Page 39 - RUSRptSept18

individually - depending on the size of the salary. In August 2017, the Pension Fund recounted the pensions of 11.8mn pensioners who worked in 2016. The average size of the increase was RUB169. The recalculation concerns pensioners receiving an old-age or disability insurance pension, for, which employers paid insurance premiums last year.
There are large developmental and income disparities between Russia’s regions . As estimated by the World Bank, Moscow’s gross regional product per capita in 2015 was at a similar level to the GDP per capita of the Netherlands. This is almost ten times the GRP per capita of the poorest regions, Ingushetia, Chechnya and Tuva, whose income levels are comparable with Honduras and MyanMarch The recession has also yet to come to an end in many regions. Overall, real incomes rose by 2.5% in Russia in January-May year on year; but incomes continued to decline in 58 regions over this period, including 13 regions where there will be gubernatorial elections in September.
According to the Ministry of Finance, public spending per head in the richest 10 regions is 2.6 times higher than in the ten poorest regions. Before federal subsidies are applied, the difference in spending is 5.7 times. However, a recent paper notes that in the 2014/15 crisis, federal transfers to support the regions were much smaller than in 2008 and less targeted. As a result, interregional budget inequality has increased; the authors speculate that the willingness of the authorities to tolerate increasing interregional inequality may eventually undermine the cohesion of the country. Regional differences in living standards add another complication to the pension reform debate – the average life expectancy across Russia is 71.9 years, but in Tuva, one of the poorest regions, it is just 64.2.
As the World Bank notes, “the sheer scale, scope and starkness of spatial disparities are startling by any standard.” Russia’s economic geography is unique, even among very large countries. Its population is much less concentrated in major cities than Australia and Canada, and labour mobility is also comparatively low (while probably understated by official statistics).
At the same time, according to Alexei Kudrin, by 2035 Moscow, St. Petersburg and their surrounding regions will account for 40% of Russia’s GDP. To address this lop-sidedness and boost productivity, he has urged the government to focus its efforts on the development of Russia’s second-tier cities.
39 RUSSIA Country Report September 2018 www.intellinews.com