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regions where income tax contribution growth was under 20%.
The political consequences of this levelling of incomes in Russia are huge. Previously disenfranchised and missing out on Russia’s post-Soviet progress, the poor residents of the backward regions are finally participating in Russia’s modernisation and catch up with the rest of Europe’s higher living standards. And they credit Putin with the transformation.
“Given the growth in income tax payments (and that Rosstat assesses that 59% of incomes in 2023 derived from wages), it can be said with confidence that real incomes have risen faster than inflation since the full-scale invasion,” says Kurbangaleeva.
Russians are both spending more and saving more from the war income windfall. According to the central bank, the amount of held in Russian bank accounts climbed 19.7% to 7.4 trillion in 2023 (nearly three times what it was in 2022), buoyed by high interest rates.
When it comes to consumption, the picture is a lot more varied. Popular European holidays are off the agenda after airlinks were severed shortly after the war broke out and the flood of imported Chinese cars that replaced the European models is not everyone’s cup of tea either says Kurbangaleeva.
“However, there are two spending trends that suggest at least some consumers have money to burn. Firstly, demand continues to grow for mortgages (the total value of mortgages held in Russia grew 34.5% in 2023). This growth has mostly been driven by state-subsidized mortgage programs. And demand showed no sign of slacking in the first four months of 2024,” says Kurbangaleeva. Many Russians have enough cash to put down a 30% deposit on a property and are happy to take on twenty-year mortgages.
“The second trend is the booming gambling market. The income of legal bookmakers rose 40% in 2023, and active gamblers (those who bet at least once a week) numbered some 6.6mn people. In total, more than 15mn people gambled (about one in seven Russians over the age of 18) over the course of the year. At the same time, inflation means the size of the average bet is growing. Current trends have even led to calls to raise the legal limit on a single bet from RUB600,000 ($7,220) to RUB1.4mn ($16,840),” says Kurbangaleeva.
Previously it was jobs like IT professionals, bankers and lawyers that commanded the best salaries, but in a war economy it is working class blue-collar jobs like milling machine operator, machinist, welder, weaver, and garment worker that are in demand.
Kurbangaleeva gives the example of a long-distance truck drivers who can now get an average of RUB180,000 ($2,030) a month (up 38% y/y), while
43 RUSSIA Country Report June 2024 www.intellinews.com