On the economic sustainability of Russian households at a socially acceptable level

Abstract

The paper is focused on determination and analysis of the thresholds for socially acceptable criteria of economic sustainability for households of different composition. The paper shows the key methodological aspects of determining the economic sustainability of households and its socially acceptable criterion. The main macroeconomic conditions for the formation of economic sustainability of households in Russia are also considered. Besides, the characteristics of employment for the people living in economically (un)sustainable households have been identified and analysed. The basis for the household economic sustainability, according to the authors, is self-sufficiency that enables using its own resources to support the socially acceptable level of consumption of socially significant goods and to accumulate savings subject to the resources’ limitations and social risks. The socially acceptable consumer budget is used as the criterion for identification of the household economic sustainability, including the specifics of the consumption of the main socio-demographic groups of the population (population of working age, pensioners, children) and savings in consumption due to cohabitation. Differentiating features of the threshold values for the households of different types are determined in the paper. It is shown that the threshold values of the criterion for economic sustainability of households per household member decrease as the number of minor children per 1 adult increases. However, the income position of such households worsens and, in conditions of unsustainability, the income deficit increases relative to the threshold value. It is revealed that there are no unemployed individuals among the people from economically sustainable households (unlike those living in economically unsustainable ones), while the situation regarding the share of the employed and the level of income from employment varies, depending on the composition of households, indicating different “strategies” for achieving sustainability of their households.

1 INTRODUCTION

The issue of sustainability is part of the global agenda. Under the UN 2030 Agenda for Sustainable Development, the achievement of the Sustainable Development Goals is monitored in both developed and developing countries (SDSN 2015). Sustainability in this context means to meet “the needs of the present without compromising the ability of future generations to meet their own needs” (UNECE 2014: 96). At the same time, it is emphasized that sustainability needs to be measured not only at the countries’ level, but also at other levels, including the household level (UNECE 2014). Micro-level sustainability can be interpreted in different ways, for example, in the context of sources (resources, activities required to support them) and ability to “cope with and recover from stress and shocks, maintain or enhance its capabilities and assets, and provide sustainable livelihood opportunities for the next generation […]” (Chambers and Conway 1991: 6;Natarajan et al. 2022).

Outlining the research field, it is possible to specify several “vectors” for the development of research issues that correlate with the topic of this study. One of these “vectors” is related to employment, which is essential for the formation of households’ income sources and the sustainability of their position. The availability and level of income from employment determine (taking into account the number of dependents) the ability of households to achieve self-sufficiency, without engaging social support (e.g., to overcome poverty) (Rzhanitsyna 2019; Bobkov and Odintsova 2023). In this context, the employment situation in households will affect their position. Implementation of job decision can be influenced by a different circumstances (e.g., Jensen and Blundell 2024;Chen, Kuo and Zhao 2023;Martinoty 2022;de Brauw et al. 2015), that can be divided into “internal” and “external” ones. The first group can include, e.g. the number of people employed in a household and the level of their income from employment, availability and level of other incomes in the household, and the life cycle of the household (e.g., a young family with a child), etc. “External” circumstances are related to socio-economic policies in the field of labour and income support (the amount of scholarships, pensions, benefits), as well as the proposed employment conditions (working hours, wages, etc.).

The employment situation in households is reflected in their financial status. Research results indicate that jobless households are at a risk of relative income poverty or deprivation, which varies depending on the household type (de Graaf-Zijl and Nolan 2011). With the increase in the number of unemployed, the position of households is expected to worsen (Korchagina and Prokofieva 2023). Some household types are more vulnerable: large families (e.g., Grishina 2024) with a higher burden for workers; single-parent families, in which the burden falls entirely on one parent, where the risks are higher in the families of single mothers (e.g., Korchagina and Prokofieva 2023;Calegari, Fabrizi and Mussida 2024;McErlean and Glass 2024). In addition, for women after childbirth, there are barriers in returning to employment, related to the break in employment (maternity leave and child care) (e.g., Pishnyak and Nadezhdina 2020).

