Russia - Poverty and wealth

The transition from communism to a market-based economy did not create poverty in Russia, but it certainly made life more difficult for many groups of people. Poverty became widespread in 1992 and grew in 1993, widening from not more than about 10 percent of the population in the 1980s to nearly 30 percent by 1993. Poverty, often associated with family size, was concentrated increasingly in families with children, as well as in families with unemployed or handicapped persons. Poverty grew especially quickly in the rural areas. Certain

GDP per Capita (US$)
Country 1975 1980 1985 1990 1998
Russia 2,555 3,654 3,463 3,668 2,138
United States 19,364 21,529 23,200 25,363 29,683
China 138 168 261 349 727
Germany N/A N/A N/A N/A 31,141
SOURCE: United Nations. Human Development Report 2000; Trends in human development and per capita income.

Distribution of Income or Consumption by Percentage Share: Russia
Lowest 10% 1.7
Lowest 20% 4.4
Second 20% 8.6
Third 20% 13.3
Fourth 20% 20.1
Highest 20% 53.7
Highest 10% 38.7
Survey year: 1998
Note: This information refers to expenditure shares by percentiles of the population and is ranked by per capita expenditure.
SOURCE: 2000 World Development Indicators [CD-ROM].

geographical regions of Russia were disproportionately affected by poverty, reflecting increasing disparities in wages. The Russian Far North and Far East were hard hit. Poverty was strongly associated with single-parent status, and the majority of such households were female-headed.

Measuring poverty is difficult. Nevertheless, it is undisputed that a large share of the Russian population lives below the poverty line. The social assistance provided by the Russian government has not been sufficiently targeted to the poor. According to surveys of the standard of living, the share of eligible households who did not receive social benefits increased from 60 to 80 percent. Further, the share of the households that were legally entitled to public benefits and received them has decreased dramatically as local governments have "postponed" payments. Measures of public satisfaction indicate the quality of government services has generally deteriorated since 1991, and the poor, particularly the elderly poor, have been the most directly affected.

The economic transition also witnessed the "feminization" of poverty. Single-mother families and single elderly women make up a group with the highest poverty risk. In the case of single-mother families, poverty factors include the low individual income of the mother. Added to this is the insufficient amount of private and public transfers designed to partly offset the absence of other income sources such as alimony after divorce or pensions for the benefit of children after the death of their father.

The elderly also suffer from insufficient pensions, of which 90 percent go to women, according to a World Bank report. The average pension allowance is two-thirds of a retiree's cost of living. This means that pensions cannot meet even the most basic necessities of the elderly population. The problem for women retirees is compounded by the fact that pensions, which for this age group is largely the only source of income, are higher for men of retirement age than for women.

Household Consumption in PPP Terms
Country All Food Clothing and footwear Fuel and power a Health care b Education b Transport & Communications Other
Russia 28 11 16 7 15 8 16
United States 13 9 9 4 6 8 51
China N/A N/A N/A N/A N/A N/A N/A
Germany 14 6 7 2 10 7 53
Data represent percentage of consumption in PPP terms.
a Excludes energy used for transport.
b Includes government and private expenditures.
SOURCE: World Bank. World Development Indicators 2000.

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