XVI Международная студенческая научная конференция Студенческий научный форум - 2024

Introduction

 

Social and economic inequality is the most important factor and result of the development of our society. On the one hand, the low level of inequality can negatively affect the labour motivation of the working-age population. On the other hand, high level of inequality can lead to social tension, political instability in the society, decrease in consumer demand and individual savings. Social and economic inequality can negatively affect the economic development of a particular country and slow down social progress as a whole. Therefore, it is necessary to maintain the adequate balance income and wealth distribution [1].

The reasons for economic inequality include unequal distribution of material goods, property and income, different starting conditions for the implementation of business plans, low wages for certain categories of the population, unemployed workforce, insignificant social benefits, delays in payment of benefits, pensions, and wages.

Social differences are the ones that are generated by social factors including:

• way of life (urban and rural population);

• type of labour (mental and manual work)

• social roles and occupations (doctor, politician, etc.) [2].

These factors lead to differences in the degree of income, authority, social status, and prestige.

Research aim

The aim of our research is to identify the features of social and economic inequality in Russia. To accomplish this it is necessary to determine the causes of inequality through the analysis of the corresponding theories and published papers of foreign and domestic researchers, to compare the empirical data in terms of inequality in Russia.

Materials & methods

Nowadays, the problem of social and economic inequality has become the most debated issue among Russian and foreign politicians, academics and experts involved in investigation of the essence of inequality and poverty.

Income inequality is observed in all economic systems to varying degrees. The traditional type of economy is characterised by the largest income gap. The differences gradually decrease during the transition to a capitalist system with free competition and are significantly reduced during the transformation into a modern market economy. Income inequality increases significantly when the command-and-control system becomes a market system.

This process is explained by the fact that part of the country’s population continues to exist under the disintegrating previous system, and a certain layer of society is being formed that lives according to the laws of a market economy. Over time, inequality is reduced due to the inclusion of wider sections of the population in market relations.

Social inequality is dangerous because some people have more rights, freedoms and opportunities than others, which is injustice. Social inequality leads to the fact that some people do not perceive others as the same people; they treat them as tools for survival.

In recent decades, in the Western countries many research works devoted to social and economic inequality have been published.

The French economist, Thomas Piketty, in his book “Capital in the 21-st century”, (2013) studied the roots of economic inequality. He created an essential historical database in terms of taxes, incomes and wealth in the USA and some Western countries. He states that economic inequality is “the central contradiction of capitalism”. He suggests that without political decisions and government intervention, economic inequality in the world will continue to grow as the returns on capital are more unequally distributed than labor income [3].

The British economist Anthony Atkinson (2015) developed the model to measure inequality – the Atkinson index – which enables to rank income distribution and measure the income inequality [4].

Max Weber (2010) in his theory of social stratification argues that social inequality is determined by unequal life opportunities depending on social class position, level of status and the amount of power (or authority) that different groups of people hold. According to him, the criteria for inequality determination include wealth, prestige, power, level of education, family ties and others [5].

The Italian professor of political economy Pasquale Tridico (2017) distinguishes two types of economic inequality: in-country and inter-country inequality. He investigates the cyclical development of this process [6].

The concept of social and economic inequality in Russian scientific literature is currently used in various meanings and is increasingly discussed by our researchers (Antropov V.V., Boiko A.P., Dorofeev M.L, Kapelyushnikov R.I., Shkaratan O.I. and others). This notion is most often considered as disproportions in the distribution of income between different social groups, which is the main reason for the social and economic inequality observed today, both within individual countries and at the global level [7].

Zakharova A.T. (2017) analyses the reasons for wage inequality identified by employers. She highlights the similar conclusions:

• differences in abilities;

• differences in education and training;

• differences in occupational income;

• differences in ownership;

• luck, personal and business links, misfortunes [8].

The study of the works on social and economic inequality published both in Russia and abroad shows that this problem has not lost its relevance, since the gap between the rich and the poor is not narrowing. Poverty still exists everywhere. In most countries, privileged groups of people enjoy a disproportionate amount of power, wealth, prestige and other highly valued benefits.

Discussion

The position of people remains fundamentally unequal in all countries even in the most advanced post-industrial states despite strong political measures. There are cases when groups of the population do not have material wealth and are deprived of access to education, which opens the way to skilled labour. Some of them become dependents refusing to work and choosing to live on social benefits.

The causes of inequality can be divided into several categories, which are given in Fig. 1.

Figure 1 – Reasons for social and economic inequality

The listed measures are aimed at reducing the gap in the distribution of spiritual and material goods among members of the society and are designed to improve the standard of living through the improvement of the taxation system, effectively control real income.

