RUSSIAN PRESIDENTIAL ACADEMY OF NATIONALECONOMY AND PUBLIC ADMINISTRATION
International Laboratory of Political Demography
and Social Macro-Dynamics
CRITICAL 10 YEARS
DEMOGRAPHIC POLICIES OF
THE RUSSIAN FEDERATION:
SUCCESSES AND CHALLENGES
Appendix 7. February 2015 update.
Looming demographic catastrophe and
how to prevent it
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Russia is currently experiencing a financial crisis, due to international sanctions coupled with a decline in oil prices. These are leading the economy to shrink, perhaps by as much as 5% or more in 2015. The length and consequences of this period of turmoil are unpredictable, but it will surely have a visible negative impact on crucial socio-demographic indicators. Recent demographic improvements have become one of the most important indicators of the overall success of domestic policy for Vladimir Putin. Fertility increases and mortality decline are regularly mentioned in the Presidential Addresses to the Federal Assembly.
Thus, in his 2014 Address President Putin praised Russian progress in overcoming depopulation, as well as its entering the group of countries with good (over 70 years) life expectancy according to the World Health Ranking. "Our demographic programs have proven to be effective, and we will continue to implement them," said the President, declaring 2015 the National Year for Combating Cardiovascular Diseases.
In the next few months, however, Russia risks facing a repetition of the 1990s’ demographic problems once again – with a new wave of mortality increases and a new wave of fertility decline. Pressing economic issues are currently receiving much more attention from the Government; yet an effective anti-crisis strategy also requires paying attention to the seemingly “long-term” demographic problems.
Several threats to recent demographic gains have arrived with the crisis. As inflation is rising, more of Russia’s population is falling into poverty – and risks of impoverishment have traditionally been the highest for families with many children. Even with the existing social support, the proportion of households with children among the households with income below the subsistence level is increasing. While in 2005 the ratio of poor households with and without children was 50/50, in 2013 it skewed to 64/36. The share of large families among the poor households has grown over 10 years by 2.8 times and reached 9% of all poor households in 2013.
In his 2012 pre-election article ‘Building justice. Social policy for Russia’ Vladimir Putin condemned and labeled unacceptable the situation when “childbirth brings a family to the brink of poverty. Our national goal for the next 3-4 years is to completely eliminate such a situation”. This goal has not been fully achieved yet, and is further threatened by drastic budget cuts. As the resources available for families shrinks, the recent upturn in fertility rates for second and third children may be reversed. When combined with the rapidly declining numbers of women in active reproductive ages (20-29 years) Russia is almost certain to experience a precipitous decline in fertility.
In addition, a dramatic increase in the availability of alcohol is looming, reminiscent of the late 1990s. In 1998 Russia experienced a very serious financial crisis accompanied by a jump in inflation (by 84%) – however, the excise duty on spirits was increased only much more modestly, by 20%. As a result, during a single year the relative value of excise duty fell by one-third, leading to an dramatic cheapening of vodka and other spirits. Throughout the early 2000s this fall stayed uncompensated for, and the increases in vodka excise taxes frequently lagged behind the inflation rate. This caused an enormous increase in mortality in 1998-2005, when Russia “additionally” lost about two million lives. Today the recurrence of a mortality jump due to various initiatives on liberalizing the alcohol market is, unfortunately, a highly probable scenario. The Government has cancelled an earlier-planned increase in the spirits excise tax, which – given the high and rising rate of inflation – actually means their remarkable decline. The minimum price of vodka has been significantly reduced since February 1. Beer is supposed to return to sidewalk kiosks, the bans on alcohol advertising in mass media and on alcohol sales overnight are to be virtually lifted, etc. As a result, Russia may face a new round of population decline after all the recent claims of demographic victories. Even more sadly, this decline will probably be written off as the consequences of the economic difficulties, while in reality a new wave of depopulation could be averted – or, at least, substantially mitigated – by carefully designed and well-targeted social c policy interventions (many of which are purely legislative and would not put any additional strain upon the budget). A new series of calculations performed by a team of researchers from the Russian Presidential Academy of National Economy and Public Administration (RANEPA), the National Research University Higher School of Economics, the Russian Academy of Sciences, and the Moscow State University demonstrates that "alcohol liberalization" coupled with the absence of a new set of effective family policies may provoke a new demographic collapse with catastrophic consequences. In order to avert this disastrous scenario, appropriate measures must be taken immediately.
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