“The immediate cause,” the Russian scholar says, “is the reduction of the incomes and purchasing power of poor citizens.” However, there is another reason: blaming sanctions and import substitution, domestic producers are raising prices, often in unconscionable ways that put many goods beyond the reach of the poor.
In comparison with last year, he continues, “the purchasing power has fallen significantly,” with some goods now costing five to ten percent more than they did and others “up to 40 percent.”
Among the hardest hit are pensioners, who see their future as being even more bleak given that the government plans to adjust their pensions not at rates equal to inflation but at a fixed level – and to do so even though “for the first time since the end of the 1990s already is occurring a reduction in the real size of pensions paid out.”
If Moscow goes ahead with this step, it will create a new situation “socially and politically,” Smirnov says.
To avoid disasters, he suggests that the Russian government must carefully target assistance to its poorest pensioners and poorest people generally. One thing being discussed, he says, is not paying pensions at all to those who continue to work and make more than a certain figure.
These problems increasingly affect not only those at the very bottom of the income pyramid but those in the middle class who have also seen their purchasing power drop and have been forced to cut back on their spending. Russians are returning to “the Soviet model of consumption” when they put off purchases of durables as long as possible.
That suggests, the Moscow researcher continues, that the lower middle class in Russia increasingly resembles the poorest groups.
Despite this, Smirnov says, Russia still has a long way to go before protests spread and a social revolution becomes possible. It is “a great misconception” to think that poverty or falling incomes alone will spark such things. Other factors have to be present, as Russian history has repeatedly shown.
Another reason the situation may not be as dire as the statistics suggest, he argues, is that many people even among the poor have shadow incomes which they don’t report but which allow them to continue to purchase what they need. But at a time when some Russians are forced to steal toilet paper, that may not be as much a reserve as Smirnov suggests.
Moreover, when those who can’t afford basic supplies see that members of the Russian elite are giving each other watches costing thousands of dollars and that Vladimir Putin has ordered the destruction of goods from abroad already on Russian shelves, at least some may reflect that something is not right in the kingdom of Muscovy.