Page 60 - bne_April 2021_20210401

60 I Eastern Europe bne April 2021
“Net-net the quality of life in some of the regional cities has risen to the point where they are starting to compete with Moscow and seeing reverse migration”
The cities of Sochi and Krasnodar, to name two prominent examples, have seen their populations explode dramatically in recent years and
are experiencing reverse migration
– particularly by families with small children. The basic services of school, hospitals and affordable housing
mean life is more pleasant than in
the megalopolis of Moscow, and
with firms increasingly moving production into regional cities where the costs are lower, there is plenty of work. For example, Kazan has become the call-centre hub for the whole of
the Federation. Likewise, the rapid growth of e-commerce has been driving a groundswell of light industrial manufacturers catering to the domestic consumer market after rising incomes in China have started to price its consumer goods out of the mark in comparison to cheaper Russian alternatives.
About a third of Russia’s regions are now prospering, and have been helped
European cities, but the cost of living is also extremely high. In somewhere like Brayansk the cost of living is so low residents have comfortable lives with much less evening out the pay difference gradient.
But income inequality remains a major problem, as does the differential
in wages between the cities in the European part of the country (to the west of the Ural mountains) and the rest of the country. However, things are starting to change.
As bne IntelliNews reported two years ago, the average wages in most of Russia’s regions remain well behind
the national average, but the wage distribution is distorted by the high wages in resource production mono- cities in the deep interior of the country. In a 2018 regional wage survey for three regions – Chukotka, Yamalo-Nenets and Nenets – all had higher average wages than Moscow. The latter two regions are both huge but remote gas producing
regions and the reason why Chukotka's average wage was so high was because oligarch Roman Abramovich was
a registered resident and paid his income tax there.
These cities are mostly raw material producers with no connection to the road or rail networks and so have to have everything flown in. The wages are high, but so is the cost of living.
Net-net the quality of life in some
of the regional cities has risen to the point where they are starting to compete with Moscow and seeing reverse migration.
“About a third of Russia’s regions are prospering, helped by the government’s policy of heavy investment into regional infrastructure development”
by the government’s policy of heavy investment into regional infrastructure development.
The Sochi Olympics were widely derided as the “most expensive Olympics in history” after the government poured some $50bn into the preparations for the games – about ten-times more than is usually invested by the host country. But what critics missed is that the
bill was not so high because of all the stealing (although there was plenty
of that) but because the city’s entire infrastructure was overhauled: new airports, conference centres, modern housing, power and sewage – everything was upgraded. And the population of Sochi has more than doubled since.
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