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The death of the middle class themes of the day 21.02.2019 at 21:06

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The Capitalists and the oppressed working class — it is only our yesterday or our tomorrow? What happened to the Russian middle class, which until recently politicians and economists have such high hopes?

the Real disposable incomes of Russians decrease for the fifth consecutive year. For 2018 they fell towards 2017 another 0.2%, and since 2014 fell by almost 11%, cites Rosstat. In January 2019, the fall accelerated: the average income in annual terms fell by 1.3%. The Ministry of economic development thus argues that the poor Russians began to live better, but the richest worse. However, it seems it is not. For the bulk of Russians working life is getting harder, and there are objective reasons in the state of our economy. However, and abroad the situation is not better: the middle class is shrinking, income inequality is growing, the proportion of poor among the working population becomes more and more. How is it that economic and social achievements of the second half of the twentieth century come to naught and where that leaves us?

the Rich get poorer? Oh well...

Commenting on the Rosstat data on the fall in real incomes in 2018, Ministry of economic development indicates a "significant differentiation" depending on the level of income. The income of the poorest segments of the population last year rose, they say in the MAYOR and bring the following arguments: the minimum wage in 2018 has finally been raised to the subsistence level, increased payments to families with children and increased wages in the budget sector. In turn, the incomes of the most provided Russians has decreased because of rising property taxes, lower returns on Bank deposits and rising mortgage payments. However, it is very important to clarify exactly who are the "most wealthy" Russians.

"According to calculations by the MAYOR, in real terms, i.e. adjusted for inflation, decreased incomes of the so-called eighth and ninth deciles, which, according to Rosstat, have an average salary of about 50-60 thousand roubles a month, — says head of analysis and strategic marketing PSB Nicholas Kashcheev. — According to his own estimation of the Analytical credit rating agencies, 60 thousand is the lower part of the middle class (except for Moscow where the bar referring to the middle class — more than 120 thousand rubles)". That is, revenues have fallen, unfortunately, not the oligarchs, and small representatives of the Russian middle class. The average salary in the country, we recall, according to Rosstat, is 42.6 thousand.

"At the same time the most wealthy citizens increased revenues that are generated from the export of raw materials: in 2018, the commodity prices were high, — the General Director of IFC "Timer" Roman Makarov. — Given the weak ruble, they brought great profits to the owners and top managers of export oriented business".

the Average class or mediocre?

In the past year the Analytical credit rating Agency (ACRA) published a study "the Main macrotrend: the growth of regional differentiation in Russia", where he calculated that in order to be classified as middle class Russians must obtain a minimum of 60 thousand rubles a month, if you live in the region, and from 121,1 thousand roubles, if you live in Moscow. Most economists agree with this assessment.

the Proportion of the middle class is steadily declining in 2014, but 2018 Rosstat showed the growth of the middle class by 1%. However, we must remember that our statistics are not very good sees rich. In reality, we see the growing stratification of society: it is witnessed by an indicator such as the Gini coefficient, where a value of zero represents the minimum income gap, and one maximum. In 2012 it was 0.42, and in 2017 already 0,41 (2018, this figure remained unchanged).

the Middle class — the economic and political basis of society — a subject of special study of Russian economists. Because depending on what criterion measure, researchers have numbers from 4% to 80% of the population of Russia. And yet, if we reduce the material characteristics of the middle class to the already mentioned 60 thousand per month, such people in Russia about 10%. The calculations are carried out according to its own methods Institute of sociology, Academy and other research centers provide a range of estimates in the range of 20-30%.

However, the problem is that the Russians with salaries of 60 thousand rubles a month, and Muscovites with a salary of 120 thousand are people with average incomes, but not necessarily middle-class. The classical definition of the middle class include not only a certain level of welfare, but the level of education and work (relatively speaking, "white collar") and a certain mindset.

It is the ideology, not identity, as they like to label in our country. Few consider themselves middle class, it is important to match it. For example, the Director for social development studies HSE Ovcharova emphasizes that the middle class is mobile, in terms of a career. Difference of the middle class that he is willing to invest their resources in education, health care and incur other costs associated with the development, the expert stresses. And not only.

"to Be a member of the middle class is more than having a certain income, higher education, job, economic security, property ownership and certain social and political views. The class is also determined by the worldview," write the experts of the American research center Pew.

the German economist and later Chancellor Ludwig Erhard, who laid the foundations of modern socio-economic system of Germany, in 1954, wrote that "the quality characteristics of the middle class are self-esteem, confident and stable social situation, the independence of existence and judgments, courage to put their existence in dependence on the effectiveness of their own work." And here we come to a sad observation.


a Recent study conducted by the HSE showed that over the last ten years, the structure of people belonging to the Russian middle class (to be more correct to say, for owners of average income) has changed: it increased the proportion of security forces and state employees (workers education and medicine) — from 29.6% in 2007 to 40.2% in 2015. at the same time decreased the share of workers of science and culture, as well as engaged in different business sectors — industry, trade, construction. And this process continues.

moreover, if we talk about the public sector, this "middle class" includes only those who occupy top management positions. Because the difference in pay of ordinary teachers and the head teacher or school Director within one educational institution may reach 5-6 times. In medicine a similar situation.

