Benefits or services? Politics of welfare retrenchment in Russia, 2014–2017

ABSTRACT

In the wake of the economic crisis of 2014–2016, the Russian government implemented tough austerity measures, earning the praise of the International Monetary Fund. However, the spending cuts were unevenly distributed across different welfare programmes, budget levels (i.e. federal and regional) as well as across different Russian regions. The article argues that this distribution is indicative of a consistent strategy of blame avoidance similar to that of the Western democracies. Specifically, the most politically sensitive budget outlays, such as pension spending, were largely protected from cuts, while areas less visible to voters, such as education, were disproportionately affected by austerity measures. Furthermore, the federal centre shifted the burden of austerity to the regions, turning regional governors into scapegoats for the federal policies. Nevertheless, in some instances fiscal considerations trumped political risk, as even cash benefits (apart from pensions) experienced deep cuts. Furthermore, the analysis of the regional spending patterns reveals that some regional governments tried to stimulate the local economy during the crisis. However, this led to even more stringent welfare austerity policies than in other regions.

KEYWORDS:

• Russia
• authoritarianism
• welfare
• austerity

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No potential conflict of interest was reported by the authors.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 On fiscal policy in Putin’s Russia, see, for example, Åslund (2013).

2 For an overview of the debate on “the new politics of welfare”, see Starke (2006; Levy 2010).

3 Importantly, even in the case of Pinochet's Chile, an elite actor – physicians' professional association – managed to moderate healthcare reform somewhat due to its entrenched role in healthcare management (Castiglioni 2001).

4 For evidence of such strategic timing of unpopular pension reforms in OECD countries, see Fernández (2012).

5 Indeed, Linda Cook finds that, in the case of Russian welfare reforms of 2000-2004, “both the legislature and government did rely on strategies of delay, obfuscation, and avoidance of responsibility that are familiar from studies of welfare state retrenchment in democratic systems” (Cook 2013, 184). In this period, however, neoliberal restructuring took place even as real social spending was steadily increasing due to the favourable economic situation. The crisis period of 2014–2017 was different insofar as the government was actually decreasing real social spending, not just carrying out neoliberal reforms.

6 While social spending is only one among many possible measures of welfare retrenchment (Green-Pedersen 2004), I focus on spending because it is the area where the government had to make immediate tough choices in the context of falling budget revenues in 2014-2016. Consequently, spending patterns reveal the government's strategy and priorities.

7 On pro-natalist agenda in Putin’s Russia, see Cook (2011).

8 Republic of Crimea and Sevastopol were excluded, as they were not part of the statistics in 2013. Healthcare spending includes both the insurance component and the direct financing from the regional budget. Social policy spending includes both the welfare benefits administered by the regions and the local social services.

9 Remington et al. (2013) treat it in a similar way.

10 Calculations are based on consolidated spending from all sources (federal budget, regional budgets, insurance funds). For healthcare, I also provide calculations excluding the public insurance component. For family benefits, average annual growth is calculated for the period 2011–2013, not for the period 2009–2013. In 2011, there was a dramatic (more than fourfold) increase in this category, as it was the year when the payment of Maternity Capital began. In 2016–2017, transfers from the regional budgets to the public health insurance fund to compensate for non-working citizens were reclassified from 'healthcare' to 'welfare benefits' (see Maleeva 2018). In order to have a valid comparison, I re-calculated the numbers for 2016–2017, substracting these transfers from welfare benefits and adding them back to healthcare.

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Ilya Matveev

Ilya Matveev is an Associate Professor at the Department of International Relations and Politics, North–West Institute of Management, Russian Presidential Academy of National Economy and Public Administration. His research interests include Russian politics, public policy and political economy.