Russia’s high employment masks widespread poverty

Outlook

Recorded unemployment is low at 4.2% in 2016, falling to 3.8% in the third quarter of 2017. However, a large proportion of people in work are earning less than the official minimum wage.

The government’s Analysis Centre calls them the “working poor” and estimates that they accounted for 16.8% of people in employment last year, much higher than the figure usually cited for workers on very low incomes. The proportion of public-sector working poor is four times as high as in the private sector, and the gap is widening.

The Analysis Centre argues that a resurgent private sector will reduce working poor numbers overall but things may get worse in the state sector.

Impacts

• President Vladimir Putin will worry about voter apathy among lower-income public-sector workers ahead of the March 2018 election.
• By all measures, the working poor category has declined over the last decade and this should continue as GDP growth revives.
• Employers, especially in the public sector, are reluctant to dismiss employees and may instead reduce wages or hours.
• The monthly minimum wage will rise by 21.7% to 9,489 rubles (160 dollars) in January but this is still below the minimum subsistence level.