Page 35 - RusRPTJul19

In addition to the level of spending on purchases, the level of other household payments rose much, so the picture of saving was weak. Other payments now include better Russian remittances abroad.
Russia’s middle class has shrunk by nearly 20% since the start of the country’s economic crisis in 2014, according to Alfa Bank, as cited by The Bell . Around a third of Russia’s population is currently middle class, down from 37% in 2014, according to the study. The report defines members of the middle class as having monthly earnings from 39,000 to 99,000 rubles ($620 to $1,600). Low oil prices and Western sanctions have taken a toll on Russians’ real incomes, a figure, which has been falling five years in a row. “It is precisely the middle class that has become the biggest victim of the slowing economy — its incomes have stagnated over the past 10 years,” The Bell writes. Moreover, representatives of the middle class have grown more risk averse in the years since the 2008 financial crisis, according to the bank’s analysis — they take out fewer loans or credit cards and opt for stable employment instead of opening a business. Russia’s biggest lender Sberbank recently estimated that the share of those who consider themselves middle class has shrunk from 60% to 47% in the five years since 2014.
The government has announced a new subsidy for families with children aged between 18 months and three years. The existing RUB50 per month is to be replaced with an amount matching the minimum life expenses for each region (blended RUB10,000/month for the country). The obsolete support measure was launched in 1994 and has not been raised. The proposed initiative is supposed to be merit based and launched as early as 2020. The consolidated amount annually is estimated at RUB55bn, financed from the fund of Social Insurance. This represents 0.1% of household consumption and covers 1.8mn people, while employers are to be exempt from payments. The announced parameters call for incremental support across the consumer segment and additional incentives for fertility rates in Russia, that were under pressure in 2017-18.
35 RUSSIA Country Report July 2019 www.intellinews.com