Russian President Vladimir Putin again demanded to raise the incomes of citizens who have become impoverished by almost 10% after the annexation of Crimea and have experienced a new wave of falling living standards due to the war in Ukraine.
In some regions and industries, “the problems with low wages persist,” Putin said on Tuesday, January 17, at a meeting on economic issues with the government.
We are talking about regions and cities where “problem sectors of the economy are concentrated,” Putin stressed. This is, in particular, the auto industry, which, after the departure of foreign concerns, experienced a full-fledged collapse last year with an 85% drop in output.
“The government, together with the subjects of the Federation, needs to work to correct this situation,” the president said, adding that the authorities have all the resources for this (quotes from the Kremlin press service).
For the past year, Putin has ordered at least the sixth increase in the incomes of Russian citizens, half of whom, according to Rosstat, live on less than 27,000 rubles a month.
October 27 at the Valdai Forum, he declaredthat the authorities “should solve the problem” with incomes that “have become a little lower”, and called on the Russians to “fight” for an increase in their salaries on their own.
June 7 at a meeting with the government Putin demanded “ensure the growth of citizens’ incomes” in order to “stimulate the final demand in the economy.”
May 12 he instructed “ensure a positive momentum” in consumer income, emphasizing that this will also support business, and on February 17, a week before the start of the war, spokethat income “should grow by 2.5% and this” task must be solved.
In 2021 Putin instructed increase the income of Russians to the State Duma (in October), Federation Council (in April), and only in December twice demanded this from the government.
According to Rosstat, in the third quarter of 2022, Russian citizens lived on average on 46,025 rubles per month. Nominally, incomes grew by 12%, but this was not enough to compensate for inflation, and in real terms, people became poorer by 3.4%.
In fact, the decline in income for most citizens was much higher, estimates Yevgeny Nadorshin, chief economist at PF-Capital: Rosstat statistics were “decorated” by payments to the mobilized and the military, which, according to Bloomberg, amounted to at least 1.1 trillion rubles.
“If we adjust for these payments, we would be surprised to find that our real disposable income is already falling by at least five percent, or even more, despite phenomenally low unemployment,” says Nadorshin.
The Ministry of Economic Development predicts a growth in real incomes of Russians by 1.3% in 2023, and then an acceleration to 3.5% in 2024. Real wages, according to the department, should increase by 2.6% this year and 3.1% next.
But the optimism of officials is hardly realized in practice: Russia is entering a series of long-term declines in real disposable income, Nadorshin believes: “Attempt at the expense of the defense sector and pumping up defense spending at the cost of reducing civilian spending to speed up something, to improve the economy is doomed to failure by definition” .