MOSCOW - “At the time of transition, there were hopes that Russia would transform itself into a high-skilled, high-income economy with strong social protection programs inherited from the Soviet Union era...” So starts the Credit Suisse report on Russia as part of its 2012 Global Wealth Report.
According to the bank’s experts, since 2000 the world has become about 38% wealthier, and it is expected to substantially gain more wealth in the next five years. In general, the world is getting richer.
But that is not the problem. It turns out that 39.3% of the world’s wealth is owned by a mere 29 million people, or 0.6% of the world’s population.
So who has the lion’s share of the wealth? The largest number of millionaires is in the United States, with 11,023,000 millionaires. In comparison, in all of Africa, there are only 95,000 millionaires, and there are some countries in Africa without a single one.
The researchers also looked at the distribution of wealth inside the countries – and the outlook for Russia is particularly extreme. Russia has one of the most unequal wealth distributions in the world, topped only by Caribbean tax havens.
On average worldwide, for every $194 billion in household wealth there is one billionaire. In Russia, there is a billionaire for every $15 billion. On the other hand, Russia is one of the countries that grew the fastest in average wealth creation during the first decade of the 21st century, going from an average of $2,000 per adult in 2000 to $13,600 today. But the Swiss bank did not look closely at how many poor people were left in the dust by Russian development.
Reducing social inequality
“The high level of social inequality is connected to the Russian economic structure, to the concentration of most resources in the hands of a select cross-section of the population – that much is obvious,” said Natalia Akindinova, director of the Development Center Institute. “The government is trying to reduce inequality by raising salaries for government workers and pensions. But unfortunately that just has a short-term effect. We know what works in the long term: developing different sectors of the economy, not just oil and gas.”
But that isn’t the only thing that creates wealth inequality. Russians have only had the possibility of saving for the past 20 years, and often their wealth is connected to their apartment and car, experts say.
The memory of the 1998 ruble crisis that wiped out most people’s life savings is still relatively fresh in the minds of everyone old enough to remember. To this day, few people participate in the stock market, and trust in financial markets is very low, and in fact often investing in stocks is unwise because they barely keep up with inflation - that’s why well-off Russians often put their money in real estate. On the other hand, in the West there is a long tradition of participation in the stock market. Some experts say that if Russia is going to develop into an advanced economy, financial instruments like stock market participation will have to become commonplace.