Half of Russians say their salary does not cover basic needs

Moscow — The number of Russians who say their salary does not cover basic spending has jumped 20 percentage points in two years to almost half, a survey by recruiter Headhunter showed, as Moscow diverts record fiscal resources to funding its war in Ukraine.

The findings, from an October survey of almost 5,000 people, put Russia’s economic woes in sharp focus and could give the authorities a headache in the run-up to March’s presidential election, in which President Vladimir Putin is likely to extend his more than two decades in power.

Record-low unemployment this year is evidence of Russia’s stark labour shortages, while the rouble’s weakness has added to intense inflation pressure. Interest rates, already at 13%, are expected to rise further to tackle inflation seen ending the year at around 7%, well above the Bank of Russia’s 4% target.

Asked whether their salary was enough to cover basic spending, without taking into account income from second jobs or investments, just one in five Russians surveyed said yes.

“Yes, with difficulty,” replied another 36% of respondents, while 45% said their salary was insufficient.

That is up from 25% in 2021 and 39% in 2022, the Headhunter’s survey showed. In 2021, before Russia launched what it calls a “special military operation” in Ukraine, 36% of those surveyed felt their salary was sufficient.

Of the 45% lacking the money for basic spending, more than half said they were at least 20,000 roubles ($212) short per month.

The average monthly nominal wage earned by Russians was 71,419 roubles ($756) in July, Rosstat’s statistics show.

Real wages in Russia are growing rapidly as defence companies rush to meet government orders. Other industries are struggling not to lose staff but cannot always compete with salaries.

Double-digit inflation in 2022 heaped pain on consumers and although the economy is set to recover this year from a 2.1% drop in GDP in 2022, Russia’s long-term prospects are dim, according the IMF and some of Russia’s own forecasts.

Russia could miss its 2024 budget revenue target and be forced to hike business taxes if the rouble proves stronger than expected and optimistic economic assumptions fall short, analysts say.

Reuters