The quality of employment also plays a role in shaping the household sustainability. As follows from the research results, the fact of having employment may not be enough if this employment is precarious. It was revealed that the risks of negative consequences for the households (material deprivation) are observed in the cases of job instability and temporary jobs (Figari 2012;Cheung, Chan and Chou 2019;Pérez-Corral, Bastos and Casaca 2024). Precarious employment, due to the lower income it generates for households, is associated with a less favourable financial situation of such households (e.g., Lewchuk et al. 2015). As a result, the economic sustainability of the precarious workers’ households decreases, while the consequences differ by the category of workers – for the older age group and the youth, the situation is worse compared to the middle age group (Bobkov and Odintsova 2023), which may be important in terms of “combination” workers in certain households. Besides, as noted in (Toshchenko 2022), precarious employment is increasingly spreading into the way of life and lifestyle of workers.

Due to various problems arising in the field of employment (such as unemployment, low income from employment, etc.), as well as other life situations (disability, loss of a breadwinner, etc.), the share of social transfers in the total household income may increase. Their impact on the “economy” of households is one of the key “vectors” of research. As follows from the papers, social transfers play an important role in reducing the risks of poverty, especially in households with children, where some household members are obviously unable to enter the labour market (e.g., Korchagina and Prokofieva 2022;Andreeva, Bychkov and Feoktistova 2021). The reduction of poverty risks is also determined by the number and amounts of various social benefits (such as family, children, old-age, survivor, and unemployment benefits, etc.) that a household receives (e.g., Bárcena-Martín, Blanco-Arana and Pérez-Moreno 2023;Bonanno, Chies and Podrecca 2023). At the same time, an important research aspect is the “balance” between the social transfers received and employment activity, and their reflection in the “economy” of households (e.g., Nishiyama 2019;Kaygusuz 2015).

The resources available to households determine their ability to meet needs at various levels corresponding to a certain model of living standards (ranging from poverty to high security). In this context, the sustainability of the household position can be considered in the (static, structural) aspect of its ability to overcome the conditions of poverty and low security, meeting the needs at a higher level, for example, close to the standards of the middle-income (Bobkov and Odintsova 2023). In this sense, the problem considered in this paper is linked with a large segment of research devoted to issues of socio-economic stratification, based on the assessment of income, expenses, consumption, and other criteria for identifying the socio-economic structure as a whole, or its particular strata (layers, classes) (e.g., Milanovic and Yitzhaki 2002;Ravallion 2010;Atkinson and Brandolini 2013;Chen and Ravallion 2013;Gorshkov and Tikhonova 2016;Bobkov 2018;Anikin and Lezhnina 2018). There is also a “dynamic” aspect of the household position associated with its stability, i.e. the ability to maintain it at a certain level. In this context, the “vector” of research related to the dynamics of socio-economic situations throughout life and across generations is of interest (e.g., Vosters and Nybom 2017;Gentili and Hoekstra 2021;Hsu 2021;Colagrossi, Geraci and Mazzarella 2023;Rohenkohl 2023).

The aim of the research is to determine the methodological foundations for the formation of a socially acceptable criterion for the economic sustainability of households, analysing its thresholds for different types of households, taking into account savings on consumption and dependency burden, as well as identifying the employment characteristics of the persons living in economically (un)sustainable households.

Empirically, the study focuses on the situation in Russia, but the methodological solutions used by the authors are not spatially limited and can be applied in further studies to identify the situation in other countries (taking into account adaptation to national peculiarities), or to develop cross-country comparisons.

The instrumental basis of the study is the consumer budget, which is well-established for the research and social policy purposes (e.g., Goedemé et al. 2015;Rzhanitsyna 2019;Penne, Cornelis and Storms 2020; Bobkov, Gulyugina and Odintsova 2019a;Deeming 2020). This research complements the practice of developing and using this expert analytical tool, which operates not only with a minimum budget standard associated with limited resources, but with a budget standard of a qualitatively different, higher, socially acceptable level.

2 METHOD

2.1 THEORETICAL AND METHODOLOGICAL BASIS OF THE RESEARCH

The Russian research methodology concerning household economic sustainability is based on fundamental statistical assumptions, which define a household as a group of persons “cohabiting in the same living residence or its part jointly ensuring for themselves food and all necessities for living” (Rosstat 2008). The household sustainability, in its specific systemic meaning, refers to the ability to support the functioning in the presence of stabilizing and destabilizing factors (Yarin 2014: 14). In relation to households, functioning is generally considered from the viewpoint of satisfying the needs “in food, housing, health care, mobility, education, social security, bringing up children, and safety” (Golubova 2012: 25).

