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Russian middle class: good money, bad attitude
13/06/07
MOSCOW. (RIA Novosti economic commentator Mikhail Khmelev) -

The middle class accounts for somewhere between 15% and 70% of Russian society,
according to various sources using different definitions of "middle class."

One way or another, it is clear that Russia has a middle class. Although not
as large as in industrialized countries, it fulfills its main function as
the socioeconomic stabilizer of society.

It is generally agreed that the middle class is the foundation of stability
in any society. The larger it is, the smaller the possibility of political
and social shocks.

Unfortunately, there are no criteria for determining who belongs to the
middle class in Russia, which explains why figures differ so dramatically,
sometimes by tens of times. Russians themselves sometimes cannot say if they
are part of the middle class.

Two groups of factors are traditionally used for socioeconomic
identification: objective factors, such as income, the range of goods and
services the people can buy with it, and education; and subjective factors,
the most important of them being self-esteem.

Objective factors are a simple matter. According to the Economic Development
and Trade Ministry, Russians whose income and level of consumption satisfy
the notion of the "Russian middle class" constitute about 20% of society
(some 5% are rich, 55% constitute the low-income group, and 20% are poor).

The ministry's experts include in that category people with a complete or
incomplete higher education whose monthly income per family member is at
least six times higher than the subsistence wage (26,484 rubles, or $1,025).
Other obligatory factors are a sizeable bank account, real estate (a second
home) and the ability to regularly spend holidays abroad.

The ministry forecasts that the Russian middle class's share of the
population will grow to 30%-35% by 2010.

The group of poor Russians is expected to decrease from 20% now to 11% by
2010. Official optimism is fuelled by growing incomes, which should rise by
27% on the current level by 2010.

The criteria for the middle class elaborated by the All-Russia Center on
Living Standards (VCUG) are more modest. Its experts believe that well-to-do
people have a monthly income of more than 20,500 rubles ($790), and people
with a moderate income earn 6,963-20,500 rubles ($270-$790) per family
member. This means that 40.5% of Russians can be described as middle class.

Other studies of the issue show that the more lax the criteria, the larger
the Russian middle class.

All of these calculations are debatable ad infinitum. After all, people earn
more in the capital and other major cities than the average for the country,
but then prices there are almost as high as in Europe. For example, the
official subsistence wage in Moscow is at least 16% higher than the national
figure, and the average salary and personal consumption levels are 140%
higher than the average for the country as a whole. Moscow is one of the
world's 10 most expensive cities.

But this does not change the general picture, according to which there are
many people in Russia earning a good salary even by Western standards. They
spend less than 25% of their income on food and housing and can make
expensive purchases, such as real estate, cars, expensive clothes and
household electronic goods, and spend their vacations abroad.

The cost of a specific set of goods and services can differ from region to
region, but all researchers agree on who makes up the group of Russians who
can be described as middle class. They are small and medium-sized
businessmen, the middle and top managers of state-controlled and private
corporations, and top-ranking state officials.

Self-assessment is another matter. In Western Europe, 40% to 50% of people
say they belong to the middle class, and the figure for the United States is
about 70%. In Russia, only 22% say they are sufficiently well off to be
considered part of the middle class.

The middle class is crucial for the country's economic growth; Russia's GDP
is burgeoning thanks to a consumer boom. The middle class shop in expensive
supermarkets, take out loans to buy cars and flats, and spend money on
holidays abroad.

These people form the basis of social stability, sowing the seeds of a
healthy conservatism that saves the country from excessively emotional
political decisions. However, their self-rating is so far not high enough.

The opinions expressed in this article are the author's and do not
necessarily represent those of RIA Novosti.