The definition and measurement of poverty in Russia

For long years in the former Soviet Union the question of poverty was not openly discussed in print. It was presumed that the existing system of social support, together with the full-employment of the able-bodied population, met the needs of those who could not work. The problem of poverty, its definition and measurement did not receive proper attention in the research of our economists.

The terms "subsistence minimum" and "poverty indicator" began to be used openly in print for the first time only at the beginning of the 90s. But this does not mean that before this time there was no problem of poverty in the USSR. In 1975 allowances for children in needy families were introduced in the Soviet Union for the first time. A needy family was defined as one with an income lower than 50 roubles. By 1985 the poverty threshold had been raised to 75 roubles and served as the criterion for the definition of the minimum wage and minimum pension.

In research beginning in the 1960s, which it was forbidden to publish, ‘rational´ and ‘minimum´ consumer budgets for various groups of the population were developed by a normative method. This normative method was based on a synthesis of absolute and relative concepts of poverty. M. Mozhina (2.9) noted that these minimum consumer budgets were not a real minimum. Both the minimum and the rational consumer budgets included the same 300 items of consumer goods, food and services (300 names). However, fixed state prices were used in accounting for the cost of the minimum consumer basket while average purchase prices were used for the rational consumer basket and this was the main difference between the minimum and rational consumer baskets. Hence, composition and structure of the goods and services included in the minimum budget were defined by the average standard of consumption. This method was used to define the boundary of neediness in 1975 and in 1985. In this way the subsistence minimum amounted to half the average per capita income. The proportion of food in this basket amounted to 50%.

According to the calculations of V.G.Zinina,1 in 1975 16% of all white- and blue-collar families lower than the poverty line of 50 roubles per head, and 39% of collective farmers fell below this line. In a 1985, with a poverty line of 75 roubles per head the corresponding figures were 16.3 % and 27.6%. On the eve of reform, in 1989, the poor amounted to between 16 and 25% of the total population, on different estimates.2

In 1992 a monograph edited by N.M. Rimashevska was published which for the first time analysed the socio-demographic characteristics and dynamics of poor families in Russia was on the basis of research in Taganrog (a typical average Russian city) between 1978 and 1989. In particular, she noted that in 1989 negative structural shifts in the composition of poor families could already be observed: the proportion of traditionally poor categories of the population was falling and the proportion of socially secure families had increased.

The liberalisation of prices in January, 1992 resulted in a more than twofold fall in the real incomes of all social strata of the population. There was obviously a need to change the volume and structure of the subsistence minimum. In November 1992 the new subsistence minimum was authorised by the Ministry of Labour of the Russian Federation. In its development the authors, in the main, were guided by the absolute conception, using together with it some elements of a relative approach. In accordance with the Methodological Recommendations3 the subsistence minimum was calculated on the basis of a normative-statistical method.