Men are significantly more often involved in activities related to the Russia-Ukraine conflict, from fighting battles to building infrastructure. The relatively high pay for these activities could have boosted their assessments. In addition, the threat of mobilization began to be perceived less acutely at the beginning of 2024, while the general mood of Russians, according to data from the Public Opinion Foundation (FOM), has gradually calmed, becoming less anxious over the past year
23. Such feelings can also affect people’s perception of their personal financial situation. For the first time since the beginning of the intervention in Ukraine, men have begun to assess their personal financial situation more positively than women (18% of men said it had improved versus 16% of women), although in September 2023 there were no significant gender differences.
Even though the oldest Russians typically report a stable financial situation, the ratio of those whose situation was said to have improved versus those whose reportedly worsened has changed significantly throughout the conflict. At the outset, the stability of pension income kept this group protected from a decline in economic well-being (the index was 0.64); however, after six months (0.46) and then a year and a half (0.27), inflation and rising prices had convinced many pensioners that their financial situation had deteriorated. By 2024, they had managed to adapt to the changes, with the index swinging back (0.77), especially since the question concerns changes over the past year, and few pensioners really felt a change in 2024 versus 2023. Thus, at the end of 2023 and beginning of 2024, less and less did older generations of Russians report deteriorations in their financial situation.
The backward-looking index from August 2022 to January-March 2024 increased for all workers: from 0.44 to 0.82 in the public sector, from 0.29 to 0.85 in the private sector and from 0.37 to 0.80 among entrepreneurs. During the first year of the conflict, those employed in the private economy noted a deterioration in their financial situation (from 0.49-0.58 in February 2022 to 0.29-0.37 in August 2022). It was likely the case that in 2022, after the start of the conflict, it was Russians who depend on the state budget for their income that felt nervous, but government support for public-sector employees, along with payments and benefits, made this group more stable in the Russian labor market, and by August 2022 they rated the change in their financial situation relatively positively. Moreover, recall that it was the private sector, which provides most consumer goods and services, that felt the greater pain from the slump in the domestic market caused by foreign sanctions, closure of several lines of business, restrictions imposed by the Russian authorities and sharp reduction in imports.
In 2023, the private sector already managed to adapt to the changing environment, while inflation was not fully offset by the indexation of pensions, with both factors contributing to growth in assessments of a worsened financial situation among nonworking pensioners (0.19). By 2024, pensioners felt things had stabilized and, at least compared to 2023, few of them thought they were worse off (0.72).
The growth in the backward-looking personal prosperity index among working Russians may be a consequence of the labor shortage, which has tilted the supply/demand balance in favor of workers. This is indicated by the shifting groups that were most upbeat about changes in their personal financial situation: whereas in 2023 it was entrepreneurs and the self-employed, at the beginning of 2024 it was hired workers. Such dynamics are congruous with official economic statistics. In 2022, the government focused on supporting incomes among the lowest-earning households, which grew 27.8% year over year in nominal terms, while real incomes overall fell 2.8%
24. In 2023, the year-over-year growth of wages was 14.6% in nominal terms. Thus, whereas in 2022 the lowest-earning Russians felt the impact of government support amid heightened anxiety in the spring, driven by accelerating inflation and an expected shortage of goods, in 2023 the crisis was declared to have been overcome, yet this “success” was hardly noticed by the groups most dependent on the state.
The first months of the war economy and life under sanctions likely dealt a significant blow to higher-earning groups. Economists have already noted this, pointing out that the Russian banking system had little choice but to confiscate the foreign-currency deposits of Russians, who almost certainly belonged to higher-earning groups
25. After the start of mobilization and the involvement of wider groups of the population in the conflict (not only fighting battles but also, say, fulfilling state defense orders and bringing in so-called "parallel imports"), the need and opportunity arose for the government to spread the benefits around to more prosperous Russians too. As a result, these groups began to feel less left out (although the overall balance of assessments regarding their financial situation remains negative) than a year before and relative to other social groups outside of the economy serving the conflict.
Despite the confiscation of foreign-currency deposits and the problems that entrepreneurs encountered, a direct connection was observed between the level of income and assessments of changes in people’s personal financial situation throughout the entire period of the Russia-Ukraine conflict: the higher one’s income, the less negative one is. This became most pronounced in 2024. As can be seen in Chart 6, in September 2023, for Russians whose average income over the last three months was no more than RUB 12,000/month, the backward-looking personal prosperity index remained virtually unchanged (0.18 in 2022 versus 0.19 in 2023). Yet among Russians who earned more than RUB 70,000/month, the index increased from 0.69 in 2022 to 1.04 in the early autumn of 2023 and to 2.11 in 2024. At the same time, the index values have increased across all income groups, indicating gradual adaptation to the new economic reality. Amid the Russia-Ukraine conflict and economic turbulence, financial resources are needed to maintain living standards, with the greater one’s margin of financial safety, the more stable one feels. For those who lack such a safety margin, any economic problems in the country can become a source of major financial headwinds. At the same time, for now, state support for the lowest-earning groups of the population allows them to maintain their usual living standards, which generally were not high before the Russia-Ukraine conflict.