Amartya Sen, an Indian economist, evaluated the interconnection between consumption and well-being as considered from the perspective of functioning and possibilities, emphasizing that “having certain commodities at one’s disposal is not enough to generate well-being. People should be free and able to use these commodities in such a way that their needs are truly satisfied” (UNECE 2014: 6). Representatives of the European statistics, having considered the consumption as a subsystem of general human well-being, draw attention to the importance of the aspects of the current households’ well-being and its sustainability.

In the post-Soviet Russia, the economic situation of low-income households is maintained based on the established state guarantees of minimum monetary income, using the subsistence minimum as a minimally acceptable consumer budget1 (Ukaz Prezidenta Rossijskoj Federacii No. 210 1992; Federal’nyj zakon No. 134-FZ 1997).

The use of consumer budgets is a well-known practice (Deeming 2020;Saunders and Bedford 2017). Consumer budgets can be aimed at meeting the needs associated with living standards at various levels, ranging from poverty to high security. This tool is most developed for low-income and poor groups of the population: with the minimum financial resources required to participate adequately in society (e.g. Goedemé et al. 2015), with incomes below poverty threshold and determining the right to social assistance (e.g. Guggisberg, Häni and Fleury 2013), etc. These budgets take into account different needs (such as food, clothing, health, etc.), target various types of households in terms of their type (а single person, single parent with one child, couple without children, couple with two children, etc.), consider household composition (e.g., a 40 year-old man, 35 year-old woman, boy of about 10, girl of about 14), and account for the economic activity of adults (e.g., employed in low-paid jobs, unemployed, not in the labour force), etc. Meeting the needs of such budgets is limited to a minimum level: minimum cost of healthy eating, minimum level of spending for personal care, modest but adequate dwelling which meets some minimum quality criteria, minimal level of leisure activity and social participation, etc. (Goedemé et al. 2015;Saunders and Bedford 2017).

In Russia, the methodology for determining the subsistence minimum (SM) until 2021 was associated with the formation of its two components – the minimum consumer basket (the first component, which includes minimum sets of food, non-food products and services) and mandatory payments and fees (the second component). The regular review (envisaged once in five years) of the consumption volumes and the composition of the consumer basket for the SM was accompanied by partial adjustments, taking into account the changes in the actual consumption patterns of the low-income population and the development of scientific recommendations on healthy lifestyle issues.

The methodology for forming a minimum normative consumer basket has aroused great scientific interest and many a discussion. In 2013, a transition was made from the normative approach to determining the sets of the minimum consumer basket to the normative and statistical one, in which only the food set remained normative (accounting for 50% of the cost of the minimum consumer basket), while the cost of the sets of non-food products and sets of paid services was determined through calculations (each accounting for 25% of the cost of the minimum consumer basket) (Federal’nyj zakon No. 227-FZ 2012). Since 2021, the average value of the SM per capita in Russia as a whole has been determined based on the ratio of 44.2% to the average per capita money income (Federal’nyj zakon No. 134-FZ 1997). Since 2022, this provision has been temporarily suspended and the all-Russian SM has been established by the federal law on the federal budget. The official calculations of the poverty line still use the SM calculated according to the 2013–2020 methodology. The value of the indicator for the 4th quarter of 2020 is indexed in accordance with the level of inflation.

Despite the discussions that have unfolded in the scientific community about the change in the methodology for determining the SM in 2021, scientists have acknowledged the shortcomings of the previous methodology (Bobkov et al. 2022). In the conditions of rising incomes, socio-economic differentiation, and risks to living standards (Bobkov et al. 2024), the focus of Russian scientists has shifted to higher quality-of-life standards (than the SM) and economic sustainability (e.g., Bobkov et al. 2007;Ochirova, Bobkov and Grigorieva 2008;Rzhanitsyna 2019; Bobkov, Loktyukhina and Shamaeva 2022).

The methodological approach used in this paper to determine the economic sustainability of households is based on a socially acceptable consumer budget, which reflects a higher quality of life than the SM (by accounting for a wider list of socially significant needs). It corresponds to modern conditions for maintaining a healthy lifestyle and human development, but with limited income. This approach is based on scientific developments related to consumer budgets of different income levels, including socially acceptable consumer budget.2 The basic one is the SM, the methodology of which is evolving to take into account the increasing availability of consumer goods. For scientific purposes, and to ensure comparability of dynamic time series, researchers carry out their own calculations of the SM according to the methodology of 2013–2020.

