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Poverty Rate in Russia Jumps to 16%

The number of Russians living below the poverty line rose to 22.9 million, approximately 16 percent of the population.

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This post first appeared on Russia Insider

The number of Russians with incomes below the “poverty line” increased by 3.1 million in the first quarter of 2015, compared to the same period of the previous year. In total, some 22.9 million Russians now have incomes “below the subsistence level”, said the Federal State Statistics Service Rosstat on Thursday.

Percentage-wise, that means 15.9 percent of Russians are now living below the poverty line, compared to 13.8 percent in quarter one of 2014. Rosstat's information excludes data from the Crimea and Sevastopol, Interfax reported.

Rosstat said the main reason so many Russians are struggling to make ends meet is that the cost of living in the country has risen sharply in the last year. The agency puts the bare minimum income needed at 9,662 rubles per person, per month, compared to just 7,688 rubles per person, per month in 2014.

In Russia as whole, the average per capita income for the first quarter of 2015 amounted to 25,200 rubles per month, compared to 22,700 rubles per month one year ago.

However, Rosstat says that poverty in Russia is somewhat “seasonal” - noting that the poverty rate stood at 13.8 percent in Q1 of 2014, then 12.1 percent in Q2, 11.5 percent in Q3 and 9.1 percent in Q4. Overall in 2014, the poverty rate was 11.2 percent, compared to 10.8 percent in 2013.

More misery on the horizon?

The forecasts don't look good. According to the World Bank's baseline forecast, Russia's poverty rate will increase to 14.2 percent (20.3 million people) in 2015 as a whole.

“This will be the first substantial increase in poverty since 1998-1999. The poverty rate did not increase in 2008-2009 due to significant growth in disposable income," a World Bank official told Interfax.

Rosstat's report notes that because of limited budgetary resources in 2015-2016, financial support from the government for the poor may not be so forthcoming. It said that Indexation of public sector salaries will not be held in 2015, and that pensions and other benefits have decreased in real terms, since indexing based on the 2014 rate of inflation is much lower than projected pay rises in 2015.

"Currently, pensioners, public sector employees and state-owned enterprise employees account for a substantial part of the poorest part of the population. Other vulnerable groups include workers in the informal economy and families with children. As a result, in 2015-2016 there will be less opportunities to improve welfare," Rosstat said.

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