The Normal Russian Salary

If you want to know how people really live, it’s crucial to know how much money they have at their disposal. For this reason, I regularly read Russian financial newspapers.

So what is a normal salary in Russia? If with normal Russian salary you mean average salary, the official answer in 2019 is 42 595 rubles, which according to today’s exchange rate amounts to about $652 or €582. These numbers come from the Russian Federal State Statistics Service ( Rosstat).

Although 42 595 rubles is certainly not a huge number many people in Russia make a lot less than this. This is mainly due to 3 reasons. First there are huge differences between Russian regions. For example in areas of Russia where the conditions of living are very harsh, salaries are higher. Basically, these regions are subsidised by the Russian government in order to prevent the already small towns up north from becoming completely abandoned. Also in a city like Moscow, the salaries are logically much higher than in other Russian regions. The second reason why many people in Russia make much less than the official average salary is that it is widely believed, probably not without reason, that the numbers presented by Rosstat are simply not correct. The numbers presented by Rosstat are thought to be erroneous for several reasons:

• First of all many people don’t believe Rosstat to be an independent organisation that comes up with its own numbers
• Secondly even when assuming that Rosstat wants to paint a correct picture, it can only base itself on numbers. But a lot of Russians are active in the so-called shadow economy, for which there are no official numbers available. So they have to work with estimates and estimates have of course a larger margin of error than do numbers.
• Thirdly a lot of Russians receive only part of their salaries officially and the rest they receive in cash under the table, these are the so-called grey salaries (серые зарплаты).

I will discuss this in more detail below. The third reason many people in Russia make less than the average salary is because of the huge size of the informal economy in Russia.

Below I will discuss each of these three reasons in more detail.

On This Page

• The Differences between Russian regions, the numbers from Rosstat
• Are Rosstat’s Numbers Correct?
• Russia’s Huge Informal Economy
• Partly Paid Under The Table
• What Is Normal?
  • How Much Money Russians Say They Need
  • Russian Attitudes To Rich And Poor
• Conclusion

The Differences Between Russian Regions

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Here below are the average salaries per Russian region on alphabetical order. As I mentioned, these numbers come from Rosstat and many people don’t trust them. In spite of that, these are still the most reliable figures we have. There are no other authoritative numbers.

Even though these numbers from Rosstat may have been embellished, still many regions are far below the average salary.

The numbers below are in rubles, if you would like to know how much this is in your currency, I suggest you use an online currency converter, like for example this one.

Usually, when you see these numbers anywhere on the Russian internet there are a lot of people very critical about them, because they claim to make much less money. According to the Rosstat numbers the Russian region with the highest salaries is the Magadan Oblast (Google Maps) with an average salary of 101662 rubles, which is about $1,569 or 1400 euros according to today’s exchange rate.

Are Rosstat’s Numbers Correct?

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So how do we know if these numbers are correct? We can just take a look at an online job site. One of Russia’s biggest job is hh.ru. If we look for jobs in the Magadan Oblast we get the following results.

So those are the vacancies from the Russian region with the highest average salary. But what about the Russian region with the lowest average salary? That region is Dagestan and below I put some random vacancies from that region.

Let’s have a look a hh.ru’s vacancies for Dagestan as well. These are vacancies in the regional capital, Makhachkala, therefore salaries are a bit higher.

The above is of course by no means a correct way to determine whether Rosstat’s numbers are correct or not. It’s just a small sample survey. There’s someone who did real research about it, Russia’s Anti-corruption Foundation, which is lead by opposition politician Aleksey Navalny has a team that conducts its own opinion polls. They made a very interesting youtube video about salaries in Russia, it’s in Russian, but you can turn on the English subtitles (by clicking the cc button). According to foundation’s research, the real average salary in Russia is between 15,000 and 18,000 rubles a month (between $230 – $276 a month), quite a difference with the official number of 42 595 ($654)!

The Huge Informal Economy

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According to an article in the authoritative magazine “Foreign Policy” (external link to article) from 2017 an estimated 15.4 million people, which equals one-fifth of Russia’s workforce is currently active in the informal economy. These are people who don’t pay any taxes and who don’t show up in the statistics. You should think about, for example, freelancers who fail to register as an entrepreneur, but also about employees who work for companies that are not formally registered in Russia and therefore don’t pay any taxes, which is a common phenomenon in Russia.

According to the Federal Financial Monitoring Service of the Russian Federation in 2019, the share of the informal economy in Russia’s GDP has been even greater, Forbes magazine writes (external link in Russian). It is estimated that the size of the informal economy in Russia is about 20% of Russia’s GDP, which corresponds to 20.7 trillion rubles, so an estimated 286 billion Euros оr $320 billion US dollars. That is a lot of money.

According to estimates from the IMF, Russia’s shadow economy is even larger. In their report from 2018, entitled Shadow Economies Around the World: What Did We Learn Over the Last 20 Years? they estimate Russia’s shadow economy to be as big as 33.72% of the country’s GDP in 2015! Russia’s GDP in 2015 was reported to be 1,368 trillion dollars.