Indicative of a socially acceptable quality of life, based on the sample surveys of household budgets conducted by Rosstat3, are the results of households’ assessment of their financial situation, which are distributed among 20% income groups. The group with socially acceptable economic opportunities includes those who provided the following response – “there is enough money for food and clothes, but they cannot afford to buy durable goods.” The share of such responses among households as a whole (49.7% in 2022, 48.7% in 2023 (Rosstat 2024a) dominates other responses. The 4th quintile group is the representative, in which most of the answers were also concentrated (46.4% in 2022 and 46.0% in 2023), close to the average values. This makes it possible to consider household consumption of the 7th-8th decile groups in a 10% distribution, depending on the level of disposable resources, as characteristics of a socially acceptable lifestyle.

The representativeness of the 4th quintile income group for the average values of the indicator can also be traced according to the macroeconomic picture of the distribution of the total volume of monetary income by 20% of the population groups. The average per capita income in the 4th quintile group (53906 RUB in 2022, 60277 RUB in 2023) is closest to the average for Russia as a whole (47386 RUB and 53139 RUB, respectively) (see Table 1 below).

Table 1. The Russian Federation: GDP, income, unemployment, inequality from 2019 to 2023

	Years					Growth, % (2019=100%)
	2019	2020	2021	2022	2023
GDP per capita at PPP, USD	30964	31491	38938	40999	44071	+42.3
GDP per capita volume indices, as a percentage to the previous year	102.1	97.5	106.2	99.1	103.9	+6.6
Average monthly nominal accrued wage of employees of organizations for the economy as a whole, RUB/month	47867	51344	57244	65338	74854	+56.4
Unemployment level for the population of 15–72 years of age, %	4.6	5.8	4.8	4.0	3.2	-1.4 p.p.
Average per capita money income of population, RUB/month	35233	35934	39934	47386	53139	+50.8
Incl. for 20-percent groups of population
1 group (with the lowest income)	9375	9817	10778	13387	14564	+55.3
2 group	17662	18317	20200	24672	27142	+53.7
3 group	26472	27264	30162	36397	40365	+52.5
4 group	39846	40747	45228	53906	60277	+51.3
5 group (with the highest income)	82811	83523	93301	108567	123349	+49.0
Gini index (income concentration index)	41.2	40.6	40.9	39.8	40.5
Source: compiled based on Rosstat 2023: 113; Rosstat 2024d, 2024e, 2024f, 2024h.

The formation of a socially acceptable consumer budget is based on the following methodological principles (Bobkov et al. 2019a: 16–22):

1) the principle of matching current income to the satisfaction of needs for the basic socially significant consumer goods and services involves limitations on the purchase of expensive items and paid services that require significant additional financial investments;

2) the principle of the normative method for forming the sets of food (taking into account the official norms of physiological energy and nutritional needs for various groups of the Russian population, vitamin and mineral complexes, and eating out), as well as non-food products and services (using an expert method, which takes into account current widespread needs);

3) the principle of continuity in methodology for updating the composition and consumption standards;

4) the principle of self-sufficiency provides for the payment of housing and utilities without external subsidies. It also includes financial self–insurance through the formation of targeted savings to maintain a lifestyle in unforeseen or unfavourable circumstances by creating a financial reserve, purchasing passenger transport (passenger car), and improving housing conditions. These components are calculated based on the analysis of the existing characteristics, such as, for example, the period of job search, the cost of housing, etc.

This article presents calculations of the socially acceptable consumer budget for 2022, based on the latest published annual data from the sample surveys conducted by Rosstat during the calculation period. Previously, calculations of the cost of a socially acceptable consumer basket were carried out taking into account the 2018 prices. In particular, they showed that the cost of a socially acceptable consumer basket based on the normative sets in Russia as a whole (average monthly per capita) was 3.24 times higher than the cost of the consumer basket of the SM. The cost of home food was 1.4 times higher, the non-food products cost was 2.39 times more, and the cost of services was 6.05 times higher than in the current consumer basket of the SM (Bobkov et al. 2019: 22).

Due to the specificities of consumption patterns by age, the consumption habits of the working age population, unemployed pensioners, and children (up to and including 15 year-olds, in accordance with the methodology of the SM) are taken into account when forming the socially acceptable consumer budget. Two stages of the aggregation of the consumer budgets for different population categories are used at the household level. At the first stage, the consolidated consumer budget for the specific household is calculated based on its demographic portrait and numeric composition. At the second stage, the consolidated consumer budget is transformed into the equivalent socially acceptable consumer budget, where the savings in consumption due to cohabitation are accounted for, including the equivalence scales (Bobkov et al. 2020: 13).

