In 2017, the Russian average salary was about RUB 39,000. In ACRA’s opinion, the minimum salary of a middle class employee varies from region to region, from RUB 60,000 in the Oryol Region to RUB 121,000 in Moscow. It is obvious that the Russian average salary is not enough to cover middle class expenses.
Middle class markers:
- Residential real estate in ownership
- High level of current consumption
- Quality education
- Intellectual work or own business
- Self-identity as middle class
The minimum salary threshold was calculated as a sum of an employee's mortgage payments, car loan payments, current consumption, expenses for leave, and savings. Any property in ownership was excluded.
Income calculations were based on the official statistics on wages and salaries. Other income sources, e.g. leases, bank deposits, social benefits, etc., were excluded from calculations in view of the absence of relevant data (see Appendix 1 for more details).
Moscow, where salaries are traditionally highest, is followed by the Far East Federal District, with the average salary of RUB 80,000. It is explained by high prices for residential real estate in the Far East, about 40% higher than in other regions of Russia (except Moscow). In the European Russia (excluding some regions) and the Siberian Federal District, the threshold is lower: from RUB 60,000 in the Oryol Region to RUB 73,000 in the Murmansk Region.
Although the minimum threshold 'middle class' salary is comparably low in the European Russia, only 2–6% of residents enjoy incomes that exceed the threshold. The maximal concentration of highest wages and salaries is observed in Moscow (18% of employed) and mining regions (up to 43% in Yamalo-Nenets Autonomous Okrug).
The structure of expenses of Moscow residents, dominated by real estate expenses, fits most into the 'middle class' model. In other regions, car loans and current consumption prevail. One possible cause is a relatively low quality of residential buildings, so that the price of a one-room flat is comparable with the price of a quality car in some regions.
In 2009–2017, the gap between the highest and lowest average salaries has been stably high (about 15x), while the share of employees whose salary may be considered to be 'middle class' has been growing slowly in that period: mere 1–2% in most regions, and sizeable 12% in Moscow, 9% in Saint Petersburg, 15% in YaNAO, 10% in KhMAO. Thus, the interregional differentiation has been deepening in Russia.
Figure 1. Regions leading by the share of employees with 'middle class' salary in Regions
Figure 2. Regions ranged by the share of employees whose salary exceeds the regional 'middle class' threshold
Figure 3. Differentiation between average salary of 10% of highest paid and 10% lowest paid employees, fold change
Appendix 1. Minimum 'middle class' threshold salary criteria
1. The threshold salary covers the following expenses (per capita): mortgage payments, car loan payments, current consumption, expenses for leave, savings.
2. Minimum mortgage payments were calculated for each region as an average price per square meter multiplied by 25 (a minimum comfortable floor space of an apartment), provided that the mortgage loan is repaid by annuity payments within 120 months.
3. Minimum car loan payments were calculated for all regions based on the price of the most sellable car of a foreign brand, provided that the car loan is repaid by annuity payments within 36 months.
4. Minimum consumer expenses were calculated for each region based on the monthly price of a consumer basket.
5. Minimum expenses for leave were calculated for each region as the average price of a tour to the nearest tourist destinations (based on the available data).
6. As the consumer basket price does not reflect the actual consumption volume, the aggregate of items 1-5 was increased by 20%, assuming that a certain part of such expenses is spent for current consumption and a certain part goes to savings.