Moscow's Millions
// A Million Muscovites Live on $5,000 a Month, but Income Gap Still Widening
According to data from the Moscow City Statistics Agency (Mosgorstat), the average Moscow resident's monthly income rose 22.8% to 30,486 rubles in 2006, while incomes among the top 10% of earners reached 129,654 rubles (more than $5,000). At least 30% of Muscovites, or three million people, make more than $1,000 per month. The income gap between rich and poor, however, shows no signs of narrowing: the incomes of the city's richest 10% exceeded those of the poorest by 41 times, and 13% of residents live below the official poverty line.
The 30,486 ruble average monthly income in Moscow is approximately three times higher than the average for the rest of Russia. The gap is due less to differences in salaries – the average Moscow monthly wage in 2006 was 17,900 rubles, compared to approximately 12,000 rubles in the rest of the country – than to available sources of extra income: Moscow residents tend to make their extra money from renting out apartments and running small business enterprises.
A breakdown of the population by income (see the table below) shows that the average income of the most well-off 10% of the city's population in 2006 was 129,700 rubles a month, or around $5,000. This group receives 42.5% of income in Moscow. The average income of the next 10% was 57,000 rubles, or approximately $2,200. The average does not drop to slightly below $1,000 a month until the fourth group, which means that a minimum of three million of Moscow's 10.5 million residents live on more than $1,000 a month. "This index could be the envy of many European cities," said Yaroslav Lisovolik of Deutsche UFG.
The numbers from Mosgorstat are somewhat higher than those collected by the research group Komkon, which show that in 2006 48.9% of Muscovites earned between $500 and $700 per month, 25% between $700 and $1,000, 11.6% between $1,000 and $1,500, 7.5% between $1,500 and $2,000, and 1.4% more than $3,000. "We compared our data with data on England and France, and the first thing that jumped to our attention was that the middle class abroad lives more modestly," said Komkon communications director Maria Vokatova.
Even judging from Mosgorstat's data, however, many in Moscow live in poverty: the average monthly income of the city's poorest 10% of residents was a mere 3,135 rubles in 2006, while those in the second decile earned 5,266 rubles a month. Given that data from Rosstat, the country's national statistics-gathering agency, show that the average monthly pension in Russia is 2,700 rubles, Mr. Lisovolik points out that the lowest income group undoubtedly includes many pensioners.
Meanwhile, the factor describing the gulf between the city's richest and poorest residents grew from 38 times in 2005 to 41 times in 2006. In most European countries, the norm is considered to be 6-8 times. According to data from the Institute of Economic Forecasting (INKhP) at the Russian Academy of Sciences, this index is actually even higher: between 50 and 55 times. "The income gap has a tendency to widen. Even if "grey" salaries (wages paid off the books) were taken into account, these numbers fundamentally will not change," explained INKhP director Viktor Ivanter. Aleftina Gulyugina, the deputy director of the Center for Issues of Population Income and Social Welfare, notes that the widening income gap is linked to rising incomes among well-off Muscovites: "Incomes are growing faster for the super-rich than for those with the lowest incomes," she said.
Mr. Ivanter points to the specific structure of Moscow's workforce. "The capital is first and foremost a large financial and scientific-artistic center, where there are many workers in the financial sector with high incomes and many workers in the arts and sciences with low incomes," he said, a point of view that is borne out by data from Mosgorstat. The highest monthly salaries in the capital in 2006 were in the financial (44,741 rubles) and mining (30,776 rubles) sectors, while the lowest incomes were received by Moscow's few remaining fishermen (5,471 rubles) and farmers (7,340 rubles).
Ms. Gulyugina also ties the income gap to the capital's high concentration of the super-rich: "The biggest earners live in Moscow, and at the same time there is a high level of poverty in the capital – 13%," she said. Her opinion was seconded by Natalia Tikhonova, the deputy director of the Russian Academy of Sciences Sociology Institute, who notes, "all of the richest people are concentrated in Moscow. The capital has more people who can be assigned to a level higher than middle class." This is explained by the capital's large number of government employees and the many big companies that are concentrated in Moscow.
"With such economic growth, the income gap should shrink, but it is not decreasing. This is tied to a low level of effectiveness – in production, with a low level of organization and technical facilities," said Mr. Ivanter. He also warned about the danger of a further increase in the gap, "which will be followed by the lumpenization of the lowest levels of the population." Meanwhile, Mr. Lisovolik is mainly concerned by a decrease in competitiveness: according to him, the efficiency of labor is clearly not keeping pace with salaries.