Savings on consumption are realized when living together, for example, through the shared use of dishes and furniture, household equipment, etc. This arrangement lowers the overall cost of the consumer budget. In world practice, equivalence scales are used for various purposes, particularly for statistical analysis, such as measuring poverty by the US Bureau of Labour Statistics or the OECD (Bobkov, Gulyugina and Odintsova 2019a: 12–14). In Russia, the equivalence scale is used in scientific research. This paper utilizes the author’s equivalence scale, which has been developed during the implementation of a pilot project aimed at strengthening the targeting of social support for poor families with children.

The household economic sustainability is defined as its ability, through income from labour activity and other sources, to maintain the satisfaction of needs at a level not lower than the level of socially acceptable consumer budget for the household, including savings in consumption due to cohabitation.

The households with an income level lower than the threshold value are economically unsustainable. The depth of unsustainability is defined by the amount of the income deficit, which is the difference between the actual household income and the corresponding threshold criterion.

2.2 THE RESEARCH TASKS

This research aims to consider the following issues:

(I) Characteristics of the main macroeconomic conditions for the formation of economic sustainability of Russian households;

(II) Analysis of the level and composition of thresholds of the socially acceptable criteria regarding the economic sustainability of the main socio-demographic groups and households of different composition, taking into account savings on consumption;

(III) Evaluation of the household income deficit in the conditions of economic unsustainability at a socially acceptable level;

(IV) Identification of the employment characteristics of individuals living in the economically sustainable and unsustainable households.

The hypothesis is as follows: the threshold values of the socially acceptable criterion for economic sustainability of households per household member decrease as the number of minor children per 1 adult increases. However, the income position of such households worsens. In the conditions of unsustainability, the income deficit relative to the threshold value increases.

2.3 TYPES OF HOUSEHOLDS

This research focuses on the households with children (up to and including 15 year-olds) and considers their following types and compositions:

Type I – single-parent families: 1 adult and 1 child, 1 adult and 2 children,

Type II – two-parent families: 2 adults and 1 child, 2 adults and 2 children,

Type III – family with many children: 1 adult and 3 children, 2 adults and 3 children.

The number of children (up to three) in households is determined in line with the actual situation. According to the data of the All-Russian Population Census in 2020, the share of the family units with 1–3 children was 97.9% of the total number of family units with children under the age of 16 (Rosstat 2020).

2.4 DATA

The macroeconomic data, including the cash income, income inequality, unemployment level, and monetary poverty published by the Federal State Statistics Service of Russia (Rosstat), formed the information database for the research. Also included are the results of the sample surveys of the labour force4 conducted by Rosstat, as well as the results of the sample surveys of socio-demographic problems (Rosstat 2024b) (comprehensive monitoring of living conditions, statistical survey of income and participation in social programs, and the sample survey of the dietary structure of the population), household budgets (Rosstat 2024a), which reveal the overall picture of the financial situation of the population, as well as the consumption structure and living conditions.

Additionally, the data from 31th round5 of the Russia Longitudinal Monitoring survey (RLMS-HSE) were used. The RLMS-HSE is a series of nationally representative surveys monitoring the health and socio-economic situation of households and individuals in the Russian Federation.6 For the analysis, the individuals aged 15 years and older living in households with children of the considered composition were selected from the RLMS-HSE dataset (RLMS-HSE 2023): 1 adult and 1 child (7.3%), 1 adult and 2 children (2.6%), 2 adults and 1 child (44.8%), 2 adults and 2 children (35.8%), 1 adult and 3 children (0.5%), 2 adults and 3 children (9.0%) (N=1333). The data were weighted to correct for the population parameters (gender, age, type of settlement) by the weight variable (included in the RLMS-HSE dataset). For the persons from these households, the employment characteristics were taken into account: a) availability of employment (employed, unemployed); b) the ratio of income from basic employment to the threshold of economic sustainability (< 50% or ≥ 50%). These characteristics were considered based on the economic sustainability of the households: a) those households with money incomes below the threshold of economic sustainability; and b) those households with money incomes not lower than the threshold of economic sustainability.

