Pandemic has Pushed 6.1 Percent of Middle-Class Russians into Poverty, HSE Experts Say

Paul Goble

            Staunton, September 26 – The coronavirus pandemic has cut the incomes of 24 percent of the members of the Russian middle class and driven 6.1 percent of them into the ranks of the country’s poor, according to an analysis of Rosstat data by scholars at Moscow’s Higher School of Economics.

            Before the pandemic, Rosstat said 24 percent of the population was middle class. The loss of 6.1 percent of them to the poor means that the overall loss in the percentage of middle class people is only 1.5 percent, to 22.5 percent, a small but significant number in such a short time (rbc.ru/economics/26/09/2020/5f6dde659a79477e5967a9e9).

            The HSE analysis suggests that middle class Russians suffered smaller losses in income than other groups but that its fall was “significant and the restoration of its incomes will require additional measures to stimulate economic growth, Liliya Ocharova, the director of the HSE’s Institute of Social Policy, says.

            This is especially important, she and other authors of the report say, because income is only one of the ways class status is measured. If people who consider themselves middle class because of their educational attainments or occupation find themselves with lower incomes, that can lead to more anger than if all decline together.

            Some experts, like Aleksandr Burdyak of the Russian Academy of Economics and State Service, argue that because these other marks of status continue unabated, the impact of the decline in incomes can be remedied quickly if the government adopts policies to push incomes back up.

            Overall, the HSE study reports, the pandemic reduced the per capita incomes of Russians 9.7 to 11.5 percent. The government’s anti-crisis measures cut these declines by about two percentage points but this is far from being enough to set the country back on the trajectory of growth.

The HSE experts say that the high level of income inequality in Russia means that “the majority of families feel a growth in real incomes only when they increase 2.5 to 3 percent or more over three to five years.” That happened with high oil prices in the first decade of this century, but it has not been the case since. And prospects for a quick change aren’t obvious.

Three things are leading to an increase in poverty, they say. First, unemployment has risen dramatically, increasingly 47.6 percent between 2019 and 2020. Second, the pandemic crisis has hit informal employment even harder than regular employment. And third, families with children are suffering because they have more mouths to feed.

To counter this situation and to help those middle-class Russians who have fallen into poverty, the HSE experts call for federalizing the employment service to help these people find jobs, to increase subsidies for families with large numbers of children, and to establish more scholarships to higher educational institutions for them.

Unless these steps are taken, the experts warn, poverty is going to increase and anger about it as well.