Russia is one of the leading countries based on the degree of concentration of wealth owned by a small percentage of the population. For example, more than 70% of the assets of the financial and non-financial sector of the country’s economy belong to 5% of the country’s citizens [9].

Today, the Russian society faces an unprecedentedly high level of income and wealth inequality, which is deepened by a high level of regional inequality. This leads to the higher inequality in terms of access to social goods including health care, education, labour market and housing, which threatens to further inequality.

The Gini coefficient (or equity index) introduced by the Italian statistician Corrado Gini in 1912 is an indicator reflecting the degree of inequality in income distribution within various population groups. The indicator may receive the values from 0 (in case of absolute equality) to 1 (in case of absolute inequality). According to the Gini Index, inequality in Russia is higher than in most European countries (e.g., Germany, France, the UK) and China, but not as high as in the USA, Brazil, and Turkey. According to Rosstat, in 2021, the Gini index in Russia was around 0.4 and its dynamics in recent years indicated a gradual smoothing of income inequality [10].

The situation in Russia is such that wages are differentiated by regions, since the constituent entities of the Russian Federation are at different levels of social and economic development. Wage differentiation is also observed across sectors of the economy. At the same time, an attempt was made to determine whether there are significant differences in wages in the Russian labour market between territories, industries, and organizations of different forms of ownership (Fig. 2).

Figure 2 – Average wages in the regions of the Russian Federation

Source: https://dzen.ru/a/YcrAMx9OPxrS7OnQ?%E2%80%A6

In the process of various reforms in Russia, the means of production and finance were redistributed to the benefit of the wealthy people who increased their share in the total population of the country. The growth of wealthier groups of the population has correspondingly widened the gap between the rich and the poor. According to statistics, at the end of 2015, the share of poor people in Russia amounted to 22 million people, despite the fact that approximately a quarter of Russians receive wages that are little more than the subsistence level, which pushes them to the poverty line.

The most prosperous are the cities of federal significance – Moscow and St. Petersburg, as well as the northern regions which are producers of natural resources – the Yamalo-Nenets, Nenets, Chukotka Autonomous Okrug, Khanty-Mansiysk Autonomous Okrug - Yurga. The least prosperous regions include the national republics of the Northern Caucasus, as well as a number of regions of the Central Federal District located in close proximity to Moscow, since the capital region is a significant center of attraction for labour from neighbouring constituent entities of the Russian Federation. Buntovskaya L.L., Buntovsky S.Yu., Strelchenko D.I. come to similar conclusions. The authors state that “the most significant factors in the high differentiation of workers in terms of wages in Russia are not education and qualifications, as in developed European countries, but the financial state of the region, industry and enterprise” [11].

Parkhochuk M.A., Gryaznova O.A., Grebneva M.E., Vinogradova N.I. note that the low level of average wages in the regions is explained by the inefficient operation of their economies and “such areas are often depressed and subsidised.” On the basis of this, the authors conclude that ensuring a decent level of remuneration for workers in the constituent entities of the Russian Federation and smoothing out interregional imbalances can only be achieved through solving regional economic problems and achieving economic growth [12].

In fact, the parameters of the existing system of income and wealth redistribution in Russia are too soft, taxes on the incomes of richer people are rather low to ensure social justice and decrease economic inequality in the country

Just a few decades ago in Russia, the population over 40 years of age had the highest wages and incomes. It turned out that the salary / wage was directly proportional to the length of work experience, level of professional training of the employees. However, at the moment, the population from 20 to 40 years old has higher incomes, since employers prefer to hire younger and more energetic employees who can be the most efficient and quick-witted, those who can learn and adopt new faster than their older generation [11].

One of the problems of social and economic inequality is the difference in income between men and women. If an industry becomes more lucrative, a greater movement of men into that industry can be observed, while women move into lower-wage sectors. This factor leads to the large income disparity between men and women. Currently, employers prefer to hire men for higher-paid specialties and professions, since women, due to their childbearing potential, need additional benefits and privileges, which is obviously inconvenient for employers. More than 30% of women in Russia live below the poverty line, which also affects their children. It turns out that gender discrimination affects not only women in our country, but also leaves its mark on the children, which in general makes the social gap even wider. The difference in salaries and wages of men and women by year is shown in Fig. 3.

Figure 3 – Average wages of men and women in the Russian Federation

Source: Gender wage inequality: URL: https://dzen.ru/a/YeahTC_KX1HYaO3f

Gender inequality, which is expressed, among other things, in the level of wages, is one of the most acute problems of the 21st century and acts as a barrier to economic development.

