Russian upper-middle and upper-class households have lost almost half of their income in the past year. Losses to families with an annual income ranging from 15 million to 100 million rubles ($250,000 to $1,500,000) vary from 25% to 75%, Vedomosti writes, citing an independent study titled Russian Wealth Report 2016.
Russians with passive income—rentiers—were hit the hardest. Most of their assets are either bank deposits or property located in Russia, and these provide income in rubles. These people, however, prefer to live abroad and spend foreign currencies. Their incomes have shrunk by 75%. According to the report, every fifth wealthy Russian is a rentier.
Most wealthy Russians—60%—profit from running businesses, and these people have lost half of their income in the past year. Business owners, however, are more concerned about the possibility of completely losing their businesses, given the current atmosphere in Russia.
Top level managers, who make up 20% of wealthy Russians, turned out to be the best-protected from the ongoing financial crisis. Most people in this category work in state-run Russian companies and corporations. Managers working in the private sector mainly lost their bonuses, while those who work for state-run corporations have avoided almost all losses.
For instance, the total income of eleven Rosneft board members, including the CEO, Igor Sechin, has increased by 1 billion rubles ($150 million) in 2015, reaching a total of 3.7 billion rubles. Sechin explained the necessity of such high salaries: Rosneft’s top managers’ salaries need to be in line with those at other global corporations or else Rosneft would face a brain drain. Similarly, the sanctioned Gazprombank tripled its losses in the course of the last year, losing a total of 48 billion rubles ($720 million). But in a state-run Russian bank, the top managers’ salaries only rise with losses. In 2015, Gazprombank’s CEO salaries have increased twice, up to 1.8 billion rubles ($28 million).
According to the official numbers from Russia’s Federal Tax Service, there are around 24,000 families with an annual income that exceeds 10 million rubles in the country. The authors of Russian Wealth Report, however, tallied those who earn an income abroad—for instance, those having foreign bank accounts—and thus their total was around 100,000 wealthy households, with 84,000 of those living in Moscow. (Russian official tax figures don’t include these households.)
Meanwhile, in the same time period, the number of Russians living below the poverty line has increased by 150% in the last six months alone, according to Russian official statistics. Up to 22.7 million people are living below the official subsistence level since the end of 2015. To put it another way, in Vladimir Putin’s resurgent world power, every sixth Russian lives in poverty.
In May, the Russian Ministry of Agriculture said it was looking at “off-budget” means to finance food purchases for lower-income families as there is no money in the federal budget set aside for this. Earlier today, the Kremlin endorsed the Finance Ministry’s idea to freeze federal spending for three years. Kremlin Spokesman Dmitry Peskov called it “budget harmonization”.