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Another important conclusion to follow from that survey concerns numberless discrepancies between regional and local regulations and federal laws. Federation members are prone frequently to overstep the bounds of their constitutional regulatory powers as regards education. These discrepancies occur in the rules adopted in the regions regarding provision of paid educational services. Adoption of rules applying to civil law regulation of this kind of services is contrary to Article 71 of the Russian Constitution, which makes civil law regulation an exclusive right of the Federal authorities.

An analysis of education-related laws undertaken by the Federal Ministry of Antimonopoly Policy has reveals a few discrepancies between the Education Law and some provisions of the Federal Constitution. In particular, the law leaves unanswered the question of who and at which level can lawfully regulated relations under contracts for the provision of paid educational services. Capitalizing on this legal uncertainty, some Federation members and local government authorities (such as the Republic of Tatarstan, the Vladimir Oblast, and the cities of Perm, Novosibirsk, and Chelyabinsk) have passed rules of paid educational services provision that regulate relations under civil law. To end law-mongering in defiance of the Federal Constitution, amendments are needed in the Education Law to make the right of legal regulation of relations involving provision of paid educational services an exclusive prerogative of the Federal authorities.

2.8. Household Sector Finances and Consumer Markets

Cash Incomes. The effects of the deep plunge in cash incomes in September 1998 continued to be felt in the early half of 1999. As a result, real disposable personal incomes in the first six months did not rise above 75 per cent of their level in the same period of 1998. On year-end results, real incomes fell by around 15 per cent, but in December 1999 they were 10 per cent higher than they were in December 1998, and 37 per cent higher in November 1999 than in the same month of 1998. This abrupt turnaround in December is explained, on the one hand, by compensatory measures pushed through the State Duma immediately before the Duma elections and, on the other hand, by the fact that the monthly pattern of income fluctuations typical of preceding years had been restored in December. (The December upturn came in 1998 as well, but it was more of a low blip because of the September shock a couple of months before).

Overall, personal monthly incomes per capita averaged 1,563 rubles for the whole of 1999 (almost 2,500 rubles in December of that year). Interregional income differentiation continued to increase. In particular, average personal incomes per capita in Moscow registered 7 to 10 times as high as the estimate for Central Region oblasts (in 1998, the difference ranged between 6 and 9 times, and it was still narrower, 5 to 7 times, in 1997).

Real wages plunged even deeper in 1999 than did personal incomes: the average monthly wage dropped by 25 per cent, against a fall of 15 per cent for the personal income per capita. (A nominal monthly wage was, on average, 1,575 rubles in 1999 against 1,050 rubles in 1998.) The share of wages in total household incomes decreased insignificantly, by around 1 per cent. This is explained essentially by the fact that in its analysis of the income structure, Goskomstat now included hidden wages in the wage earnings6 (hidden wages are not included in accrued wages that are used for calculating real wage dynamics). Even allowing for a 1 per cent growth (in annualized terms) in employment, such changes in the general structure can only occur when a more favorable dynamics in hidden wages is registered in comparison with officially accrued wages.

Table 1

Household cash income structure 1992 through 1999
(in per cent)

Year	1992	1993	1994	1995	1996	1997	1998	1999
Total cash incomes	100	100	100	100	100	100	100	100
Payment for work	69.9	60.5	46.6	40.7	41.9	39.3	42.4	38.0 (63.9)
Social transfers	14.0	15.1	15.4	12.4	14.2	14.9	13.3	13.4 (13.4)
Income from property and entrepreneurship, and other income	16.1	24.4	38.0	46.9	43.9	45.8	44.5	48.6 (22.7)

In parenthesis: official RF Statistics Agency data as adjusted for hidden payment for work; data comparisons with preceding years are estimates by authors of this review.

In late 1999, average wages were higher than average per capita incomes in a majority of Russian regions (according to statistics for November, except Moscow and the Samara and Novgorod oblasts). In Moscow, however, they were only 42 per cent of average per capita incomes (down from 48 per cent in 1998 and up from 41 per cent in 1997). Intersectoral average monthly wage differentiation increased slightly, for example, to 2.95 times the average for Russia in the fuel industry in late 1999 (from 2.37 times in 1998), while it dropped from the Russian average still further in relatively low-wage sectors financed from the Federal Budget. In health care, for example, the average wage stood at 60 per cent of the Russian average (down from 67 per cent in 1998), and in education, culture and the arts, it was 55 per cent (from 60 per cent in 1998).

In 1999, the situation of old-age pensioners continued to deteriorate. The ratio of the average monthly pension to the average monthly wage, which had fallen to 32 per cent in the last quarter of 1998 (from 38 per cent in the first quarter of 1998), did not exceed 26 per cent in late 1999. Whereas in the fourth quarter of 1998, the average pension was 10 per cent below the subsistence level of a pensioner, it fell to approximately 25 per cent below the subsistence level in late 1999.

