Page 8 - RUSRptOct18

2.2 Wages in Russia’s regions well behind the national average
Wages are starting to grow again in Russia after several years of shrinkage, leading economists to hope that consumption will return in the second half of this year as an economic drive. However, drilling into the distribution of wages and the recovery is clearly very mixed.
The two mega-cities of Moscow and St Petersburg both have incomes that are 51% and 117% more than the average national wage of RUB42,640 ($625) per month as of July, according to Rosstat, however, as the chart shows about two thirds of Russian regions have incomes well below that level.
In general the poorest regions with incomes under RUB30,000 per month are all along Russia’s southern border with the Republic of Chechnya coming in last place with an average income of RUB26,116 ($383) – almost half the national average.
Surprisingly Moscow is not the richest income city in Russia , although it ranks in the top five. That honour goes to Chukotka, a mining outpost in Russia’s extreme Far East and Far North corner of the country. The reason for Chukotka’s high score is almost certainly as its former governor Roman Abramovich is registered there and pays his personal income taxes in his “home” region. As a one time richest man in Russia, Abramovich’s personal income tax payments used to make up half the regions income and has clearly driven the regional average score up.
St Petersburg also scores well with an average income of RUB62,619 per month, but again, against the national average this remains relatively modest.
The other high scoring regions are all in the wastes of Siberia and Yakutiya – the mining and oil and gas producing regions. Wages in these regions are deceptively high, but as they are all almost entirely cut off from the rest of the country – without road or rail links, the locals talk as if they live on an island and refer to the rest of Russia as “the mainland” – everything has to be flown into the cities such as Sakha (diamond mines) or Nenets (oil) making the cost of living twice that in the rest of the country.
Taking these factors into account and Moscow and St Petersburg emerge as by far the best off cities in Russia to live. The raw material producing cities may have better pay, but the quality of life is probably much closer to the average income levels once the cost of living is accounted for. (And that assumes you have a job with the local mining companies; pensioners trapped in these regions because they can’t sell their apartments are in a very difficult position.) And those that live along the southern periphery are in a much worse position than their peers in the European part of Russia.
As part of president Vladimir Putin May Decrees , the president has called for the rate of poverty to be reduced and the number of small and medium-sized enterprises (SMEs) to be increased to provide more employment.
And the growth of real wages and disposable income growth remained robust in July , with real wages up to 8% growth y/y, increasing from 7.2% in June. Thanks to the success of the Central Bank of Russia (CBR) campaign to drive down inflation to record lows – consumer price inflation (CPI) was about 3% in August – Russians are starting to feel the benefit in their pocket: real disposable incomes grew 2% y/y in July versus 0.7% y/y in June.
8 RUSSIA Country Report October 2018 www.intellinews.com