting high incomes after the age of 35. The experts of Russian Center of Studying of Public Opinion (VCIOM) have found that working people who have overstepped the boundary of the age of 35 are paid less than during the period of the age from 24 to 34. The research of sociologists in fact refutes widespread opinion that 35 years old is the age of flourishing of a career. Having reached the age of 40, the majority of working people earn less than during the most active period. And with increasing age the incomes in Russia only become less and less.
Sociologists found out that by March, 2007 the following interdependence between the age and the salary took place in Russia (average income):
• 18–24 years old  8.2 thousand roubles,
• 25–34  11 thousand roubles,
• 35–44  10.9 thousand roubles and
• 45–60  9.8 thousand roubles.
The comparison with the foreign (developed) countries demonstrates the contrary: specialists from 45 to 60 years old are paid more than their young colleagues. Traditionally in developed countries the most highly paid are representatives of an older generation, those of 50 to 60 years old. But in Russia people of this age are most often left off the professional life, being deprived of any income except pension.[4] The occupations they may count for are included into the category of low paid. They are librarians, cloakroom attendants, elevator operators, concierges, cleaners and yardmen. Besides, now elderly people are competing with guest workers what makes their position even worse.
As different researches show, the income inequality in Russia really takes place. It is connected with different factors, the main of which are occupations, regions with diverse life levels and with the corresponding incomes, and age. It was found out that the most highly paid occupations are in such spheres as financial intermediation and mining and quarrying and the least paid are those in agriculture, hunting and forestry, education, hotels and restaurants (waiters, cleaners) and social and personal service activities. It is also was discovered that about 10% of the Russian population earn almost 30% of the overall income while about 20% of the Russian citizen earn between 10 and 15 thousands roubles. Moreover, the widespread opinion that 35 years old people are the best-off is just a stereotype. The actual age of flourishing career and of real opportunity to earn big money is between 24 and 34. And with the age close to 40 and farther people lose their incomes and may even be left off their professional lives.

[1] – according to data provided by Goscomstat RF
[2] – according to The Moscow Times. January 2007
[3] – according to Goscomstat RF
[4] – according to data portal http://www.osvic.ru
1. www.gks.ru
2. Novye Izvestia. October 20, 2008
3. The Moscow Times. January 2007
4. http://www.osvic.ru/job-career/salary-35/article8097.html
5. http://www.newsru.com/finance/23jul2007/dohod.html

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