– This year, since February, the government has indexed pensions by 8.6%, and other social payments (maternity capital, families with children, veterans, disabled people, Chernobyl victims) – by 8.4%. That is, the adjustment is made according to the official inflation for the last year. Is it possible to consider that by doing so the state fulfilled its social duty to citizens?
– I would call this indexing the minimum necessary function taken on by the state. This measure only formally compensates for the main costs of pensioners on rising prices for goods. The authorities promised that pension payments would be indexed at rates no lower than inflation. De facto, for the past 15 years, older Russians have not only been favored by the state, but they have become accustomed to the fact that the indexation of pensions significantly exceeds inflation rates. And now, for the first time in the last seven years, since January 1, they have faced a new and extremely unpleasant reality, with an additional factor affecting the quality of their life. The official consumer price index differs sharply from the rate of inflation expectations of 12-16% published by the same Central Bank. The rise in food prices has reached double digits, and yet the consumer basket of pensioners is now shifted to the food zone. The problem is that inflationary processes in Russia and the world are not predictable. It is clear that the first half of 2022 will also be marked by high inflation.
– What were the authorities guided by when they made their decision on the amount of indexation?
– By raising pensions by 8.6%, and not by the maximum possible amount, not at a faster rate, not at a one-time rate, the government left for itself a certain “gap”, space for further maneuver. To do otherwise would be counterproductive from the point of view of monetary policy and budget balance. I hope that at the end of the first quarter, the authorities will return to the issue of the need to provide one-time assistance to the elderly in the amount of 5-10 thousand rubles. Our pensioners are represented by various groups – for example, there are military pensioners and former government officials who receive higher payments. Such assistance will be especially useful for recipients of the minimum pension payment, who have nothing more to hope for.
– Has the peak of inflation been reached in Russia today?
– This is evidenced by a fairly large number of indirect factors. At least in December, we did not observe an increase. Another thing is worrying: abroad this peak has not yet been passed: in the USA, inflation has exceeded 7% (a record for the last 40 years), in Europe – 5% (a record for the last 30 years), and so far there is no rollback. And Russia, being deeply integrated into the world economy, is critically dependent on external inflationary processes, remaining, in fact, their hostage. And here the measures taken by the Ministry of Finance to tighten monetary policy and budget consolidation will not help her. If high rates of price growth continue in developed economies, then new peaks are possible in our country. According to many domestic producers, they are ready to increase prices for their products by tens of percent. This is a kind of proactive position: companies “lay straws” in order to avoid questions from regulatory authorities and relevant departments later. An additional factor is also seasonal: closer to spring, agro-industrial products traditionally become more expensive, due to the peculiarities of this market. Previously, people did not attach any importance to this, but today it is a powerful irritant for them. The monopoly of manufacturers is simply off scale, the business understands that further loans will be provided at a higher interest rate, and this prospect is included in the price of finished products. After all, it is not oysters that are getting more expensive, but potatoes, the cost of which can be changed quite voluntaristically.
– To what extent can inflation devalue pensions?
– Pensions are indexed by 8.6% compared to 2021, when pensioners faced increased prices for food and medicine. Even then, most of them experienced an acute shortage of funds. Since the inflationary process will certainly not subside in the first quarter, over the two-year period (2021 and 2022) pensions will lose their purchasing power in real terms, and the standard of living of older Russians will fall even more. And nothing can be done about this cumulative effect. It remains to be hoped that the state, realizing the realities and having a budget surplus, will provide pensioners with direct financial assistance.
– When, in your opinion, such measures can be implemented, and which categories of the population are entitled to rely on them for additional support in the first place?
