Just like in any country, there are rich and poor people in Russia. Some Russians are extremely rich, but the majority of people are poor by the western standards and have little money, although most of them own their flats outright without a mortgage.
Rich Russians
Some really rich Russians became wealthy because of their own smarts and entrepreneurship, but the majority of the new wealthy just happened to be at the right place at the right time during Perestroika.
Perestroika began in 1985 and was started by Michail Gorbachev, who was elected as the General Secretary of the Communist Party after the death of the long-term serving Leonid Brezhnev and two subsequent successors who died within a couple of years each.
The word “Perestroika” means “reconstruction” or re-build, and rebuilding it was! By 1991 the largest country of the world, The Union of Soviet Socialist Republics, collapsed and broken into 15 national republics, now independent countries.
This was the time when the fortunes of the modern rich Russians were built. He who had access to someone who was responsible for loaning government’s money would be laughing all the way to the bank for the rest of his life, because the inflation in these times was 10% per day. Any loans taken from a bank were turning into next to zero within months.
Getting control of government-owned factories and permits to mine Russia’s vast recourses was just about more lucrative than printing money.
Today’s Russian oligarchs build palaces the size of which would make Versailles look like a doll house and compete in the size of yachts (quite literally) with Emirates sheiks.
Poor Russians
When someone becomes very rich, at the same time a lot of some ones become very poor. This is what happened in Russia.
The country’s vast mineral resources, which used to be owned by everyone in the times of the USSR (at least this is what everyone had been told), were sold abroad and profits taken to off-shore companies in Panama and Co, rather than reinvested back into the economy of Russia.
It is a good economic model for western countries that got all this investment into their economies, because oligarchs don’t trust their homeland enough to keep their money there. But it wasn’t very good for the poor Russians who kept getting poorer.
Money-wise, the average wage in Russia is officially 44 thousand rubles, which is about USD 700. However, locals complain that this amount is nowhere close to the actual salaries people are earning, and the real number is around $500 in big cities or even less in smaller towns. The median wage in 2019 is USD 540 per month. In Moscow, however, the average wage is over USD 1,000 per month, which is the highest in the country.
Sure, prices for food in Russia are also cheaper, although goods like branded electronics and mobile phones are even more expensive than in the West. Services are much cheaper, since the cost of labour is low.
The price per square meter of apartments is also about the same as in developed western countries, it’s just the flats in Russia are much smaller. Now there are even apartments the size of 11 square meters (18 square feet) are built. This makes cleaning for Russian women easier, but living in such apartments is rather tight. Do you think you would be able to do it?
The poorest Russians live in villages and small towns. Capitals (Moscow and St. Petersburg) get a lot of investment, big cities still get some funding, but small towns get nearly nothing. They still look the same like in 1985 when Perestroika began, just 35 years more worn out.
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In Moscow, apartment prices are high but in most of Russia and all CIS countries, it’s the low cost of apartments that makes the low salaries survivable. Clothing and electronics are more expensive, as it’s stated here but overall, it’s super cheap to live in Russia.