The differences in these numbers can partly be explained by the fact that some methods of calculating the size of the country’s shadow economy take into the account the under the table payments to people who are formally employed whereas others do not.

Partly Paid Under The Table

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A lot of Russians who are formally employed only get part of their salary transferred to their bank account. The rest of their salary they get paid under the table, usually cash in an envelope. Another way this scheme works is that the employer asks the employee to sign an application to have an unpaid vacation for a long period. Instead of vacationing, the employee is actually working and receiving his salary in cash, without any taxes being paid.

As I indicated, according to some methods of calculation these under the table payments are part of the shadow economy and according to others, they are not.

Employees who agree to receive part of their salaries under the table don’t have any guarantees. If their employer doesn’t pay them on time, they can only complain about the part of the salary that is paid officially. Moreover, they don’t build up a substantial pension and neither do they have enough official income to qualify for a mortgage.

What Is Normal

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Like true survival artists, many Russians can navigate this web of low salaries and other the table payments like no other. They often have a realistic and pragmatic attitude. Even though receiving under the table payments can lead to huge fine not only for the employer but also for the employee, many Russians actually prefer to have a large part of their salary paid in cash. The reasoning behind this is that they believe the state is corrupt and not acting in their best interest. Especially recently after the pension age has been raised in Russia, this has only gotten worse. Therefore, if they can receive a bit more money, by avoiding taxes they see this is fair.

Unfortunately but understandably the corrupt system has also corrupted the attitude of its citizens. It will take a change of culture for many Russians to start willingly paying taxes.

The average official numbers vary a lot per region as is clear from the table above. Since the cost of living also differs a lot between regions, it is clear that what is regarded as normal or acceptable also differs.

How Much Money Russians Say They Need

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How much money you think is enough to lead a normal life is, of course, a very personal question as well, but the answer is most of all dependent on where in Russia people live. A group of Russian sociologists determined last year that on average for the whole of Russia, a family of three (parents and a kid) need 75 900 rubles a month ($1,165) to live a normal life. Russians who live in cities with over a million inhabitants have a bit higher demands, they think they need to earn 91 600 rubles a month ($1,405). Russians who live in cities with up to half a million inhabitants say they need 80 200 rubles a month ( $1,231). And Russians who live in cities with up to 100 thousand inhabitants say they need 75 000 rubles a month ($1,150) for 3 persons. Russians who live in the countryside say they need just 61 500 rubles ($943) month for three persons. Here is a link to the article (external link, in Russian only).

It’s remarkable that almost everywhere average salaries are lower than what people think they need to have their needs met for three people. So in most cases, they would have to be a double-income couple in order to have their needs met. And in practice, this is also what I see. The cases in which a small Russian family can live off just one salary are quite exceptional.

To be honest, I think even with 91 600 rubles a month it is rather hard to make ends meet for a small family in a metropolis like Moscow. I guess that if you don’t have to pay rent or make mortgage payments, it can be done. The average rent of a 1 room apartment is 31 553 rubles ($484) in Moscow and that’s not in a very nice central part of town. So that doesn’t leave one with a lot of money. But people live very differently of course. The last time I was in Moscow the taxi driver who drove me to the airport was from Kyrgyzstan. Most of these taxi drivers rent a car for twenty-four hours for 1700 rubles ($26). According to his words, he makes about 2 thousand rubles a day profit on average ($31). So that gives him maybe around 50 thousand rubles ($767) a month if he takes some days off. Also if he gets a ticket for speeding or something else he has to pay it out of his own pocket. So if that happens he basically works for free on such a day. Still, this guy not only manages to live in Moscow with this small amount of money but also to send a large part of it home to his family in Kyrgyzstan.

Russian Attitudes To Rich And Poor

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Although Russians love money like any other people, they also have certain believes about money. For example, according to a recent survey from 2018, 50% of the surveyed Russians believe that someone who earns a lot of money (over 100 thousand rubles a month, ($1,533)) is more likely to have deteriorating moral qualities. Whereas at the same time 37% of the surveyed believed being poor has the same influence on one’s moral qualities. Here’s a link to an article about the survey (external link, in Russian only).

According to a survey among Russians in 2011, 70% of Russians don’t believe it’s possible to become rich with honest work. In this survey, they also noted that most fewer Russians than before look with respect and interest at the country’s very rich. Here’s a link to an article about that survey. (external link, in Russian only).

Conclusion

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Differences in salaries between Russian regions are huge. But it is difficult to determine with any degree of certainty how big Russia’s informal economy really is. Estimates of the Russian institutions and the IMF vary a lot.

If you enjoyed this blog post, you’ll probably also enjoy our blog post about the minimum wage in Russia. In this article we discuss the development of the minimum wage in the country as a whole and take a closer look at the development of minimum wage in Moscow and Saint Petersburg.

If you enjoyed this blog post you may also want to read my blog post about the richest people from Saint Petersburg (another article on Russialounge).