Real Incomes Collapsing in Federal Districts from Urals to the Pacific

Paul Goble

            Staunton, February 9 – During the first 11 months of 2016, the real incomes of Russians across the country fell by 5.5 percent, Rosstat reports; but in the federal districts from the Urals to the Pacific, they fell by far more, despite what officials say is massive Moscow investment, especially in the strategically important Russian Far East.

            In the Urals FD, incomes fell by the most – almost nine percent, officials say. In the Volga FD, they fell by more than seven percent; and in the Siberian and Far Eastern FDs, they declined by seven percent. And the decline in the last of these has sparked outrage in the Russian government given the investments it has been making there.

            Vice Prime Minister Olga Golodets told the Duma that the situation must be corrected now: “Money is going into the region, but the standard of living of citizens is falling” and “the incomes of the population in the Far East are falling faster than in the country as a whole” (ng.ru/economics/2017-02-09/1_6924_vostok.html).

            She acknowledged that investments had fallen in the Far Eastern FD by just over one percent last year but noted that this was far less than the declines that occurred in other FDs. In the Southern FD, for example, investments fell by 16 percent. Despite that, incomes in the Far Eastern FD lagged as did industrial production.

            In reporting Golodets’ complaints, Anastasiya Bashkatova of “Nezavisimaya gazeta” points out that “in her criticism is in fact contained self-criticism of the federal government” because its policies and especially its way of accounting are behind much of the disaster that the vice premier points to in the Far Eastern FD.

            For example, the journalist says, in the Far Eastern FD but not elsewhere, pension payments for January 2016 were paid in January 2015 and thus were not included in the 2016 statistics and many of the investment projects the official talks about remain at the level of planning and no money has gone to the region even if plans to shift it have been announced.

            But there are even bigger problems for Far East. Artur Niyazmetov, the deputy economic development minister, told Bashkatova that “until recently, in many cases, the far East was financed on the basis of the remainder principle: that is, the further to the east of the country a region was, the lower was its budgetary allotment per resident.” Only now is that being changed.