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Russia: lessons from the poverty line

Liza Surnacheva
12 June 2008

Liza 4

I've managed to live for a month off the minimum sum which the Ministry of Statistics says you can live on. It wasn't all about surviving of course, about losing weight or

 

having fun, although it was all of those things: I crossed the finishing line triumphantly, with my jeans falling off, after keeping office workers in stitches with my adventures. Yes, one of my colleagues had the nerve to suggest that the aim of the whole experiment was really to find a husband. ‘It's the crudest kind of self-advertising', observed Mikhail, ‘Liza showing off how economical she is, how well she cooks. Though doing it through a heavyweight political e-zine isn't your average girl's way of looking for a husband..'

Somewhat haphazardly, three aspects of ‘the Rosstat fast' have come to dominate my blog entries. Distinct, but related, they are the nutritional, the economic and the social.

1. Nutrition

The norms, calculated as ‘minimal requirements for sustaining health', don't bear scrutiny. Basically the diet is a great deal of bread, things made from flour and potatoes, and a minimum of meat, fish, beans and vegetables. Is this enough for minimal nutrition and survival? Yes - for survival or less. Is it enough for a healthy diet (especially for ‘a man of working age')? Hardly. The nutritionists say that on a diet like that the metabolism slows down and weakness and apathy set in.

So what's the point of working out this minimum consumer shopping basket, if it's got no practical application? This is implied by the fact that completely different norms and levels expenditure are applied in state institutions like nursery schools, summer camps or the army.

It costs 60 rubles a day to keep a working dog, 81 rubles to feed a soldiers allowed, a soldier must live on 81 rubles a day, while the food allowance for a child in a foster family in Moscow is 180 rubles per day. So as an average citizen, I'm worth about 1.18 working dogs, 0.87 of a soldier or 0.4 of a foster child.

There are questions here for the Ministry of Health's Institute of Nutrition.

2 Economic

The concept of the ‘minimal grocery selection' is used to differentiate prices in the regions and to evaluate the index of consumer prices.

According to Rosstat, consumer prices in Moscow have risen by 4.6% since the beginning of the year. In the last month potatoes (which make up the largest part of the ‘grocery selection') have risen in price the least, and cheese, eggs and vegetable oil (which make up a small proportion) the most. The conspiracy theorists would conclude that this is a way of indicating that inflation is considerably less than it really is. You could vary the consumer basket even more, changing the amounts, introducing more of the products whose prices are rising more slowly (rice and potatoes) and reducing those whose price is rising faster- vegetables and milk products.

Fruit and vegetable products went up in price most of all in March - by 5.9% - and they made up almost a third of my budget for this month. Milk products - which only went up by 1.2%,made up 11% of my basket rather than the recommended 18%.

Meat products, which made up 10% of my basket rather than the 18% recommended by Rosstat, went up by less than 1%, and the cheaper eggs made up 1% of my basket. Almost 9% of expenditure went on fats, and they rose in price by 4.6%. If I'd bought larger proportions of these items, my own personal inflation would have risen over the 2% stipulated by government statistics.

Since we make no official calculation of the middle class consumer basket, we have no hard facts on the rate of inflation going on there. Yet, in fact, the middle classes are suffering even more than the poor from price rises: nobody's stopping the distributors from raising prices on other products because they've had to freeze prices on ‘socially significant' food staples. As a result, the most ordinary foods - eggs, cheese, fish, meat, vegetables - now seem like luxuries.

When people write about the Russian consumer basket they often compare it with the UK consumer basket, which includes a range of goods ranging from cakes and peanut butter to mp3 players. This doesn't really make sense: in Russia, the minimum consumer basket is a means to establish a basic poverty line. In the UK, the ‘basket of goods' is a means of comparing regional prices and calculating inflation - this is what we use the ‘minimum grocery selection' for. But the UK consumer basket includes not just the minimum you need to survive, but those things which the average person buys most often. Hence it includes ‘fine foods' like chicken Kiev and the price of beer bought in a bar after ten at night. So the inflationary impact it calculates is more middle class. This is a long way from Rosstat's method for calculating the minimum grocery basket. Rosstat isn't concerned with the impact of inflation or price rises on the middle classes.

So there are some outstanding questions for Rosstat here too.

3 Social

At last we come to the social. Two aspects of Rosstat's minimum consumer basket are particularly troubling. The first is that this minimal benchmark, on the basis of which the minimum subsistence level is calculated (at 6,624 rubles a month), should determine the levels of the minimum wage, pensions and other social security benefits. It doesn't, as we have seen:

  • - The average working pension in Moscow is around 5,500 rubles.
  • - The average level of benefit awarded a single mother who was on a minimum wage until her maternity leave is around 5,000 rubles.
  • - The minimum wage promised by the Moscow government from the first of May, is 6,800 rubles. But it is not clear how much inflation will affect the minimum cost of living - even officially - before then. In fact, according to the statistics, the average minimum wage in Russia is 2,300 rubles.

Officials of all levels love promising to raise the minimum wage to the minimum subsistence cost. This is absurd, to say the least. They've established a poverty line (a minimum substance level). They've enshrined it in law that pensions and the minimum wage cannot be lower than this. Yet they still regard it as perfectly normal and honourable to admit publicly that the law is not being upheld. And moreover, they take pride in declaring that in a couple of years the minimum wage may, possibly, rise above the poverty line.

The second worrying aspect of Rosstat's calculation is this: the contents of the minimum consumer basket were established in 1992, in order to calculate how much it was possible to live on, rather than the actual poverty line. Today, according to official data, 21 million people have an income lower than the subsistence minimum. Even by official calculations of this minimal minimum, 14.8% of the population is living at subsistence level.

In practice this 14.8% of the population is actually living in desperate poverty. What the true poverty line is we do not know.

Earlier entries:

Part One:

Liza, young journalist of the Russian e-zine http://www.polit.ru/ tries to survive for 62 euros per month.

http://www.opendemocracy.net/Russia/article/life-on-the-poverty-line-first-part

Part Two: Day 10, and Liza tries to work out why she's not managing.

http://www.opendemocracy.net/Russia/article/life-on-the-poverty-line-second-part

Part Three:

A young man woos the dwindling Liza with tempting invitations

http://www.opendemocracy.net/Russia/article/life-on-the-poverty-line-third-part

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