Russian Regions: Incomes and Employment

Abstract

Regional differences in incomes and buying capacity were formed in the beginning of transition period. Living standards lowered significantly after financial crisis of 1998. Maximal prices growth took place in large cities with a big share of imported goods. As a result increase in wages and incomes fell behind prices growth, besides the wages that 'lost their weight' sharply began to be paid even less regularly. The situation is especially hard in the regions in the east and north of Russia. Climate and nature there do not allow to develop personal subsidiary plots, that is why the population survive through gathering wild mushrooms and berries, hunting and fishing.
Regions' distribution according to incomes buying capacity in 1998 was worse than in 1995 - the most unfavourable year before. In 7 regions nominal money income became lower than living wage. Moscow and Tumen region, relatively prosperous regions, broke even further away from the rest of the others. 1998 crisis increased the share of poor with incomes below living wage, especially in poorly developed and depressive regions.
Consideration of natural incomes (so called "disposable resources") besides money income makes poverty level in some regions significantly lower. Average disposable resources of the rural population per capita make only 68 % from urban level. The number of unemployed increased as a result of financial crisis. The notable changes are: a) registered unemployment level in depressive regions continued downsizing; b) unemp-loyment was slightly reduced in the regions with younger population, which face the problems of placing youth for a job; c) unemployment grew in the northern and especially eastern regions of the country that had had lower unemployment indexes than country average; d) short-term unemployment growth became a new phenomenon for the two capitals (Moscow and St. Petersburg) , that had been the most secure, and the largest cities.