Moscow News
http://www.mnweekly.ru/
March 27, 2008
Slave to the Wage
By Rebeccah Billing
Moscow may have overtaken New York as the home of the most billionaires, but the average Muscovite's wage is just one quarter of what their New York counterparts earn.
The UBS 2008 Prices and Earnings update released this month ranks Moscow 49th in a rating of world cities by salary. The report, which compares the purchasing power of workers around the globe, found that Moscow's average gross salary is 24.8 percent that of an average New York salary.
In terms of purchasing power, Moscow fares better: an hour's work here delivers 44.4 percent of the spending power of an hour's work in New York, thanks partly to Russia's low income tax, which is a flat 13 percent. The world's highest earners are in Copenhagen, Oslo and Zurich, with average wages of 140.9 percent, 139.1 percent and 130.0 percent respectively compared to New York wages.
Of the cities surveyed, the lowest earners were in Jakarta, where workers earn just 6.5 percent of the average New Yorker's gross wage, followed by Delhi (7.6 percent), Manila (8.0 percent) and Mumbai (8.7 percent)
New York itself came in 13th position. The depreciation of the U.S. dollar has caused American cities to slide down the list this year; Chicago was pushed down 11 places, from number 7 to number 18, since the last comparison was released in 2006.
Moscow's position on the list has steadily improved in recent years; in 2003 the average wage in Moscow was only 13.8 percent that of a New York wage, this rose to 18.3 percent in 2006 and 19.9 percent in 2006. The rising income levels are having an appreciable effect on standards of living in the city according to the deputy director of the Independent Institute for Social Policy, Liliya Ovcharova:
"[But] unfortunately the poorest members of society are seeing the smallest increases in income. Those in middle to high incomes brackets are seeing their incomes rise much faster; so the disparity between the highest and lowest wages is increasing."
In Russia last year the highest earning 20 percent of the population earned 47.8 percent of the total income in Russia, while the lowest earning 20 percent received just 5.1 percent, according to figures from the Federal State Statistics Service. The respective figures for 2006 saw high-earners getting slightly less (47.3 percent) and the lowest earners slightly more (5.2 percent) suggesting that social stratification is worsening.
Wages also vary significantly between different sectors; last year the highest wages went, unsurprisingly, to those working in the oil and and gas industries (average wage 33,366 rubles) and those working in the financial sector (35,406 rubles). The lowest wages went to agricultural workers (6,128 rubles) and textile workers (6,387 rubles). Russians in education were also among the worst paid, with an average monthly wage of 8,788 rubles.
In the regions, the highest salaries are to be found in oil-rich Tyumen, with wages 2.5 times the national average according to figures from Independent Institute for Social Policy. Muscovites' wages are currently twice the national average.
Overall incomes in Russia grew by 21.2 percent last year according to preliminary data from the Federal State Statistics Service. When adjusted for changes in the consumer price index this translates to a real average income increase of 11.6 percent.
Although it is difficult to assess how these wage increases relate to rises in productivity in the country, most analysts agree that the two figures aren't growing in tandem:
"It is unlikely that Russian productivity has been consistently growing by 10-15 percent per annum over the last few years, while people's real income is growing at this pace," Artem Arkhipov, macro economist for Gazprombank, told The Moscow News.
The steep wage growth in Russia has lead to speculation that the government will introduce economic policy measures to prevent the economy from overheating; the rapid increase in salaries is one of the causes of the current high inflation in Russia.