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Books by Grigory Yavlinsky
Economics and Politics in Russia
The Center for Economic and Political Research (EPIcenter)
Nizhni Novgorod-Moscow, 1992


4.2.3 Adjustment of the Population Monetary Incomes

To create a new income level and structure, when implementing measures to stabilise the situation in the region, a gradual transition must be made to new ways of working out the minimum consumer budget. At the same time the prerequisites for a regional system of people's monetary income adjustment are determined.

Different approaches have been proposed on the formation of a new consumer basket. Recommendations on ways of calculating the subsistence minimum have been drafted to solve this problem. They are based on a phased transition to a new way of drafting the minimum consumer budget, based on the iteration method, which takes into account the disintegration of the state social security system and the appearance of new ways of satisfying the people's basic needs.



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Changes in the social security system, above all its financing, are primarily reflected in the population expenditure structure. Rising prices for basic consumer products increase related purchasing costs and their respective share in current cash expenditure. Increases in rent and utility charges also influence the expenditure structure. The same phenomenon has been witnessed in the paid services sector. This causes the problem of priority payments.

At the same time new expenses appear, such as payment for health care, education and social service. The transition to paid services in terms of public expenses envisages a qualitatively new structure of family budget expenditure and a fundamentally new consumer basket structure to calculate the subsistence minimum.

Under the old distribution system, the consumer basket included above all foodstuffs and consumer goods. Paid services and housing expenses represented only a small share of the total. Medical services, education, rent etc. were paid from the state budget via a system of subsidies or provided free of charge, consequently the minimum wage was based only on goods purchased by the general public for money.

The old way of formulating people's monetary incomes and the different levels has so far been maintained. The resources used to satisfy individual requirements have not been redistributed between the state (which accumulated the resources and virtually disposed of them independently) and the population as immediate consumers, at least not on a federal level.

The local authorities are obliged to do so independently, as far as their competence permits. This is linked to the implementation of several tasks.

1. The adaptation of the region's financial system to high inflation presupposes a staged transition of subsidies for diet staples, transport, housing and utilities, etc. from the local budget to people's incomes. In each case it requires a specific measure and mechanism of distribution of subsidies between the region's residents.

2. The need to convert the social infrastructure and exempt the enterprises from expenses envisages a transition of respective projects and their maintenance resources directly to the consumers.

3. A new way of satisfying the population's basic needs involves a transition to various types of insurance (medical, pension, etc.) The distribution of these forms will influence the level and structure of the population's monetary incomes.


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