The variational series of individual statistical parameters cover the period from 2019 to 2023. The analytical work was performed using the economics-statistics analysis methods.

3 RESULTS

3.1 MAIN MACROECONOMICS CONDITIONS FOR THE FORMATION OF ECONOMIC SUSTAINABILITY OF HOUSEHOLDS IN RUSSIA

The opportunities forming the conditions for the household economic sustainability are defined by the level and trend of Gross Domestic Product (GDP), which is the key indicator of a country’s economic resources. According to Russian statistics, the GDP per capita at purchasing power parity (PPP) is characterized by the growing trend. In 2023, it increased by 42.3% compared to 2019, reaching 44071 USD (Table 1). At the same time, the volume index of the GDP per capita, excluding the price factor, showed a reduction of 2.5% in 2020 during COVID-19 and 0.9% in 2022. In contrast, in other years of the period under review, the indicator grew by more than 2%, with 2021 being particularly successful at +6.2%.

The main source of the Russian household income is the labour remuneration. Within the structure of the total volume of money income of the population, labour remuneration accounted for 57.2 – 60.2% in 2019–2023, while the share of income from entrepreneurial and other production activities ranged from 5.2 to 6.7%. Other sources are social payments (18.5–21.4%), property income (5.1–7.2%), and other income (8.1–12.9%) (Rosstat 2024h).

Average monthly nominal accrued wages of employees for the economy as a whole in 2023 increased by 56.4% in 2023 compared to 2019, reaching 74854 RUB. The unemployment rate for the population aged 15 to72, according to sample surveys of the labour force conducted by Rosstat, was comparatively low in 2023 – below 6%, with an actual rate of 3.2% (a decrease of 1.4 percentage points compared to 2019) (Table 1).

Nominal average per capita money income in Russia has been steadily rising. In 2023, compared to 2019, it increased by 50.8% to 53139 RUB per month (Table 1). The World Bank divides countries into categories, based on the income level: high income, upper-middle, lower-middle and low. In 2023, it included Russia into the list of countries with the high income level, while in 2022, Russia was in the list of the countries with the upper-middle income level (Anisimova 2024).

Serious risk factor for the household economic sustainability is inequality in money income. According to the Russian statistics on distribution of the population by 20-percent groups, the first three lower income groups have the income per capita which is lower than in Russia as a whole. At the same time, the income equalization process is observed. During the period from 2019 to 2023, the income of the lowest 20-percent groups showed outstripping growth rates. For example, while in the 1st 20-percent group (with the lowest income) the growth rate amounted to 55.3% (to 14564 RUB), in the 5th 20-percent group (with the highest income) it was 49.0% (to 123349 RUB). The difference in the average per capita income between the highest and lowest 20-percent groups amounted to 8.5 times in 2023 and 8.8 times in 2019.

The Gini index (income concentration index where «0» indicates full equality, «1» indicates absolute inequality) has ranged from 39.8% to 41.2% in 2019–2023 (Table 1). Compared to other countries, the indicator for Russia, based on the 2019–2021 data, was about the same as that of the United States (39.8% in 2021) and Turkey (41.9% in 2019), noticeably lower than in, for example, Mexico (45.4% in 2020), Brazil (52.9% in 2021), or Chile (44.9% in 2020), and higher than in Italy (35.2% in 2020), Spain (34.9% in 2020), China (37.1% in 2020), and India (34.2% in 2021) (Rosstat 2023: 123–124). The lowest values of the indicator (ranging from 22.5% to 24.05%) for the period 2009–2022 were in Kyrgyzstan, Slovakia, Armenia, Slovenia, while the highest value was in the Republic of South Africa (63.0%) (Rosstat 2023: 119–120).

The income inequality problem is closely linked to that of monetary poverty. Despite the gradual reduction in the poverty rate, the problem remains relevant. Based on the national criterion, the share of the population with the money income below the poverty line in Russia in 2023 amounted to 8.5%. In 2019, the share of the population with the income below the subsistence minimum level was 12.4% (Table 2).

Table 2. The Russian Federation: monetary poverty indicators from 2019 to 2023

	Years					Change (2019=100%)
	2019	2020	2021	2022	2023
The share of the population with money income below the subsistence minimum level (2019–2020) / poverty line (2021–2023), established at the national level for the population as a whole	12.4	12.2	11.1	9.0	8.5	-3.9 p.p.
The share of the population with the average per capita money income below the international poverty line subject to the Purchase Power Parity
1.90$/day	0	0	0	0	-
3.20$/day	0.1	0.1	0.1	0	-	-0.1 p.p.
5.50$/day	0.8	0.6	0.6	0.3	-	-0.5 p.p.
10.00$/day	5.1	4.3	4.5	2.7	-	-2.4 p.p.
Source: compiled on the basis of Rosstat 2024e.

