Ministry of Economic Development reveals truth about decline in incomes of Russians

The negative factors causing the decline in the population's real incomes last year by 0.2% mainly affected wealthy people, according to the Russian Economic Development Ministry's report.

These are such factors as falling bank deposits income, rising property taxes, increasing mortgage payments.

"At the same time, an increase in the minimum wage, an increase in payments to families with children and an increase in wages in the public sector have seriously supported the incomes of poorer segments of the population," TASS cited the report as saying.

The Ministry of Economic Development also paid attention to the high growth rate of wages in 2018 - 6.8% in real terms. In addition, the ministry stressed that last year the unemployment rate declined to a historic low of 4.8%.

According to Rosstat, in January-September 2018, the lowest income growth was recorded in the population groups with the highest per capita income. At the same time, the increase in revenues for the first two groups was equal to 7.0% compared to the previous year and 5.2% compared to the previous year (an increase of 3.9% and 2.2% in real terms, respectively). As a result, the cumulative negative dynamics was due to groups of people with incomes above the average level.

Real incomes of the Russian population have been declining for the fifth year in a row.

The vice-rector of the Academy of Labour and Social Relations Alexander Safonov, speaking to Vestnik Kavkaza, noted that the ministry's statistics do not quite accurately correspond to reality. “The income structure of most households consists of several sources, besides wages, these are income from social transfers and income from property. Accordingly, the fact that wage incomes grew did not mean that the wage itself grew. First, salary growth in the public sector affected only doctors and teachers, and second, the salary indexation of other public sector workers was delayed. In addition, after the the minimum wage increase, wages are distributed within the system," he pointed out.

"One should not forget about the fact that part of the salary is paid informally - either social payments or property income. Now property incomes are falling, salaries are rising, part of salary is legalized, but the total amount of income remains the same. The minimum wage has increased in companies, which are forced to pull up the minimum wage, but the indexation of the salaries of other categories has been stopped. One part’s gains are immediately leveled out by the other's loss. Most importantly, the source of wage growth are always high rates of economic growth. But now it’s not even important if we have a growth of 2.3% or 1.8% - it’s important that this economic growth is not felt by citizens,” Alexander Safonov stressed.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, in turn, noted that the gap between rich and poor in Russia has not changed. "The ratio of the gap between the incomes of 10% of the richest citizens and 10% of the poorest citizens is still 17. The number of people living below the poverty line has decreased, but at the same time the number of citizens with average incomes has become poor. Expenditures are growing steadily, which hits primarily citizens with low and middle incomes. The incomes of rich people cannot be counted directly through wages or profits, since the basket of their consumption is formed at the expense of corporate costs among other things, which are not taken into account in income statistics," he said.

“The Rosstat report doesn't include the so-called paid services for super-rich people at the expense of their corporations and firms, such as plane flights. They also don’t pay housing bills like ordinary citizens," Yuri Yudenkov added.