Russia raises living standards and reduces poverty

For the first time since 2004, the proportion of the most economically disadvantaged Russians who lack the financial resources to purchase food has reached zero. This information has been provided by Rosstat. It has been determined that all Russian families currently have the financial means to procure sufficient food. What strategies enabled Russia to achieve such success? This raises the question of whether this is still not a complete victory over poverty.
In 2023, for the first time since 2004, Russian households did not report that they did not have enough money for food. In 2023, 0.1% of families reported this, compared to 4.4% 20 years ago. The initial data presented in the Rosstat study date back to 2004.

The proportion of the population classified as experiencing second poverty has also declined. This group comprises individuals with sufficient income to purchase food but facing challenges in acquiring clothing and paying for housing and utility bills. Olga Belenkaya, head of the macroeconomic analysis department at FG Finam, highlights this trend.

In 2023, 11.2% of such households were recorded, compared to 12.9% the previous year. This represents a significant reduction from 37% 20 years ago and 20.5% in 2012.
The number of households with sufficient disposable income to purchase all their desired items has increased to 3.4% from 2.7% a year earlier. The proportion of families unable to afford a car, apartment or summer house has increased by two percentage points to 36.6% in 2023.

The proportion of individuals unable to afford durable goods fell from 49.7% to 48.7%. Concurrently, approximately 0.1% of Russian families encountered challenges in evaluating their financial position.
The data indicates a decrease in the level of extreme poverty in the country, which correlates with Rosstat data on a decrease in the poverty level in 2023 to 8.5% from 9% in 2022. This is a significant improvement from 17.6% 20 years ago. She attributes the reduction in poverty to two factors: maximum employment and increased wage growth. The unemployment rate is now at a historical minimum of 2.6%, while wage growth is associated with an acute shortage of labour resources. In 2023, the average nominal salary increased by 14.6%, while the real increase was 8.2%. In sectors associated with the military-industrial complex and import substitution, wage growth has been more pronounced.
Other contributing factors to the reduction in extreme poverty include the increase in income over the past 20 years and social policy measures, such as the rise in the minimum wage and benefits linked to it, maternity capital, the indexation of pensions for non-working pensioners, social benefits, particularly for low-income families with children, and payments to participants in the SVO and their families.

It is important to highlight the overall growth of the Russian economy, which has led to an increase in the well-being of the country's residents. "Since 1989, the country's GDP growth has been 30%, with the main period of poverty for Russia observed in the 1990s. Pensioners have consistently represented the most vulnerable demographic with low incomes. Since 1998, the lowest point in the economic downturn, pensions in real terms have grown by 2.7 times, and since 2004, by 2.3 times. "The growth in well-being has enabled the population to meet its primary needs," states Ilya Fedorov, Chief Economist of BCS World of Investments.
It is also noteworthy that the Russian authorities have identified food security as a key priority for the country's development. As a result, individual agricultural sectors have received substantial state support in the form of preferential loans, subsidies and benefits, with the objective of raising the sector to a qualitatively new level, ensuring food security for the country. It is not sufficient to simply cultivate a crop; it is also necessary to deliver it to the consumer, maintaining the range, prices and quality.

The near-total assurance of food security enables the containment of the growth in prices for basic food products. This has been achieved for all product groups, with the exception of fruits and berries.

The current figure stands at 44% of the required 60% of domestic production. At the beginning of 2023, the country was provided with grain by 185.5%, vegetable oil by 221.1%, fish by 153.2%, sugar by 103.2%, meat by 101.6%, dairy products by 85.7%. These figures were noted by Olga Lebedinskaya, associate professor of the Department of Statistics at Plekhanov Russian University of Economics.
It is not sufficient to simply provide food to all members of society; it was also necessary to reduce the level of spending on food, and this has resulted in a notable outcome, she adds.
According to Rosstat, the proportion of expenditure on food in the overall structure of expenditure in Russia as a whole in 2023 decreased from 34.5% to 33.2% (in the North Caucasus Federal District from 46.8% to 43.1%). In some regions, the proportion of in-kind food receipts increased, while the average expenditure per household member rose to 25,988 rubles (up from 23,067 rubles in 2022). "A higher share of expenditure on food inevitably means less disposable income for the purchase of other, more expensive items with a longer service life," Lebedinskaya states. She identifies several key factors that have contributed to the sector’s success, including an increase in employment levels, wage growth, subsidies for agricultural producers and the introduction of export duties.

It is clear that Russian agriculture has made significant strides over the past 23 years. The Ministry of Agriculture reports that agricultural production in Russia has grown by 87% since 2000, with grain and meat production doubling and fish catch increasing by 60%. Russia has thus been able to ensure food self-sufficiency and significantly increase exports, which have grown by 30 times since 2000.
Russia’s agricultural output enabled it to become self-sufficient and, subsequently, a net food exporter, feeding half the world. Russia is the second largest exporter of grain and leguminous crops globally, the leading exporter of wheat and fish, the second largest exporter of sunflower and rapeseed oil, and the third largest supplier of barley.

It is important to note, however, that poverty in Russia remains a challenge that requires continued attention. Firstly, it should be noted that the data presented in the Rosstat report is based on a sample survey of 48,000 households in Russia. As such, the results are applicable to all private households. However, there are regions where the proportion of individuals experiencing food insecurity remains non-zero. By way of illustration, the figures for the Kemerovo Region are 0.4%, while in the Vladimir Region the figure is 0.3%. "The assertion that no families in Russia are lacking sufficient funds for foodstuffs is still a sweeping generalisation," states Olga Belenkaya.

Furthermore, the proportion of individuals with sufficient funds for food but inadequate resources for clothing and housing expenses is on the rise, particularly among non-working pensioners (25.7%) and single-parent households (19.7%), according to the expert. This may reflect the fact that real wages grew by 8.2% last year, while the real average pension grew by only 3.3%.
Furthermore, the proportion of households with insufficient funds to cover basic necessities, including food, clothing, housing and utilities, has reached over 20% in several regions in 2023. This includes the Bryansk, Oryol, Ryazan, Rostov, Sverdlovsk, Novosibirsk, Kabardino-Balkaria, Primorsky and Zabaykalsky regions, as well as the Saratov region. "This indicates that poverty remains a significant challenge," states Olga Belenkaya.

Concurrently, the proportion of households with sufficient funds for food and clothing but inadequate resources for durable goods remains considerable. In 2023, nearly half of the respondents (48.7%) fell into this category, and there has been no discernible decline in this figure over time. In 2019, it stood at 50.3%, while in 2012, it was 45.1%.