The measurement of the Russian monetary poverty using the international lines based on purchasing power parity (Table 2) shows that in Russia, in 2019–2022, there was no extreme poverty problem calculated by the criterion of 1.9 USD per person per day7 (for the poorest countries). In 2022, for the first time, “zero” poverty was recorded at the international line of 3.2 USD per person per day (for countries with lower-middle income) (RIA Novosti 2018). According to the higher international poverty margins of 5.50$ per day (for the countries with the upper-middle income level) (RIA Novosti 2018), and 10.00$ per day (for the countries with higher income levels), the poverty problem in Russia still remains. However, the trend towards reduction of the indicator allows for hope of the positive results in the coming years. So, from 2019 to 2022, the share of the population with the income below 5.50$ per day amounted to less than 1% and by 2022 it decreased to 0.3% (by -0.5 p.p. against 2019), while with the income below 10.00 USD/day, it equalled not more than 5.1%, and by 2022 reduced to 2.7% (a decrease of 2.4 percentage points compared to 2019).

Threats to economic sustainability, which can be caused by unforeseen adverse life circumstances (job loss, illness, etc.), are carried by the observed interest of households in bank loans related to debt load. According to the Bank of Russia, the number of borrowers in the country with three or more loans in the banks increases, while credit cards are gaining popularity (Bank of Russia 2023). However, at the same time there is a growing interest among the households in financial saving strategies, enabling them to ensure their own economic security due to the saved resources. In 2022, household savings amounted in average to 13.9% of disposable resources. As prosperity increases, so does the amount allocated to savings. Thus, 2.6 % of savings made in their total volume for the households belonged to the 1st 20-percent group (with the lowest disposable resources) in 2022, and 64.3% belonged to the 5th 20-percent group (with the highest disposable resources) (Rosstat 2024h).

3.2 THRESHOLD VALUES FOR A SOCIALLY ACCEPTABLE CRITERION OF ECONOMIC SUSTAINABILITY

The calculation of the socially acceptable consumer budget (SACB) for the main social and demographic groups of the population shows that in 2022 it amounted to the following: for the population of working age – 61725 RUB/month, for pensioners – 36183 RUB, for children – 38673 RUB (Table 3). The SACB differ not only in terms of level, but also in terms of composition. The SACB components for the working age population are the consumer basket (88.6%) and compulsory payments and dues (tax component) (11.4%). The SACB for the pensioners and children coincides with the cost of the consumer basket, while the compulsory payments and dues are lacking.

Table 3. The Russian Federation: level and basic composition of the SACB of the main socio-demographic groups (population of working age, pensioners, children) in 2022

	Population of working age	Pensioners	Children
SACB, RUB/month	61725	36183	38673
Incl. (%)
Consumer basket (SACB CB)	88.6	100.0	100.0
Compulsory payments and dues	11.4	0	0
Source: Authors’ calculation of the SACB based on Rosstat 2024g, 2024i.

In the SACB consumer basket (SACB CB), the cost of the set of food for the population of working age amounted to 18425 RUB/month (33.7% in the SACB CB); it is lower for pensioners and children – 10632 RUB (29.4%) and 11080 RUB (28.7%) respectively (Table 4). The share of the cost of food sets is significantly less than in the structure of the SM in the 2013–2020 methodology (50% is the cost of a set of food), which is evidence of a higher standard of living. As you know, with an increase in income, the share of food costs decreases (Engel’s law).

Table 4. The Russian Federation: level and structure of the SACB Consumer Basket for the main socio-demographic groups (population of working age, pensioners, children) in 2022

	Population of working age	Pensioners	Children
Consumer Basket (SACB CB), RUB/month	54676	36183	38673
Incl.
Food	18425	10632	11080
Non-food goods	7268	7450	8523
Services	28984	18101	19070
Incl. services on savings	11706	3973	3886
Consumer Basket (SACB CB), %	100.0	100.0	100.0
Incl.
Food	33.7	29.4	28.7
Non-food goods	13.3	20.6	22.0
Services	53.0	50.0	49.3
Incl. services on savings in the cost of a set of services	40.4	21.4	20.4
Source: Authors’ calculation of the SACB based on Rosstat 2024g, 2024i.

