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July 28, 2006

Matthew Syed

No, I’m not a great defender of Roman Abramovitch but this is slightly odd from Mattew Syed:

Meanwhile, GDP per capita in Russia lags below that of Botswana and Equatorial Guinea. The average wage is about £2,000 per annum.

Right, it’s a poor place. Communism does that.

AS ROMAN ABRAMOVICH continues to lavish his preposterous wealth upon Europe’s playboy footballers, spare a thought for those labouring for £1.90 per hour on the Sibneft oilrigs of western Siberia.

2,000 hours a year is about right as the length of a working year. So they’re getting £ 3,800 a year, near twice the average wage. Hardly skinflint wages now is it?

July 28, 2006 in Economics | Permalink

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Comments

just out of interest, how long are you going to keep blaming communism for the low GDP/capita in Russia, particularly given that under Communism, it was higher than Botswana and Equatorial Guinea? It's fifteen years now.

Tim adds:

1) I do not believe the figures from pre 1991 for the SU.

2) Forever.

Posted by: dsquared | Jul 28, 2006 9:51:24 AM

What about the life expectancy figures, then?

Posted by: Jim | Jul 28, 2006 12:03:07 PM

£1.90 an hour in Russia actually sounds quite decent from my recollection. circa £4k is probably good.

Tim - was the average of £2000 per annum on a ppp index or not?

I know in Central Asia that wages are still low - averaging in nominal terms about £250 per month in Kazakhstan.

If we all remember, as economists that its not the nominal wage translated into pounds, but the real wage, translated into what you can buy for your roubles, that counts.

Posted by: angry economist | Jul 28, 2006 12:15:52 PM

If we all remember, as economists that its not the nominal wage translated into pounds, but the real wage, translated into what you can buy for your roubles, that counts.

Exactly. And given that a lot of Russians are now sitting in apartments worth anywhere between $40k-$100k which they bought for $100 in the early 90s, their outlook is some ways not as grim as appearance suggest.

And I'm with Tim: the legacy of communism is the reason Russia is so dirt poor. Murdering your best and brightest for 30 years then locking them up for a further 40, plus installing a 70 year bureacracy which governs every aspect of life yet ensures mediocracy and punishes excellence or innovation is not something which may ever be completely shrugged off by Russians.

Posted by: Tim Newman | Jul 28, 2006 3:20:13 PM

Russia has had it hard, first the Tsars didn't exactly help development, then Communism prevented the development that could otherwise have happened.
Now you have Putin who seems intent on preventing a liberal market economy from functioning by degrading what rule of law there was and interfering in business...

Posted by: Tristan | Jul 28, 2006 5:41:51 PM

Despite Putin, Russia is probably as good now as it has ever been. The last two years have seen a vast improvement in many areas, mainly because of the high oil and gas revenues. Long may this continue. :)

Posted by: Tim Newman | Jul 28, 2006 7:25:46 PM

dsquared asks, "just out of interest, how long are you going to keep blaming communism for the low GDP/capita in Russia..."
I don't think it is unreasonable to say that the bad effects of such things can last for centuries. Many have argued that the current backwardness of Africa and problems among people of African ancestry are partly due to the legacy of slavery. This argument is sometimes pushed to absurd lengths, but I think there is a lot of truth in the basic idea. Don't you?

Posted by: Natalie Solent | Jul 28, 2006 7:50:04 PM

Mr Newman,

Whatever enticed you from the balmy gulf to arctic Sakhalin? It must be good if the wages are only about 4 grand a year. What's the secret attraction?

RM

Posted by: The Remittance Man | Jul 29, 2006 12:50:34 PM

RM,

As I said: all the snow you can eat, all the seals you can club.

Posted by: Tim Newman | Jul 29, 2006 2:42:46 PM

"given that a lot of Russians are now sitting in apartments worth anywhere between $40k-$100k which they bought for $100 in the early 90s, their outlook is some ways not as grim as appearance suggest."

Well it would be less grim if it was a realisable asset. Unless they wanted to leave Moscow go and live in Sakhalin, things would be a little different. I suspect the situation is now much the same as the UK - property is only an asset on which to either borrow more or realise once you are dead.

Posted by: Angry Economist | Jul 31, 2006 9:07:14 PM