Page 64 - RusRPTJan21

The recovery of real incomes in 2021 will be slowed down by suppressed economic activity​ due to the ongoing pandemic, sequestration of budget expenditures and a difficult economic situation in the regions, said RBC Akindinova.
The forecast of the Ministry of Economic Development is much more optimistic. According to the ministry, in 2020 real incomes will decrease by only 3%, in 2021 they will grow by the same 3%, and then will grow by 2.4-2.5% per year.
A decline in real disposable income leads to an increase in the level of poverty ​in the country. Earlier, HSE experts calculated that due to the pandemic, at least 6.1% of the working middle class in Russia went into the poor category. The real share of the poor in the country following the lockdown has grown to 19-20%, the researchers note.
Unemployment can make the situation worse. Orlova fears that it may turn from a cyclical into a structural one and remain at the level of 6% at the end of 2021. The dynamics of unemployment can be influenced by the “effect of a technological shift that reduces the demand for labour,” as well as an increase in supply in the labour market as a consequence of the higher birth rate in the 2000s.
Business is also preparing for life amid falling incomes ​- at the end of October, the largest Russian retailer X5 Retail Group announced the launch of a new chain of hard discounters Chizhik. In conditions of stagnation of incomes of Russians in the last five years, the Novosibirsk chain of hard discounters "Svetofor" has become the fastest growing federal food retailer.
Real disposable cash income is income after deducting mandatory payments ​(taxes and fees, interest on loans, etc.), adjusted for inflation. In 2014–2017, the real incomes of Russians continuously decreased, in 2018 they showed a slight increase (by 0.1%), by the end of 2019 they grew by 1%. By the end of the third quarter of 2020, real disposable income was 11% lower than in the pre-crisis 2013. According to Rosstat, in the first nine months of this year, the drop was 4.3% in annual terms.
Globally, labour incomes due to the pandemic in the first nine months of 2020 decreased by about 10.7%, or $3.5 trillion, the International Labour Organization calculated.
The last time the steady growth of real disposable income of Russians was observed was seven years ago. The long-term stagnation of real incomes, accompanied by a high level of inequality in the country, creates risks of decreasing trust in the state and growing discontent in society, Akindinova said. The problem of declining income is the main thing that worries citizens now, noted HSE economists in their report "Russia in a New Era".
64 ​RUSSIA Country Report​ January 2021 ​ ​www.intellinews.com