That is, in today's supposedly the middle class of Russia, mostly those who spend the budget and not fills it. And those who fills increasingly descend on the property ladder.

the global poverty

However, the problem is that the working people is getting harder to live in the world. At least in the developed. The welfare, the flourishing middle class, which has been observed in developed countries after the Second world war, it seems, has exhausted its resources.

the Organization for economic cooperation and development (OECD) cites the following statistics: today the difference in income between the 10% richest of the population of OECD countries and 10% of the poorest is 9.5 times. For comparison, 25 years ago it was 7 times. Today 10% of the richest people in the world have half the wealth on the planet, while 40% of the poorest only 3 per cent.

And Russia, at first glance, does not look so bad compared to other countries. "For example, according to the world Bank top decile income in Russia earns 11 times more than the bottom (according to Rosstata — 16), and in Brazil 37 times in the U.S. — 18 times in Germany — 7,5%, — says Nikolay Kashcheev. The problem is that in developed countries, where the coefficient of separation more than in Russia (e.g. in the US), or close to Russia (eg, in Italy), significantly higher overall quality of life. This is what more than modest numbers of middle class in Russia by the standards close to European."

the position of the Russians is even more sad if you look how the welfare of different segments of the population in time. "In the world, according to the World database on inequality, from 1980 to 2016 the total size of incomes of the population increased by 60% in real terms, people with low incomes (lower 50%) — doubled, people with average income (40% of the population) are earning more, 43%, and the income of the rich increased by 70%", — cites Nicholas Kashcheev.

Don't be distracted by figures showing that even the poor are living twice as better. The reality is more complicated.

"In Russia, the incomes of the lower 50% fell by 26% in real terms, middle-class incomes grew by 5% and the richest 10% — almost three times — continues Kashcheev. — What methodology was used to compare the 2016 and 1980 for Russia and the Soviet Union, we have not considered. However, about the greater or lesser accuracy of the data for the US no doubt: the bottom 50%, increased revenues by 5%, average is 44%, the rich — by 123%. In Europe, the picture is much more uniform: 26%, 34% and 58%, respectively." Where did this doubling of the incomes of the poor, recorded on a global level? In the first place — at the expense of China, says cm.

If you talk about the developed world, poverty has a certain trait. In countries with developed pension system largely solved the problem of poverty of pensioners, but the working poor — a common story in Britain and in the United States, and developing countries, said the chief economist of rating Agency "Expert RA" Anton tabah.

the Quote used to be better?

Why it happened? There are several reasons.

first, stopped working social lifts, which allowed to climb up the social and property ladder. Last year the OECD published a study "the social Elevator is Broken? How to stimulate social mobility", which demonstrates that the social Elevator worked well for those born from 1955 to 1975, and for younger it works far worse.

what's More, this lift has become rather a "social mine": today it is much easier to fall into poverty than to improve his position. In four years of observations OECD experts found that every seventh family, belonging to the middle class fell into the group of the poorest (bottom 20% by income). Among families from the category of "lower middle-class stratum" slid into poverty is one in five.

second, stopped growing wages. Since the beginning of 2013, the growth in real wages in the U.S. is about 2% per year, compared with 4% before the crisis of 2008 and the 7-9% in the 1970s and early 1980s. In the EU the last years the growth of nominal wages is lower than inflation. That is, real wages reduced.

moreover, if we smooth out small fluctuations over the last decades, it appears that the purchasing power of American wages has not changed over the past 45 years. The average rate per hour today — 23,68 dollar is exactly the same for the consumer, and how much the average rate in 1973 — 4.03 dollar. But it is even worse. Chance American on wage growth depends on the size of the salary. Bureau of labor statistics, the U.S. has calculated how to grow in real terms wages since 2000. For 10% of the lowest wages in the U.S. the average annual growth of 3% for the bottom 25% is at 4.3%. But for those who received 10% of the highest salaries, the situation is different: average annual growth rate of 15.7%. That is five times higher than the 10% the lowest.

Salaries in real terms, cease to grow, partly due to high inflation, which in the modern world is increasingly dependent on energy prices than to the state of Affairs in the national economy. They are also pushing technological progress, about which we shall tell later, and in some areas the influx of migrants, offshoring, outsourcing, and other global processes in the labour market.

it is Remarkable how changing the share of labour and capital in the aggregate product. According to the IMF, between 1970 and 2015, the proportion of work declined from 55% to 51%: that is, labor gets a smaller share of the profits of the company. A perfect illustration was the story with the decline in corporate taxes at the end of 2017 in the United States: it was assumed that the money saved will turn into the inflow of investments into the fixed capital. This will lead to growth in the company's performance and eventually to higher wages. Instead, the market saw a boom in the share buyback: these funds went into the pockets of top managers.

this is another reason of growing inequality: if wages grow slower than GDP, capital returns faster. "Increasing inequality in Western countries has been ongoing for decades, but a strong acceleration in the rate occurred after 2008: capital revenues to rise faster than productivity, says Roman Makarov. The largest Central banks (fed, ECB, Bank of Japan) to overcome the effects of the crisis started a printing press and pumped up the world economy a huge amount of money that made the problem worse. This led to the longest continuous cycle of growth in global stock markets in history, which dramatically increased the income of capital owners. For example, the state of the 20 richest people in 2008 has doubled."

