Staff author: Adilia S.
Personal income of Russians shrank by 52.2% in January 2016 as compared to December 2015. According to the report by the state statistics body Rosstat, the monthly income in January averaged only 21365 rubles (about USD $291) though only a month ago it was 45212 rubles ($614).
End of the year bonuses and the long January holidays that limited paydays for contract workers are among the reasons for the sharp drop in the monthly income figures. December numbers are usually 30-35% higher than the average monthly income. January figures traditionally show 30-35% drop as compared with the yearly averages. However, 2016 December-January drop in monthly incomes was sharper than during previous years.
Real vs. Nominal Monthly Income in Russia
Real incomes in Russia decreased by 6.1% over the course of 2015 while the average nominal monthly wage increased by 3.1% to the level of 32122 rubles ($437).
Nominal income is the dollar/ruble amount of income. Simply put, it is the amount of money paid out in cash. Real income is the income of a person after taking into consideration the effects of inflation. It shows how much a person can buy on that amount of money. Theoretically, the amount of nominal income should be regularly adjusted according to the inflation level in the country, so that the person’s purchasing power stays on the same level.
Practically, the situation in Russia leaves much to be desired. In 2015 inflation in Russia reached the level of 12-15%. But nominal wages increased only by 3.1%. No wonder that real incomes decreased and keep going down.
Moreover, the research holding Romir adhere to the opinion that the official inflation values are way lower than the actual numbers. Experts believe that the actual inflation values could be up to 3 times higher than those showed by the state statistics.
Average monthly wages in Russia by industry (2015):
- Finance — 69480 rubles ($941)
- Mining — 63716 rubles ($863)
- Fishing, fish-farming — 46339 rubles ($627)
- State Administration and Defence; Social Security — 41786 rubles ($566)
- Real Estate — 39698 rubles ($537)
- Transport and Communications — 38758 rubles ($525)
- Manufacturing — 31839 rubles ($431)
- Household, Social and Personal Services — 30067 rubles ($407)
- Construction — 29887 rubles ($404)
- Healthcare and Social Services — 28035 rubles ($379)
- Education — 26888 rubles ($364)
- Hotels and Restaurants — 20486 rubles ($277)
- Agriculture, farming, hunting, forestry — 19455 rubles ($263)
Fear of Poverty
The amount of unpaid wages to Russians reached USD $58,8 million as of 1 February 2016. It is 21,3% more than the previous month.
Delayed wages are not an unusual thing in Russia, where people receive remuneration monthly, not weekly. Companies explain to the employees that they have no money at the moment and ask them to wait a little longer. Some companies may owe 2-4 month wages to employees. It starts with delaying wages for a week, within a few months it could be a delay for 2-3 months. Instead of getting paid once a month people are getting paid every 5-6 weeks and are being paid their salary from 2-3 months ago. The companies do not pay interest on unpaid wages.
It’s not only government employees that suffer from delayed remuneration. 70-80% of players in Russian soccer clubs do not get paid on time, Lenta.ru reported. It’s a country-wide epidemics. For the owners of the companies, delaying wages became another tool to maximize profits. Because the problem is so widespread, people don’t complain, as in another company the situation is just the same.
The unemployment rate in Russia is 5,8% for the total economically active population (7,58 million people). While the number is not excessively high, there is a sizable proportion of the population that do not register as unemployed due to miniscule benefits.
Russians are becoming increasingly concerned about the economic situation in the country. The research conducted by the Levada Center shows that the majority of people in Russia fear poverty (53%), economic crisis (49%), unemployment (35%). They consider the current economic crisis to be the most important threat to the future of the country.
The situation in 2016 strongly differs from the happy outlook of “the fat years” as they are called now, when oil prices were over USD $100/barrel. The years of expansion and development that everyone remembers are in a sharp contrast with today’s contracting economy of Russia.