How salaries differ in Russia and European countries

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

If we translate the salaries of Russians into dollars, we can see that the share of consumers with incomes below the average has grown by a third. The share of those who can be ranked among people with incomes above the average has decreased in about the same way. In general, the average salary in Russia is still much lower than in Western and Eastern Europe, analysts at Fitch Rating calculated.

The actual decline in the real disposable income of the population in Russia - those that remain after all mandatory payments - continues for the fourth year in a row. According to Rosstat, the largest decline in real disposable income occurred in 2016 - minus 5.9%. Then the fall slowed down. At the end of January-September 2017, revenues fell by 1.2% compared to the same period last year.

Over the past four years, the income of Russian consumers has decreased by 11% in aggregate, analysts from the Fitch Ratings have calculated in the report "Russian consumer market in the context of global trends."

“If we talk about the structure of the population by income (per capita - BBC), here you can see positive shifts: the share of the population living with an income level close to the subsistence level has decreased,” adds Fitch Director Tatyana Bobrovskaya at the presentation of the report.

This is shown in the graph.

But if you look at the situation with income calculated in dollars, then there is less reason for optimism. It turns out that the welfare of Russian consumers has declined much more than in the case of wages in rubles.

According to Fitch estimates, in 2013-2016, the share of Russians with incomes less than $ 220 almost tripled - from 10% to 29%. At the same time, the share of citizens with incomes over $ 900 fell by about the same - from 28% to 11%.

When analyzing income, one should also take into account the level of prices in Russia in comparison with other countries, Bobrovskaya notes.

Fitch has calculated how the average accrued wages have changed over the past three years, taking into account purchasing power parity (PPP), which takes into account the difference in prices in Russia and abroad.

For the calculations, data from Rosstat were used. Analysts took PPP indicators from the Organization for Economic Cooperation and Development, which calculates them for each country.

As a result, it turned out that from 2013 to 2016, the average salary, taking into account PPP in Russia, decreased by 6.5% to $ 1,451.

And according to this indicator, Russia lags behind the countries of not only Western, but also Eastern Europe.

For example, in Lithuania, the average salary, taking into account PPP, is $ 1,900, in Poland - over $ 2,100, in Germany - over $ 3,800.

Consumers perked up and buy on credit

Macroeconomic indicators in the first half of the year showed a modest recovery, but the third quarter figures came as an unpleasant surprise. GDP growth slowed to 1.8% against 2.5% in the second quarter, according to Rosstat.

However, the decline in earnings has slowed down and consumer confidence has returned to pre-crisis levels, Fitch said. But there is no steady growth yet, notes Tatiana Bobrovskaya.

“I don’t want you to get the impression that now consumers are happy to expand their consumption and increase their purchases - no, there is still a high proportion of those people who expect that the economic situation will remain difficult. But there are fewer of them,”the expert says.

Slowing inflation to record lows and lending growth are supporting consumption.

The Central Bank has already announced the growth of lending. In October, in the survey “Inflationary Expectations and Consumer Sentiments of the Population,” the regulator wrote that in the first two months of autumn, the share of those who did not manage to save anything in the last month and those who have no savings increased.

In October, the share of people with loans continued to grow: 41% against 33% in August.

“The observed trends in savings sentiment generally indicate a gradual increase in consumer activity of the population,” the survey said.

Lending is increasing due to the volume of loans and lower rates, analysts say Fitch.

“The number of residents who use loans has practically remained unchanged over the past few years,” said Bobrovskaya.

According to Fitch, the main factor for consumers in Russia is still “low prices without sacrificing quality”, fresh produce and walking distance to stores.

Analysts believe that demand in the mass segment, for example, in discounter stores, will grow stronger than in the premium segment, and buyers will actively use promotional offers.

As consumer confidence rises, interest in hypermarkets may increase. In large cities, there will be demand for natural and organic products, as well as for prepared food, the agency predicts.