Zee Beam News

MOSCOW. (RIA Novosti political commentator Maxim Krans) - The 12th annual World Wealth Report, published the other day by Merrill Lynch and Capgemini, points to a sustained growth in the number and wealth of high-net-worth-individuals (HNWIs) in Russia. "Russia was also home to one of the world's 10 fastest-growing HNWI populations, despite growth decelerating from 15.5% in 2006 to 14.4% in 2007," the report says. The world's average growth was 6%. In 2007, the number of wealthy Russians grew by 17,000 to 136,000, or 10% of Russia's population, largely due to skyrocketing energy prices. Does this mean the living standards of the rest of the people have improved too? To believe the Federal State Statistics Service (Rosstat), the average Russian's monthly wage was $303 in 2005, $391 in 2006 and $529 in 2007. "Average" is the key word here. Declared incomes in Russia totaled 5.27 trillion rubles ($224.6 billion) in the first quarter of 2008, or nearly 1 trillion rubles more year-on-year. But nearly 30% of this amount was pocketed by the 10% of the super-rich. The Gini coefficient, which measures inequality of income (or wealth) distribution, shows that 10% of Russia's richest people earn 16.8 more than 10% of the country's poor. The figure for Moscow, where nearly 100,000 millionaires and 74 billionaires live, is over 50, and the gap keeps growing. The rich and the poor have always been divided, even in Soviet times. The country of equal opportunities has never had actual equality. The salaries of the Soviet elite were not much bigger, but they had access to special stores where they bought at half-price the foods the rest of the people could only dream about. The same is true about better flats, foreign trips, company cars and health care services provided by the Kremlyovka, a special Fourth Directorate in the Health Ministry. These benefits look ridiculously modest compared with the wealth accumulated in the 1990s by the former "red directors," Soviet Communist party and Komsomol functionaries, covert operators, smart stock clerks and the mafia, which became the new ruling class of the post-Soviet Russia. The current gap between the living standards and way of life of the class of owners and the majority of Russians, especially the poor sections, is gaping. According to Rosstat, 22 million Russians live below the poverty line, but experts say the figure is at least twice as large. To begin with, there are more than 38 million pensioners. The Institute of Social Studies at the Russian Academy of Sciences reports that the number of the poor in the 56-65 age group has grown by 150% in the last decade. Inflation and growing food prices eat up the bulk of modest state increases in the wages and allowances of senior citizens, the public sector staff, servicemen, new mothers and disabled persons. In February 2006, the then President Vladimir Putin said one of the state's priorities was to "close the gap between the highly paid groups of population and Russian citizens with modest means." Recent polls conducted by the Levada Center show that only 13% of the respondents think the gap has shrunk during Putin's presidency, while 80% say it has grown or not changed. Judging by the first decisions of President Dmitry Medvedev, he intends to solve the problem by developing small and medium-sized businesses. He said in Berlin in June, "The quality of life can be improved only by attracting people to business, by giving them an opportunity to start up a business of their own." If he makes this possible, and businessmen are liberated from excessive taxes and unbearable bureaucratic "patronage," Russia may still attain the goal set for 2020, when the middle class should make up 50%-70% of society. Another way out is to increase wages and salaries, because a substantial number of working Russians are living from hand to mouth. The wage to prime cost ratio is 20%-25% in Russia, according to Mikhail Shmakov, head of the Federation of Independent Trade Unions. Yevgeny Yasin, research director of the Russian Higher School of Economics, who was Russia's minister for economy from 1993 to the end of 1997, says it is only 10%-15%, which seems closer to the truth. The figure for industrialized countries such as Germany and France is 58%-75%. The wage to cost ratio is only 13.8% at AvtoVAZ, Russia's largest car producer, and 65% at General Motors. Only the state can help senior citizens, children and the disabled, and it has the opportunity to do this because the current Russian government earns $1 billion daily from hydrocarbons exports. As you can imagine, the overwhelming majority of Russians get very little, if anything, from this shower of petrodollars.