It is vital to solve social problems

27 january 2016 | Nezavisimaya Gazeta

Leonid Grigoriev, the Chief Adviser to the Head of the Analytical Center, commented at length on the Human Development during Economic Downturn report that the Analytical Center released in December 2015.

Leonid Grigoryev
Leonid Grigoryev
Chief Adviser to Head of the Analytical Center

“The depth of analysis in this report comes from the systemic approach to human capital in Russia and from the fact that it used the classic international research methodology. This year’s report even has a chapter on the theory behind the methods for calculating various indexes characterizing various performance metrics. So the things we do allow us to compare Russia to others while also analyzing its development in both time and space, taking into account various aspects of the social and economic life in the regions,” Mr. Grigoriev said in an interview to Nezavisimaya Gazeta.

- Out of the 17 Sustainable Development Goals for 2016-2030, ‘End poverty in all its forms everywhere' is cited among the most important ones.

Exactly. Overcoming poverty was also cited as a central objective in the Millennium Development Goals the UN outlined until 2015.

The chapter on poverty around the world and in Russia in our report was written by Tatiana Maleva, the Director of the Social Analysis and Forecasting institute of the Russian Presidential Academy of National Economy and Public Administration. At the very beginning of the chapter she notes that Russia joined the UN Millennium Goals Declaration after the large scale transformational crisis it went through in the 1990s, whose length and depth had such a dramatic effect on increasing poverty that in some periods it exceeded 30 %.

The reasons for that are clear: there was no money to combat poverty so the state had to resort to passive measures where some groups were given preferential access to various social resources. The effect of such measures was very limited. And most importantly, at the political level, the issue of poverty was pretty much ignored. Everybody was confident that as soon as the economy took off, poverty would automatically start to decrease. But the problem not only did not go away but instead became an obstacle preventing the country from pulling out of the crisis. So on this count I agree with Ms. Maleva, as Russia’s joining the program to implement the Millennium Development Goals was completely in line with our own interests in ensuring social and economic development.

She also notes that according to official statistics, it the past 15 years Russia has managed to significantly reduce the scale and level of poverties compared to where the country was at the beginning of this century after a long and deep transformational crisis.

According to official metrics, poverty in the country has halved while abject poverty or destitution, that is when you are so poor you do not even have enough money to buy food, has gone down almost by a factor of 4.

However, some alternative metrics suggest there has hardly been any change in the levels of poverty and abject poverty.

The measure that had the most profound effect on reducing poverty was the introduction of additional payments for pensioners to bring the total amount they get to the regional living wage. That measure has helped a lot the largest social group in Russia, the pensioners.

However, there has been practically no change in the level of poverty among families with children, despite the government implementing a large scale program to support families with two or more children.

The economic crisis that hit in 2014 had an immediate effect on household income and the risk of poverty. If the crisis continues, we will not be able to avoid an increase in poverty, Tatiana Maleva concludes. And if we end up having an extended recession, almost 30 % of Russian households have a very high chance of ending up in poverty.

How is the crisis affecting the processes and metrics you look at?

We all understand very well that when a country has some kind of a huge rent and the state and business have a lot of cash, it is easy to simply throw money at the problems, backing any project with even the vaguest promise of success. At times like this it is always the case that little attention gets paid to details, institutions, logic or efficiency of the tools. But all of those are important considerations.

Because as soon as you run out of money you have to think about how to get the biggest bang for the little buck that you have left and achieve the results you want. But we are seeing fewer and fewer people going on vacation abroad and companies buying less and less imports. So the inescapable conclusion here that all the most indispensable items such as medical equipment and drugs, must be produced at home.

The devaluation of course has given local production a great chance and is keeping everyone on their toes: people have to keep searching and keep thinking.

In our opinion the current crisis is characterized by more stability than the previous one. This can be seen both in the situation with employees and in how employers are behaving. We have not seen quite as many layoffs as last time and most employees have kept their nominal pay.

Experts around the world are talking more and more about a crisis in economics as a science as it no longer seems capable of predicting what is going to happen tomorrow to the current model of the global economy. Macroeconomic scenarios are getting gloomier and gloomier and turbulence is lasting longer and longer. Does it really make sense to think about human development a thousand years into the future at this stage?

I think that viewed against the background of these gloomy scenarios our report is very simple. Basically, solving social problems, maintaining a good level of education and science, developing social society and strengthening the middle class are the kind of things that are relevant today and are bound to remain relevant tomorrow and the day after tomorrow and next century.

For more go to the website of Nezavisimaya Gazeta.