The main purpose of this paper is to explain inequality and poverty in Russia in the first period of transition and to get a clear idea of inequality and poverty in Russia. Poverty is closely associated with the stability of inequality. Therefore, examining the process of the stability of inequality will help to identify factors of poverty. Data on wages reported by Goskomstat is "wages due," or contracted wages. However, "wages due" may deviate from "acquired wages." In Russia, "wages due (+)" are frequently not paid in time and completely, which generates "wage arrears (-)." Meanwhile, workers may have "additional earnings from secondary employment (+)." Therefore, "acquired wages" can be defined as the sum of three factors: "wages due (+)," "wage arrears (-)," and "additional wages from secondary employment (+)." And two factors among them, that is, "wage arrears" and "secondary employment" should be considered in the analysis of income inequality and its increase, because they are the fluctuating factors of "acquired wages." Taking these two factors into consideration, we discuss inequality of "opportunity of getting wages" and the stability of inequality. Through the concept of "opportunity of getting wages," the following are examined; which groups are suffering from wage arrears and which ones have better access to secondary employment? In the first section, we objectively view the changes of poverty and inequality in Russia before the transition and after the start of the transition. First, the figures of poverty index and Gini coefficient show that poverty and income inequality drastically increased in Russia between pre-transition and post-transition. Second, in Russia, the decomposition of the change in Gini coefficient between pre-transition and post-transition shows that the change in concentration of "wages due" is largest and contributes strongly to the increase of inequality. In the second section, we intensively discuss "wage arrears" and "secondary employment," both of which cause "acquired wages" to fluctuate and are increasing after the start of the transition. By examining intensively these two features of the Russian labour market, we come to the following conclusion; on the one hand, the lower income groups, who are the most vulnerable, tend to suffer from more "wage arrears." On the other hand, the higher income groups have more opportunity of enjoying better access to "secondary employment." Moreover, "secondary employment" rarely helps to raise "acquired wages" of the lower income groups to the level of average "wages due," though it may sometimes help to raise them up to the level of poverty line. Thus, wage arrears and incomes from secondary employment are distributed with a strong bias, which is the obvious disadvantage to the lower income groups. The final section deals with the following; how the above two factors are related to the stability of income inequality and the formation of the poor? A possible explanation can be found in the segmentation of workers by their embeddedness in the informational networks (networks of relatives / acquaintances). Moreover, we observe the double discrimination of the poor by higher hazard of wage arrears and by lower likelihood of secondary employment. In other words, the lower-income groups suffer from more wage arrears, and have little access to secondary employment. Therefore, income inequality is stabilized and increased. As a result, it becomes much more difficult for the poor to get out of poverty.
|Translated title of the contribution||The Stability of Inequality and Poverty in Russia in the First Period of Transition: Wage Arrears and Secondary Employment|
|Number of pages||20|
|Publication status||Published - 2000|