Many Russians have been feeling the pinch since Moscow

‘Savings? Are You Joking?’ Months After Moscow’s Invasion Of Ukraine, Russians’ Money Troubles Mount

October 23, 2022
4 mins read

“In June they laid off about 70 percent of my shop,” said Sergei, a furniture builder in the Siberian city of Tomsk. The firm had been suffering since March, after its main customer, Swiss retail giant IKEA, pulled out of Russia in the wake of Moscow’s unprovoked February 24 invasion of Ukraine.

“To be honest, I didn’t look for another job for a month,” Sergei said. “I was in shock. I was already depressed from everything that was going on, and then on top of that I was laid off.”

During this time, Sergei’s family worked through its small savings. He earned money accepting rides in his car before getting a job as a guard in a supermarket.

Like many of the people RFE/RL spoke with for this report, Sergei asked that his surname be withheld for fear of repercussions for speaking out amid an escalating clampdown on dissent by President Vladimir Putin’s government. But stories like his are easy to come by as more and more ordinary people have seen their lives disrupted by Moscow’s war against Ukraine and the unprecedented Western sanctions it has brought down on the country.

According to a study last month by the state-funded polling firm VTsIOM, 21 percent of respondents said their savings had dwindled since the February invasion. Additionally, 34 percent said they had no savings even before the invasion and the changes it has wrought in Russia.

Some 39 percent said their savings had not been affected, while 5 percent said they’d managed to increase their reserves.

It is difficult to verify such figures in Russia, where polling and sociological studies are under constraints. An online survey by Raiffeissenbank in early February found that 70 percent of respondents reported they had no savings at all.

‘We Don’t Save Anything’

In August, the Russian government predicted an economic contraction of 4.2 percent for 2022, and Economy Minister Maksim Reshetnikov said on September 6 that the figure could be 2.9 percent. Independent economist Vladislav Inozemtsev, however, has written that, partially because of the disruption caused by Putin’s mobilization order, the contraction by the end of the year will be at least 10 percent.

The true magnitude of the contraction for average Russians, economist Michael Alexeev, of Indiana University in the United States, said, is probably masked to some extent by the increase in expenditures for armaments and other equipment needed to conduct the war in Ukraine.

“This means that even less production is devoted to the needs of ordinary consumers,” he said. “If you keep this in mind, the situation appears even more distressing.”

Asked about the VTsIOM findings on savings, Alexeev said the most alarming result was the lack of any savings reported by 44 percent of respondents over the age of 60.

“Considering how small pensions are in Russia, this is even more alarming than the general decrease in savings,” he said.

Irina is a nurse at a clinic in the settlement of Chemal in the south Siberia’s Altai Republic with a monthly salary of 25,000 rubles ($400). The rugged, breathtaking mountain region is one of the poorest in the country.

“Savings? Are you joking? I can’t even remember the last time I heard the word,” Irina said. “We don’t save anything. On the contrary, we borrow money and live in debt. I owe about 9,000 rubles ($150) now.”

She sees only two ways of improving her lot: “Either work in a COVID hospital or take work in Ukraine.”

“But I have two children and a father to look out for,” she said. “I hope things won’t get any worse.”

Originally from the eastern Siberian city of Irkutsk, Dmitry, a web designer, moved to Moscow several years ago. In late May, he was laid off in a group-chat message with other co-workers. His boss said the company’s foreign clients had withdrawn from all their projects, saying that business in Russia had become “toxic.”

“I later found out that he’d stopped developing all Russian-language projects and was working entirely in Western markets,” Dmitry told RFE/RL’s Siberia.Realities. “He had already left Russia by that time.”

For more than three months, Dmitry lived off the 200,000 rubles ($3,300) he had on account.

“Now I’m working for a state agency,” he said. “On a three-month project. But what happens next — will there be work after November? — I don’t know.”

Dmitry said he is currently more concerned about Russia’s military mobilization.

“They are catching people in hostels and in the metro,” he said. “I don’t use transport anymore and I order my groceries delivered.”

A man checks lists of vacancies at a Russian job center in Omsk. (file photo)
A man checks lists of vacancies at a Russian job center in Omsk. (file photo)

Before Putin announced military mobilization in September, 27-year-old Aleksandr worked at a chemical plant in the city of Achinsk in the Krasnoyarsk region. In an effort to avoid being called up, he quit his job and moved to the region’s eponymous capital, where now he earns a living as a driver.

“I don’t want to go to war,” he said. “I have no business there. That’s why I’m living for now in a big city.”

He says he used most of his savings to pay off his mortgage in Achinsk before he left. He took about 150,000 rubles ($2,500) with him.

‘Nothing Good On The Horizon’

Consumer-price inflation has been a problem in Russia since the February invasion, said economist Maxim Ananyev, a researcher at the Melbourne Institute of Applied Economic and Social Research in Australia.

“According to [government statistics agency] Rosstat, since January, the price of sugar has increased 30 percent, margarine by 42 percent, and beef by 15 percent,” he said. “These aren’t luxuries. They are things people buy more or less every day. In addition, in March we saw a consumer panic in which people rushed out to buy canned goods and so on. People used their savings then and haven’t been able to replenish them.”

Since the VTsIOM poll was taken, Ananyev said, three important developments have occurred, the impact of which is yet to be observed: mobilization, the explosions that disabled the Nord Stream natural-gas pipelines to Europe, and the European Union’s adoption of a new packet of sanctions aimed at capping the prices for Russian oil and gas.

He said it is difficult to forecast the impact of such unprecedented developments, but it seems safe to say “there will be less money.”

“Economists like Sergei Guriyev and Oleg Itskhoki say that every new dollar now will go toward financing the war,” Ananyev said. “I agree with them, but even if the government does try to spend part of every incoming dollar to support the economy, there will still be noticeably less money.”

“It is very hard to predict what will happen going forward, but overall we can say that there is nothing good on the horizon,” he concluded.

RFE/RL feature writer Robert Coalson contributed to this report.

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