The ratio of the average wage to the subsistence level of the working-age population improved slightly in 1999, to around 170 per cent in November, from about 150 per cent a year before.

Statistics characterizing the degree of differentiation among the population in terms of cash incomes continued to rise in 1999. The Gini coefficient went up to 0.394 (from 0.375 in 1998), and the assets coefficient climbed from 13.42 in 1998 to 13.91 in 1999. To an extent, this can be attributed to the fact that, as we wrote above, the hidden share of wages (more evenly distributed among the different population groups) was growing faster than the officially accrued wages in nominal terms.

Table 2 shows Goskomstat’s estimates of the distribution of the Russian population according to average income per capita in 1999.

Table 2

Household distribution by average per capita monthly cash income, in Rb ‘000 (as per cent of total)

Total households	100
With incomes up to 400.0	3,6
400.1-600	8,5
600.1-800	11,4
800.1-1000	11,9
1000.1-1200	11,0
1200.1-1600	17,6
1600.1-2000.0	12,0
over 2000.0	24,0

The distribution of total household incomes among the 20 per cent groups with different standards of living in 1999 did not change from 1998.

Early 1999 saw a relatively sharp jump in the subsistence level. In autumn months, as this happened in previous years, too, it went down because of a seasonal drop in prices of vegetables, and finally stabilized. Generally, the subsistence level rose by nearly a third over a year (in December 1999 against December 1998). All through the year, the share of needy people, with incomes at or below the subsistence level, was gradually contracting, from 37.7 per cent in the first quarter and 35 per cent in the second quarter to 26.3 per cent in the fourth quarter (mainly because of growth in incomes in December). It is to be expected that, unless Goskomstat’s methodology of calculating this indicator changes, the share of the poor would be about 30 per cent in the first quarter of 2000.

Cash Expenditure. In the first half of 1999, household expenditure on buying goods and services continued to grow as a share of total earnings (up to 85 per cent from 75.5 per cent in 1998), while the share of savings in bank accounts remained uncomfortably low through the year (ranging from 2.4 per cent to 4.7 per cent in some months). In the second half of the year, the share of consumer spending in the total earnings started to slide: while it hovered above 75 per cent in the first quarter, it was just below 75 per cent in the fourth quarter. (This level was typical of the first six months of 1998 preceding the crisis).

In the months after August 1998, the share of public spending to purchase foreign exchange in the total cash incomes stayed approximately at the same level of 8 per cent to 9 per cent.

Over the three quarters of 1999, retail sales were steadily below their level in the same period of 1998. They had dropped by 10 per cent to 14 per cent, sufficiently uniformly from month to month during that period (these rates of decline in retail sales were registered in the fourth quarter of 1998 as well, in contrast to the same period of 1997). In the fourth quarter of 1999, retail sales were about equal to the showing in the fourth quarter of 1998, and their further slide appears likely to slow down in 2000 judging by available estimates for the first quarter of 2000, with retail sales set to end at around Rb500 billion. The retail sales macrostructure has changed somewhat - with the share of foodstuffs having edged up from 47 per cent in 1998 to 48 per cent in 1999. The range of retail goods was slowly contracting, largely because of falling imports. The sales of alcoholic beverages, including beer, showed a change, too: in 1999, beer sales rose by 13 per cent and the sales of vodka skipped by 2 per cent on the 1998 figures, while the sales of brandy and ordinary and sparkling wines slipped by between 3 per cent and 7 per cent. On balance, the sales of ordinary and sparkling wines dropped by around a quarter from 1997, and those of beer and vodka survived at approximately the same level.

The bulk of the overall decline in retail sales fell on the turnover of retail outlets, which went down by around 10 per cent, with the market turnover having dipped by a mere 1.7 per cent.

---

1 BEA. Bulletin of Information Analysis, No.а20, December 1999, p. 9.

2аV. Boikov, F. Fili, I. Sheiman, and S. Shishkin. УPersonal Expenditure on Health Care and Medicines,Ф Voprosy ekonomiki, No.а10, 1998, pp. 101-117; Report of the Institute of Social Studies, УExpenditure of the Russian Population on Health Care Services and Medicines (Sociological Monitoring Results),Ф submitted to USAID, Мoscow, 1999.

3 RMBC (REMEDIUM GROUP) Pharmaceutical Market Volume Forecast, Moscow, 1999.

4аSummary prepared for a cabinet meeting, УMeasures of Government Regulation of Drug Provision for the Population of the Russian Federation,Ф January 14, 1999.

5 Report on the World Bank project, УResearch of the Intermediary Services Market in Medical Insurance,Ф Moscow, 1999.

6 Previously, hidden wages were recorded under the heading УOther household income.Ф

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