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The New ‘Map’ of Russians’ Incomes

The structure of Russians’ income sources has changed. Pensioners are working more than before, while middle-aged Russians are working more and relying less on welfare; Russians are less frequently receiving child-related benefits. Farming has become less important for residents in rural areas. Sergey Vasin and Vladimir Kozlov presented a map of Russians’ income sources in the HSE online magazine Demoscope Weekly

Work, welfare, and pensions can be regarded as the main sources of livelihood. Major changes have affected these three basic categories, note Sergey Vasin and Vladimir Kozlov in their article “How Are Russians Subsisting?”. The 2010 Russian census recorded the changes in income sources. The researchers used the results of the previous census in 2002 for comparison.

A Reconfiguration of Income

The changes in income sources are a reflection of trends in the socio-economic development of the country. These trends are positive, judging by several facts:

  1. Regarding child benefits for poor families, a decrease in payment requests shows that the financial situation of families with children has improved and that fewer are relying on welfare.
  2. Earned income ensures dependency. Work activity is a reliable source of income.
  3. Farming has become less important for people living in rural communities.
  4. Russians prefer to save money, and people of working age are filing for disability less often.

Nevertheless, the socio-economic situation is not totally positive. Vasin and Kozlov point out its dual character. Negative trends are also taking place, such as the increase in the number of older people requesting disability pensions, and the number of people of working age requesting pensions (other than for disability); this likely explains the increase in the number of  early retirement pensions.

Dependency, Work Activity, Pension

The 2010 Russian census lists 12 income sources: work activity, auxiliary farming, scholarships, pensions, welfare benefits (for mothers with children, guardians, children from needy families, subsidized housing, etc.) welfare dependency, disability pensions, and others.

Welfare benefits mainly concern women and children, while pensions concern people of all ages. Early retirement pensions start from 30-35 years of age. Children receive pensions in case of the loss of the household breadwinner. 

When asked about their sources of income, 2.8% of the respondents did not answer. Such questions make people feel suspicious, say the researchers.  Of the 139 million who answered the question, 103.4 million reported one income source and 35.6 million reported more than one.

The overall income map (Table 1) clearly shows the triad of main sources: work activity (37.8%), pension (19%), and dependency (21.8%); these are followed by auxiliary farming (8.5%) and welfare benefits (6.1%).

Table 1. The structure of income sources according to the 2010 Russian census. The entire population, male and female, %

Revenue Sources

Population

Sources 

One

Two and more

Work activity

37,8

49

21,7

Auxiliary farming 

8,5

1,4

18,6

Scholarships; dividends; interest

1,6

0,5

3,1

Pension (except disability)

19

19,2

18,6

Disability pension

2,9

2,5

3,5

Benefits (except unemployment)

6,1

1,1

13,2

Unemployment benefits

0,8

0,7

0,9

Other form of state support

1

0,7

1,3

Savings

0,4

0,2

0,6

Rental income

0,2

0

0,5

On the dependency of other individuals

21,8

24,4

18

Other source

0,1

0,1

0

Total

100

100

100

Note: The sum of the columns may differ from the total due to rounding.

Such sources as work activity, pension, and dependency are typical for people with one income source, and the others for people with several income sources, note Vasin and Kozlov.

The authors also researched the prevalence of income sources based on 100 people (Table 2). Here, the triad of sources (working activity, pension, and dependency) are also most prevalent.

Table 2. The prevalence of income sources based on 100 people (excluding the respondents, who skipped the question)

Revenue sources

Entire population

Sources

One

Two and more

Working activity

48

36,6

11,4

Auxiliary farming 

10,8

1

9,8

Scholarships; dividends; interest

2

0,3

1,6

Pension (except disability)

24,1

14,3

9,8

Disability pension

3,7

1,9

1,8

Benefits (except unemployment)

7,8

0,9

6,9

Unemployment benefits

1

0,6

0,5

Other form of state support

1,2

0,6

0,7

Savings

0,5

0,2

0,3

Rental income

0,3

0

0,2

On the dependency of other individuals

27,7

18,2

9,4

Other source

0,1

0,1

0

total

127,1

74,6

52,4

Source: S.Vasin and V.Kozlov, the article ‘How Are Russians Subsisting?’

Life Cycle and Revenue

The researchers list several patterns:

  1. The three main income sources change places during the course of aging: dependency – work activity – pension.
  2. Auxiliary farming increases with age, the peak being 50-54 years of age.
  3. Benefits also depend on age. They are the second largest income source in childhood (30% of the population under 15 years old). Among those over 20 years old, they apply only to women.
  4. Disability pensions increase up to retirement age, and then decrease; this is quite understandable: individuals receiving disability benefits switch to retirement benefits after reaching retirement age.
  5. Five years after retirement, the request for disability support declines and then starts to rise again.

Working Pensioners and Dependants of Working Age

Towards retirement age the number of sources of subsistence increases, especially during the five years before and after retirement.

During the initial years of retirement, the majority keeps on working. As a result, the number of income sources reaches maximum rates for women at the age of 55-59, and for men at the age of 60-64. But the older a pensioner gets, the harder it is for him or her to work. That is why the number of income sources declines with the decrease in work activity.

Differences in the structure of income sources among the population with one and two sources can be explained by age differences (Table 3).

Table 3. The age structure of the population with one and two sources of revenue according to the 2010 Russian census, male and female

Population Age

Urban and Rural

Urban

Rural

One Source

Two Sources

One Source

Two Sources

One Source

Two Sources

Under working age

15,2

20,3

15,3

16,5

14,8

25,2

Working age

65,5

49,1

65,7

47,4

64,6

51,2

Older than working age

19,3

30,6

18,9

36,1

20,6

23,6

Total

100

100

100

100

100

100

 

The revenue structure of the population with only one source of subsistence is simple. Dependency prevails in childhood; work activity is typical for the adult population; and pensions prevail in old age. But dependency prevents work activity from dominating at working age. Fifteen percent of the population with only one revenue source is dependent. The majority of them are students who don’t receive scholarships.

The situation with members of the adult population who have two revenue sources is more complicated. Only 55.9% of this population is engaged in work activity. Dependency often displaces the work activity of an urban population.

But the sharper contrasts in the structure of income sources between people with one or two sources of income are noted in retirement age. A significant portion of the population with two sources of income at this age both works and receives a pension. The population with one source of income is living only on a pension. 

The Rural Population Needs Several Revenue Sources to Get by

On average, village dwellers have more sources of subsistence than city residents, note Vasin and Kozlov. They found that 80.6% of city residents have only one revenue source, and it is common for village dwellers to have both one (58.5%) and several income sources. Multiple income sources are specific to the rural population due to the prevalence of auxiliary farming.

Work Activity and Pensions Crowd Out ‘Competitors’

Comparing the results of the Russian Census in 2002 and in 2010, the three main revenue sources gained in importance, as other sources turned out to be less widespread. In general, the variety of sources decreased. Dependency absolutely dominates among other sources of subsistence for children; pensioners tend to work more; and child-related benefits are in less demand today. This has caused the age profile of the average number of income sources to change. In 2002, children had the majority of income; in 2010, pensioners did.

 

Author: Olga Sobolevskaya, August 26, 2013