"Many well-known personalities in particular mark Zuckerberg, Jeff Bezos, have significantly increased their wealth at the expense of growth stocks of technology companies, — the analyst of the company QBF Denis Ikonnikov. — The situation is similar in Russia, where the shares of commodity companies in the last ten years has grown significantly".

Thus, the gap between rich and poor began to grow in all developed countries and even in the US, said the first Vice-President of "OPORA Russia" Paul Segal.

Quote the Curse has come true: we live in an era of change

it only gets worse. Reduced the number of jobs for workers without advanced education, said Anton Tabah. The reason is the change of technological mode. "Outstanding in various respects people as a result of technological progress got an exclusive opportunity for enrichment, while the General, "conveyor" bulk of the population are less in demand," — said Nikolai Kashcheev.

We are witnessing a change in technological structure, and these processes are always painful for companies. "The current contradictions arising from the coming of post-industrialization with concomitant globalization of the pass and within countries, and by geographical borders, not only from us and our main geopolitical partners in Europe and the middle East, and probably soon will go to China — continues Kashcheev. — Changing socio-economic paradigm (way of life), which is akin to the former processes of industrialization and urbanization, today, again produces a high voltage here and there".

This shift began in the 1980-ies, but the most severe consequences for society we shall see in the next 20 years, predicts the managing Director of the group Macro Trends with Bain & company Karen Harris. According to her, over the next decade in the U.S. alone, in the development of automation will invest up to 8 trillion dollars, which will lead to the disappearance of 20-25 percent of jobs (for US this means about 40 million jobs), and 80% of workers will face lower wages.

the Benefits of automation will only get 20% of the population is the most highly qualified (in the right industry) professionals and owners of capital. Of course, in the long run the standard of living will improve and everyone will benefit, but in the coming years the standard of living of a significant part of the population will decline, which will lead to lower consumption and slower economic growth, warns Harris. "Last time changes of this scale we observed in the transformation of agrarian society to industrial," — said the expert.

the Inevitable consequence of these changes has now become populism. "The phenomenon of trump — just a reaction to a reason for the revenue gap and attempt to return manufacturing to the USA, as hi-tech was not enough," says Paul Segal. But gradually right-wing populism will be replaced on the left, and in General the growth of left sentiments predefined worldwide, except that will take place at different speeds, said Nikolai Kashcheev. Increasingly will be discussed redistribution and studied the experience of Sweden as sverhzaryadnogo state.

"Judging by the popularity increase in taxation of the rich in the US, we can see a radical change in state policy, — said Anton Tabah. — In the American press, that seemingly crazy idea income tax rates for the super-rich at 70% now supported by most of the population."

Sell themselves

And what to expect in Russia?

"In Russia, the forecast is unimportant: not yet started the replacement rental raw model of the economy, nothing particularly good waits for no man" — categorically Nicholas Kashcheev.

"Russian poverty structure formed after the collapse of the USSR and the destruction of those industrial structures that shaped the economy from the point of view of maximum engagement of human resources," says Paul Segal. The poverty has left many professions. To remedy the situation, according to experts, is possible only if the long-term and sustainable development that will create opportunities for new businesses in new industries. However, talking about it for a long time and hopelessly. But what to do?

To improve the quality of the workforce, and that the current economic situation, people could improve their situation, offers Anton tabah. "We need to improve the skills of employees through further education, to stimulate the creation of new jobs through tax incentives and government programs, to reduce barriers to migration" — lists the Tabs.

it is Important to increase the accessibility of education not only for students but for the working-age population, according to managing partner of consulting company Rebridge Capital Suren Hayrapetyan. "This way is now moving the government and large businesses, creating different educational portals to which access is free, — said the expert. — New knowledge and skills, of course, will allow citizens to increase their competence".

But at the same time need to reduce staff low paid virtually nothing producing jobs, said Roman Makarov. "This is the most difficult decision — he admits. Workers should retrain and enhance their skills so they can find new, high-performance workplace". Makarov agrees that the implementation of such economic policy will increase unemployment in the early years. Therefore we need a welfare system that would allow the unemployed to receive an adequate allowance during the period of retraining.

of Course, the improved quality of the workforce, growth of labour productivity and therefore wages more quickly in the case of privatization of the economy: private business more mobile in these questions, add our experts. But this is hardly yet rely in Russia. So it's best to remember the fact, in whose hands is the salvation of the drowning, and to think independently without the help of the authorities, to increase their value in the labour market.


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