For my final blog this semester, I wanted to look more at Russia. Russia scored incredibly high on Hofstede’s scale on the Power Distance dimension, with a score of 93. This number clearly shows the difference between the people, and the inequalities between finances of the Russian population. “The huge discrepancy between the less and the more powerful people leads to a great importance of status symbols” (Hofstede, 2019).
“Officials see Russia’s widespread poverty as a main obstacle to the country’s economic growth”(Meyer-Olimpieva, 2018). The minimum wage in Russia is 9,500 rubles monthly, which equates to about $140.00. Based on this number alone, it is clear to most people that the minimum wage needs to be raised; at least to compete with the minimum cost of living per month in Russia which is 11,000 rubles, or approximately $190.00.
The question then becomes, how is this even possible? How can a country, who has a relatively low unemployment rate of 4.9% not pay most of their workers enough to even be able to live for the month, when the president of the country is rumored to be worth more than $40 billion?
The answer lies in the fact of the working poor. These are the five million Russians who are working for minimum wage, but does not account for the people who are making the 11,000 rubles per month, the minimum amount needed to survive, which is almost impossible to do as it is. Since “the minimum wage is an official measure that is used to monitor and regulate salaries all over Russia” (Meyer-Olimpieva, 2018), the problem lies in the fact that most of the work in Russia, about 80%, is in Moscow. The Moscow employers could pay their workers a little bit more, but what about the smaller businesses in a lesser populated area? If they pay their workers more, then they will not be able to survive, and thus, they will suffer. The minimum wage is something that is federally regulated, which means that as of right now, there is no real answer to the problem.
Vladimir Putin, during a re-election campaign, promised in May 2018 that he would raise the minimum wage to equal that of the cost per living per month in the country. This would be an investment of about 80 billion rubles in the people and population of the country.
On the opposite end of the spectrum, besides the extremely wealthy president, Russia is home to more than 106 billionaires, and “since 2017, the businessmen’s net worth climbed by $25 billion to a collective $485 billion in 2018” (Times, 2018).
The chart shows the average net worth of Russian citizens, as of 2018, broken down into US dollars. With more than only 106 people having a combined net worth of $485 billion dollars in a country with more than 144.5 million citizens, it’s no wonder that they scored so high on Hofstede’s scale.
Hofstede, G. (2019) National Culture – Hofstede Insights. Retrieved from https://www.hofstede-insights.com/models/national-culture/
Meyer-Olimpieva, I. (2018). The Tragedy of the Working Poor and the Populism of Russia’s Presidential Campaign. Retrieved from https://www.wilsoncenter.org/blog-post/the-tragedy-the-working-poor-and-the-populism-russias-presidential-campaign
Russia: population by wealth 2018 | Statistic. (2018). Retrieved from https://www.statista.com/statistics/482573/russia-population-by-average-wealth/
Times, T. (2018). Number of Russian Billionaires Grows by Third in 2 Years — Forbes. Retrieved from https://www.themoscowtimes.com/2018/04/19/number-russian-billionaires-grows-third-since-2016-forbes-a61212