– While it is impossible to say when, in what month it will happen. It is not clear how food prices will behave. However, the authorities should hurry. There are a lot of people living below the poverty line in Russia. All current social benefits, the recalculation of the minimum wage and other external attributes of a welfare state do not lead to significant changes, to a decrease in the number of poor citizens. These people need emergency help, you can’t tell them: come back in a year. There is a risk that they will not survive this year. The situation of the pandemic crisis dictates new, more radical and systemic methods of economic support for the population. Why not turn to the experience of the United States, where the targeted food aid program works great? In food cards, we still see a certain characteristic feature of the third world countries. It’s time to get rid of the stereotypes and complexes of the 90s. We have not learned how to act targeted, we have not decided on the categories of recipients. More natural, material forms of support must appear and develop. Today, single mothers receive a kind of rations – additional benefits in the form of a set of products. It would be nice to expand this program to other socially unprotected groups – pensioners, the disabled. Moreover, no economic breakthroughs are expected in 2022: GDP will grow at best by 2-2.5%.
– Working pensioners have been waiting for a decision on the indexation of their pensions, but it has not been made, despite the order of the president. What are the prospects?
– Indeed, there is an internal contradiction here: there is an instruction from the president, but the matter is not moving forward. In general, I would translate the topic into a philosophical plane related to the eternal attitude of the state to pensions. For officials, this is a social benefit paid to senior citizens, this is a manifestation of paternalism, an exceptional act of goodwill. To whom to pay, how much, to index or not, by what amount – everything is decided by the state. However, we must not forget: the person himself earned this money for his labor path, sometimes very difficult. He worked for the good of the country, regularly paid taxes. And now the state, within the framework of its social function, is obliged to provide him with decent living conditions in his old age. If we are talking about a pension honestly earned by a citizen, then how can pensioners be divided into unemployed and employed? The latter, by the way, monthly pay taxes to the Pension Fund in a much larger volume than this indexation could give them. In a number of countries, older people are, in principle, exempt from paying pension fund taxes. Today, with an annual treasury surplus of 1.4 trillion rubles, the state is still showing an extreme degree of pettiness. Having reached retirement age, our people continue to work not because they are bored of sitting at home. They cannot accept a dramatic drop in their income levels and quality of life.
– In developed countries, the problem is solved by switching from a distributive pension system to a funded one. Why are we worse?
– In 2014, the state became afraid, and it abandoned the achievements of a 10-year experiment to introduce this mechanism. For a long time, the government pursued a completely conscious policy in the field of shaping the right investment behavior among citizens, in particular, among young people. In order for people to realize the inevitability of the onset of retirement age, they came to an understanding that it is necessary to start saving ahead of time for retirement. To date, the state, having frozen the funded part, de facto does not offer any alternative products. But we are talking about long-term investments, the need to think and act 30-40 years ahead. For the economy, this is “long money”, in which it experiences the greatest deficit. The conscious refusal to meet the needs of working pensioners strengthens the distrust of society in the state pension system as a whole, its rejection by young people. And in the end, it undermines the policy of domestic investment in the Russian economy. The 2014 decision to freeze pension savings was explained by the need to reduce budget expenditures. At that time, there was indeed a financial hole in the Pension Fund. But since then the situation has changed, but the approach has not.
– Some politicians and experts propose to sharply increase the minimum wage and minimum pensions by 2-2.5 times in order to put an end to the problem of poverty. And they point to the National Welfare Fund as the most appropriate source of funding for such a move. Can this maneuver be carried out, and will it benefit the state and citizens?
– Yes, this will solve the problem of poverty in the country, it’s hard to argue here. But the question arises – where does the money come from in the NWF, which allows you to make savings? In fact, the fund is fueled by funds that Russians do not receive for their work. The level of wages in our country is noticeably lower than in the West. Recently, while re-reading the modern American economist Stiglitz, I noted for myself one of his thoughts. The problem of social stratification exists everywhere, but in countries whose economy rests on the export of hydrocarbons, it should be less acute. After all, according to the constitution, natural resources belong to the entire population, as well as the proceeds from their sale. Why, then, in Russia such blatant inequality? Our main goal is high economic growth. Low – leads to constant degradation of real incomes. If we now take and simply increase the minimum wage and pensions (no matter from what source), this means distributing money that will be spent very quickly on the purchase of imported goods. Over the past year, we have absolutely horrifying statistics on the withdrawal of capital from Russia. The outflow of money will dry up the accumulated reserves, and that will be the end of it. Against the background of the lack of solvent demand, long-term development programs and economic reform, this will only provide short-term relief to certain categories of citizens.