It can be noted that in comparison with 2005, the percentage of wage differences has decreased, but still remains quite high. There is a conditional division of the branches of the national economy into female and male. It is customary to refer to female (male) industries with a share of employed women (men) above 70%. Industries with a predominance of male personnel include oil and gas production, coal-mining, and construction. The industries with a predominance of female personnel are trade, catering, procurement and marketing, healthcare, social security, education, culture and art. In male industries, the average wage level is higher than in female industries.

In Russia, as well as in other countries, there are two specific groups of industries: some employ mainly men (their share exceeds 65% of the total number of people employed in the industry), while others employ preferably women (their share exceeds the same 65% of the total number of people employed in the industry). There are also mixed industries in which the proportions of men and women are approximately equal [12].

It is also worthwhile to consider the median salary in the three sectors of the Russian economy (Fig. 4).

Figure 4 – Number of men and women in three groups of industries

Source: https://tochno.st/materials

In 2023, in the segment with low salaries, 11.5 million women were employed against 3.2 million men, the relation is almost four to one.

Social inequality is one of the main problems in Russia, as other social and public problems follow from it, for example, social regression of the poor, low birth rates and high mortality rates. Therefore, the Russian government should pursue policies to improve the quality of life of the poorer population, and use various methods and means to combat social inequality.

Thus, wage inequality is a serious problem affecting the economic and social development of our country. The solution to this problem can only be realised through a systematic approach that combines the efforts of public and private structures, as well as Russian citizens.

Changes in the unequal distribution of wealth depends primarily on the country’s economic policy. It should involve reduction of excessive income differentiation, equalization of the financial situation of various population groups and changes in the existing the tax system. To ensure a real increase in income, many experts recommend taking the following measures:

• to increase real wages;

• to introduce the progressive income tax;

• to strengthen the financial basis of the pension fund through increasing the nominal amount of remuneration;

• to develop mechanisms of social support through payments to socially vulnerable groups of the population;

• to create measures for regulating income among the population taking into account the territorial characteristics of the country;

• to achieve a more rational distribution of income.

Conclusions

In our research, we have analysed the current situation with social and economic inequality in the Russian Federation. Economic inequality predetermines social inequality due to unequal distribution of income or wealth. It also relates to unequal distribution of rights, privileges and social power, which in turn influences on the access to public goods of the people. Economic inequality can lead to social inequality including gender inequality, racial inequality, age inequality, etc. Since economic factors are the main causes of social inequality, is necessary to develop and introduce measures to eliminate social and economic inequality.

Reduction of economic inequality in the Russian Federation is a vital task for the country’s future development. Without resolving labour market problems and achieving the potential of the tax system, the situation with inequality in modern Russia is unlikely to improve. It is important to develop and introduce a strategy integrating all effective measures.

References

1. Anisimova, G. A., Voeikov, M. I. Political economy of equality and inequality. Moscow, Institute of Economics. 2016. 36 p.

2. Veselovsky, S. Ya. Globalization and the problem of income inequality in the modern world. Moscow: INION RAS; 2017. 185 p.

3. Piketty, T. Capital in the 21st century. Moscow, AdMarginem Press; 2016. 592 p.

4. Atkinson, A.B. Inequality: What can be done? Harvard University Press, 2015. 304 p.

5. Weber, M. Basic concepts of stratification // Selected works. Moscow: Progress. 1990

6. Tridico, P. Inequality in Financial Capitalism, Abingdon, UK and New York, NY, USA Routledge, 2017. P. 235.

7. Antropov, V.V. Socio-economic inequality in the modern world: assessment tools, trends and strategies to overcome. Economy. Taxes. Law. 2022. № 15 (3). pp. 21-37. Doi: 10.26794/1999849x-2022-15-3-21-37

8. Zakharova, T. A. The problem of social inequality in Russia: essence and causes. Young scientist. 2022. № 21 (416). pp. 126-128. [Электронныйресурс].URL: https://moluch.ru/archive/416/92044/ (Accessed 11.12.2023).

9. Yurkova, T. I., Yurkov, S.V. Enterprise Economics / T. I. Yurkova. M. Business economics. 2006. 119 p.

10. Income inequality in the country.[Электронный ресурс]. URL: https://www.rbc.ru/economics/13/10/2022/63453c3d9a79470c2cdf05ca?from=copy (Accessed 20.12.23).

11. Buntovskaya, L.L., Buntovskiy, S.U., Strelchenko, T.V. Wage differentiation in Russia. 2019. 52 p.

12. Parkhochuk, V.D., et al. The problem of wage differentiation in the regions of Russia, 2021. 249 p.

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