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Impact of COVID-19 on Poverty in Russia

Impact of COVID-19 on Poverty in RussiaThe impact of COVID-19 on poverty in Russia is quite significant. Like many other nations worldwide, the pandemic has proven to be a sizable obstacle in the fight against poverty. Measures meant to limit the spread of COVID-19 within Russia have resulted in the Russian economy shrinking overall. With this economic shrinkage, more people within Russia are at the brink of falling into poverty.

Unemployment and Poverty Rates

The economic decline due to the COVID-19 pandemic resulted in a spike in unemployment within Russia. By October 2020, the unemployment rate had climbed to 6.3% — the highest unemployment rate Russia has seen in eight years. Many of these job losses mainly occurred in the “manufacturing, construction and retail and hospitality” sectors. Additionally, this increase in unemployment led to a spike in poverty. In the first quarter of 2020, the poverty rate stood at 12.65, rising to 13.2% in the second quarter of 2020.

Impact on Minor Cities

Some wealthy Russian cities, such as Moscow and St. Petersburg, are better positioned to handle the economic impact of the pandemic. These larger Russian cities had more robust local economies before the pandemic. However, smaller cities have proven less capable of handling the impact of COVID-19 on poverty in Russia. These smaller cities were hit hard by the collapse of Soviet industries with the fall of the Soviet Union, struggling to combat unemployment and poverty long before the onset of the pandemic. These impoverished cities also have some of the weakest healthcare systems in all of Russia. The pandemic has compounded this by overwhelming already under-supported healthcare systems.

Furthermore, sectors hit hard by the pandemic, such as construction and service, were previously a lifeline of employment for already impoverished cities. Many Russians within smaller cities face hard decisions of choosing between prioritizing health or income, with some opting to continue to work despite the dangers of COVID-19.

Impact on Migrant workers

The impact of COVID-19 on poverty in Russia is strongly felt among Russia’s sizable population of migrant Central Asian workers. Many of these migrant workers have remained within Russia during the pandemic, without jobs or income.

These Central Asia migrants were targets of discrimination before the onset of the pandemic and were already in a more vulnerable position within Russia before 2020. The pandemic has only compounded this vulnerability as many face unemployment and border closures have made it impossible for most to return to Central Asia to wait out the pandemic.

Statistics from December 2019 indicate that more than 1.6 million migrant workers reside in Moscow. The majority of these migrant workers are from Central Asia. Many work in sectors such as service or construction —  sectors that were especially hard-hit by COVID-19 restrictions in and around Moscow. The fees that migrant workers pay the city of Moscow for their work permits form a significant part of the city’s revenue. In 2016, the mayor stated that these permit payments brought the city “more revenue than oil companies.”

Intervention by NGOs

Throughout the pandemic, Russian NGOs have been providing Russians with varied forms of assistance to mitigate the impact of COVID-19 on poverty in Russia. Marginalized populations are often unintentionally overlooked in aid endeavors.

Nochlezhka is an NGO in St. Petersburg, Russia, focusing efforts on the often marginalized and excluded homeless population. The organization garnered the support of citizens to help distribute informational COVID-19 pamphlets to the homeless and encouraged donations of sanitizer and face masks. Nochlezhka also started the You Are Not Alone initiative, encouraging citizens to “leave plastic bags with food and hygiene products in places where homeless people could find them.”

NGOs have not limited their assistance to Russia’s homeless population though. Organizations have created services that are available to a wider array of people. For instance, the Agora International Human Rights Group is providing legal assistance to Russians on various legal issues during the pandemic, “such as fighting fines issued for breaching lockdown.”

Trends for the Future

Despite these troubling examples of COVID-19’s impact on Russian poverty and predictions indicating that the poverty level in Russia will remain above 10% for some time, there is hope for the future. Government policies meant to combat the economic impacts of the pandemic have had some recent success. With the implementation of these support policies, estimates indicate that by the end of 2021, the Russian poverty level should fall below pre-pandemic levels.

The impact of COVID-19 on poverty in Russia is substantial. The pandemic has witnessed a spike in unemployment and poverty overall. Additionally, the pandemic disproportionately impacts vulnerable populations within Russia, such as already impoverished citizens and migrant workers. Despite these hardships, Russian NGOs have stepped in to assist Russians. Predictions indicate that government support policies will largely reverse COVID-19’s impact on Russian poverty during 2021.

– Coulter Layden
Photo: Flickr

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Poverty in the Former Soviet Union Steadily Declines

Poverty in the former Soviet Union
The Soviet Union, also known as the USSR, was a state including several socialist republics in Eurasia. The USSR formed in 1922 following the first successful communist revolution in world history. The Soviet Union disbanded in 1991 and resulted in the formation of 15 independent nations. Meanwhile, poverty in the former Soviet Union nations ensued.

Life Before the Collapse

The Soviet government in each of the republics aspired to equally distribute services and goods within the formal sector. However, gross inequality existed within the Soviet Union, which was similar to the amount of inequality that capitalist countries faced at the time. This inequality combined with shortages in labor and goods in the final years of the Soviet Union led many people to join the informal sector where people could not regulate distribution.

The government’s control over the centralized state dwindled. The structural frameworks were able to do just enough to keep most people out of poverty. However, the Soviet government signed itself out of existence in 1991. Millions of people fell below the poverty line overnight. Additionally, crime, corruption and unemployment became increasingly prominent.

One of the most foreign outcomes of the worsening economy was inequality. An oligarchic class quickly formed, as people made and lost fortunes seemingly out of nowhere.

Poverty Factors

Following the dissolution, market forces overwhelmed a state that had virtually no market involvement for almost 70 years. In addition, funding for government-provided services declined, which left many people without the resources to survive.

Social services that the government provided tended to be poor in quality in order to meet a universal standard. The framework inherited from the former Soviet government proved unsuitable for helping transitioning economies.

The Policies

Poverty in the former Soviet Union was most prominent in the working population. Several of the newly independent states used this to their advantage when making reforms. For example, a labor market reform that had a major impact was engaging the private sector in employment. As a result, the new governments introduced welfare-to-work programs to build self-sufficiency among the people. In addition, private companies were in competition with labor offices to find jobs for the unemployed.

These newly independent states also improved through reform to social benefits. As a result of decentralized government services, the demographics of a specific state or region received better-suited services. One of the most successful forms of social benefit reform was pairing conditional cash benefits with behaviors that encourage social mobility. This way, people could use the resources they received to specifically help their economic status.

The Results

Since the collapse of the Soviet Union, the soaring poverty rates have steadily declined. Around 40 million people escaped poverty from 1998 to 2003, although there is some disparity in growth between urban and rural areas as well as between different economic classes.

The nations continue to move from a centrally controlled state economy to a privatized economy. Economic growth has been most lucrative for helping people in the former Soviet Union escape poverty.

While poverty continues to be a widespread issue around the world, countries with transitioning economies can look to the new governments in the former Soviet Union. They are a framework for how the government can use its demographic strengths to promote economic benefit for the people.

– Camryn Anthony
Photo: Flickr