Income Transfers and the Social Safety Net in Russia

Résumé du livre

The decision to move to a market economy sets in motion two major forces: (i) a widening of earnings and income distribution, a result of wage and price liberalization, is an inherent part of reform; and (ii) declining output, which is a not an inherent part of the reform, but a side effect, which aggravates poverty, and results in a fall in the real wage base and in profits, and hence creates a fiscal crisis. This report gives five paramount recommendations which will address the three major issues of poverty relief, cost containment, and the strengthening of administrative capacity. The first is that the minimum level of the major benefits should be at or above subsistence and, at least in the short run, should be fully protected against inflation. Second, cost containment should be considered from the beginning. Third, administrative capacity should be strengthened, in particular the administration of cash benefits, which needs modernization. Fourth, social insurance and pension contributions should be shared between worker and employer, with the worker's contribution appearing on his or her payslip. Finally fifth, compatibility of short-run and long-run policies should be part of policy design.