The Ministry of Economic Development intends to return poverty to macro-forecasting

The Ministry of Economic Development is ready to return to the socio-economic development forecast – the basic document of the department – for the assessment of the level of poverty. This was reported to Vedomosti by a ministry representative. He said that they are already working with the Ministry of Labor. According to the interlocutor, analytical calculations are made to complete the goal line of the Consolidated Plan for the Achievement of National Objectives. The representative of the Ministry of Labor and Social Protection affirmed that these inter-departmental calculations are already being carried out and that some methodological improvements may reflect the poverty indicator in the forecast for socio-economic development.

Earlier, the head of the Chamber of Accounts (JV) Alexei Kudrin criticized the macro-forecast for the lack of poverty estimates. “Such a figure should be in the forecast, but this time it has not been presented by the government, and that is, of course, a drawback, this population group needs to be better planned,” Kudrin said at a meeting. State Duma Budget and Tax Commission.

JV focused on the disappearance of this indicator earlier in the conclusions of the draft budget for 2022-2024. His report clarified that this is due to the incompatibility of the statistical series due to changes in the methodology for calculating the minimum survival, which is the basis for assessing poverty.

11,950 RUB

this minimum survival rate per capita is set for 2022.

The lack of indicators on the level of poverty does not allow for a correct comparison and analysis of changes in the indicator, the department warned in the document. According to the SP, it is not entirely clear which indicator should be taken as a starting point for setting a national target to reduce the poverty level by 2 times compared to the 2017 indicator.

The basis for determining the level of poverty in Russia is minimum survival: Russians below this line of income are considered poor. In 2021, the minimum survival rate was set at 11,653 rubles, in 2022 – 11,950 rubles. From this year onwards, the minimum survival estimate is set at 44.2% of the median annual per capita income and is reviewed at least every five years. The median is defined as the income of half the population below that value, while the other – above. Previously, the quarterly minimum survival estimate was based on the cost estimate of the consumer basket, mandatory payments, and fees.

“There is no technical problem in recalculating the level of poverty. But it is necessary for the Ministry of Labor to propose an option, and the government has to make a decision, ”said a representative of the Vedomosti joint venture. According to him, in July of this year, the government was ordered to compare the current and medium-term data on the level of poverty reported in previous periods. The lack of a historical retrospective in the current methodology is, in principle, not an obstacle to predicting the level of poverty for the coming years, the source added.

The Poverty Indicator last appeared in the macro forecast in the 2020-2023 draft budget review, as well as before the signing of a new presidential decree on national development goals, which assumed that the indicators would not be achieved. 2024, but 2030. At that time, the Ministry of Economic Development expected a reduction from 10.8% in 2020 to 9.8% in 2021, 8.8% in 2022, 7.7% in 2023 and 6.6% in 2024.

At the same time, the ministry presented a poverty assessment in an updated version of the Consolidated Plan, published in mid-October. According to the document, the level of poverty by 2030, as expected by national targets, will be halved compared to 2017 (from 12.9% to 6.5%). This year the indicator is forecast at 11.4%, -10.8% in 2022, -10.1% in 2023 and -9.6% in 2024.

According to Rosstat, in the first half of 2021, 19.1 million people in Russia were below the poverty line, which is 13.1% of the population. In 2020, the poverty rate fell to 12.1% from 12.3% in 2019.

Approaches to Poverty Assessment

The problem with the poverty assessment methodology stems from the transition to a new principle for calculating minimum survival because the series must be comparable, says Lilia Ovcharova, director of the Institute for Social Policy at the School of Economics. . “It simply came to our notice then. The transition to a new methodology makes it difficult to solve the problem from a purely technical point of view: as soon as wages rise, the median rises and at the same time the poverty line rises in monetary terms, ”explained the expert. If average incomes continue to grow, poverty reduction can only be achieved through social assistance tools, and not through economic growth, he believes.

The lack of components such as poverty levels distorts the forecast for economic forecasts, says Yekaterina Kheifets, chief analyst at the Center for Social Development’s “Economic and Social Development”. He believes that refusing to take into account the social situation of almost 1/8 of the population could lead to overestimated estimates and, therefore, higher expectations about the pace of economic recovery in the coming years.

There is no example in history when it was possible to halve poverty by using the relative poverty line, Ovcharova added. For example, when Tony Blair, the Prime Minister of the United Kingdom, set the goal of halving the poverty of families with children, the concept of “anchor poverty” was used. That is, the poverty line was anchored and raised only for inflation; so the poverty line was the same at the beginning and end of the period. And if the relative poverty line is used, as in Russia, then the content of the family’s material capabilities changes, the expert noted.

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