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Russia: Social Tension Simmers As Rich-Poor Divide Grows

Pensioners protesting in Moscow in January The gap between rich and poor in Russia continues to widen, according to a recent state report on social and economic development. Despite record-high oil prices and rising salaries, much of Russia's wealth still fails to trickle down. While the ultra-rich rake in more millions, a series of social reforms are threatening to push the destitute further into poverty. Is more social unrest on the cards?

Moscow, 10 May 2005 (RFE/RL) -- A report by the Federal State Statistics Service shows that the gap between Russia's rich and poor grew in the first quarter of 2005.

The report says the richest 10 percent of Russia's population makes 14.9 times more than the poorest 10 percent.

This figure has been steadily rising in past years -- Russia's very rich were 10 times richer than the most impoverished in 2001, 13 times richer in 2002, and 14 times richer in 2003.

The average monthly wage, however, has increased by 50 percent in the past three years across Russia, reaching 6,832 rubles ($246) per month in 2004.

But Natalya Sedova, a living-standards expert at the All-Russian Center for Public Opinion and Market Research, said this does not necessarily mean that Russians are becoming more affluent. Some 40 percent of Russians, she said, rely entirely or in part on secondary sources of income.

"Today, salaries are not the only source of income for Russians," Sedova said. "For many, an important source of income, sometimes the only one, is social aids -- especially for the poor -- governmental aid in the form of pensions, allowances, or benefits. Material and financial help from relatives is another source of income for many Russians. These incomes, unlike salaries, are not growing."

Meanwhile, high global oil prices have helped Russia move up on a list of the world's millionaires. According to the list compiled every year by "Forbes" magazine, Russia overtook Japan on the list in 2004, and now trails only the United States and Germany in terms of their number of millionaires.

The 2004 "Forbes" survey also showed that Moscow is home to more billionaires than any other city in the world. Thirty-three billionaires live in the Russian capital, while only 31 live in New York.

But while those who acquired state assets through shady privatizations deals in the 1990s continue to increase their wealth, the majority of Russians have seen little improvement to their living standards.

The Center for Public Opinion estimates that between 25 and 30 percent of Russians currently live below the poverty line.

The replacement in January of Soviet-era social benefits with cash payments is likely to further impoverish the poor -- particularly retirees -- who claim cash payments are too little to make up for the lost benefits.

Sedova agreed that the monetization of the benefits will probably plunge the poorest of Russians into still deeper poverty, although she said it is too early to issue reliable statistics confirming this trend.

"The fact that the government is withdrawing from the social sphere and getting rid of its social responsibilities will probably increase the number of those who live in a state of deep poverty," Sedova said. "These people don't have the resources to overcome this poverty, they live solely on state benefits."

Experts are also voicing concern over an announced national housing reform that has already been approved by parliament. They say the poor will be the hardest hit by the reform, which plans to make all Russians cover the total cost of housing-related services.

These services are currently partly covered by the state budget and include maintenance, garbage collection, and utility services.

Following the monetization of benefits, thousands of pensioners staged protests across the country, blocking roads and taking control of buses. After weeks of protest, the government granted retirees a pension raise and introduced a system that in effect restored some of their in-kind benefits.

Sedova said the growing income divide, in addition to growing discontent over social reforms, is threatening to spark serious social unrest.

"I think that this tendency [income gap] can still grow due to the current social reforms and because the number of poor people will definitely increase, especially in the coming year," Sedova said. "And this is certainly a factor that can increase social tension and protest among Russians."

According to the World Trade Organization (WTO), countries where the rich earn over 14 times more than the poor are prone to severe social disorders. This puts Russia in the league of socially explosive countries.

Vladimir Pribylovskii is the director of the Panorama think tank in Moscow. He said implementing the housing reform will imperil the country's fragile stability.

"In particular, the planned housing reform, if it is not halted, will strip several million people of their flats," Pribylovskii said. "Of course, this bears a threat to stability, at least in the long-term. Stability could already suffer in the next two or three years."

A majority of respondents in polls carried out by Center for Public Opinion said they are ready to take to the streets if further social reforms affect their living standards.

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