The cost of the non-food goods for children is higher, amounting to 8523 RUB per month (22.0% of the consumer basket of the SACB) compared to 7268 RUB (13.3%) for the working age population and 7450 RUB (20.6%) for pensioners. For children, higher standards of clothing and shoes, as well as educational goods, are taken into account. For pensioners, increased needs for medicines and medical services are taken into account.

Services dominate the SACB consumer basket. The cost of the services set for the working age population is much higher – 28984 RUB per month (53.0% in the SACB consumer basket) compared to 18101 RUB (50.0%) for pensioners and 19070 RUB (49.3%) for children. The expenditures of the bank services for savings are included in the services set. They amounted to 40.4% of the services set’s cost for the working age population, 21.4% for pensioners and 20.4% for children. In the calculations, the savings expenditures include three areas: financial reserve for self-insurance in case of social risk occurrence, savings for the car purchase and housing for the future, taking into account the growing up of children.

On a per capita basis, the value of the SACB consumer basket increased by 52% in 2022 compared to 2018. At the same time, the share of the cost of a set of food products decreased by 2.9 percentage points, the share of non-food products by 2.4 percentage points, while the share of the cost of a set of services increased by 5.3 percentage points. This indicates that the consumer interest in the service sector was developing quite actively during this period. As of January 1, the population increased compared to January 1, 2018, but slightly – by 0.07% (to 146980 thousand people). Meanwhile the share of the working-age population increased by 1.4 percentage points (to 57.4%), the share of the working age population decreased by 1.4 percentage points (to 24.0%), and the share of people under the working age (0–15 years) remained at the level of 18.6%.

Using families with adult working age persons and children younger than 15 as an example, Table 5 shows the differences in the size of family’s socially acceptable consumer budget. In a family with 1 adult and 1 child, it will amount to 100398 RUB/month, for a family with 2 adults and 1 child – 162123 RUB, and for a family of 2 adults and 3 children – 239469 RUB.

Table 5. The Russian Federation: SACB without and including (SACB equiv.) the savings in consumption for the families of different types and composition in 2022

	SACB of a family without savings in consumption*, RUB/month	SACB equiv. of a family with savings in consumption*, RUB/month	Equivalence scale **	The amount of savings on consumption, %
Single-parent family
1 adult+1 child	100398	92868	1.85	-7.5
1 adult+2 children	139071	123773	2.67	-11.0
Two-parent families
2 adults+1 child	162123	149153	2.76	-8.0
2 adults +2 children	200796	178708	3.56	-11.0
Families with many children
1 adult +3 children	177744	153749	3.46	-13.5
2 adults +3 children	239469	207859	4.34	-13.2
Notes:* Authors’ calculations. Adults include the working age persons. The SACB for a family without savings in consumption is defined as an arithmetic sum of the SACB of all family members without accounting for its demographic portrait. The SACB equiv. is calculated using the equivalence scale.** Source: Bobkov, Gulyugina and Odintsova 2019a: 13.

The savings in the consumption due to cohabitation, calculated on the basis of the equivalence scale, are presented in Table 5. As a result of its use, the socially acceptable consumer budget is transformed into the equivalent socially acceptable consumer budget serving as the threshold criterion when evaluating the household economic sustainability. For example, for a family with 1 adult and 1 child, the equivalent socially acceptable consumer budget went down to 92868 RUB (-7530 RUB), for a family of 2 adults and 1 child to 149153 RUB (-12970 RUB), and for a family of 2 adults and 3 children to 207859 RUB (-31610 RUB). The amount of savings on consumption in large families is the most significant, exceeding 13% in the examples under consideration, while in the single-parent and two-parent families, it ranged from 7.5% to 11.0%.

3.3 INCOME DEFICIT IN ECONOMICALLY UNSUSTAINABLE HOUSEHOLDS

The average per capita socially acceptable consumer budget for Russia as a whole, according to the authors’ calculations, amounted to 51313 RUB/month in 2022 with an average per capita money income of 47386 RUB/month, as per statistics data (Rosstat 2024h). The income deficit amounted to 3927 RUB or 7.7%.

At the household level, general picture, whether with or without income deficit, is formed in relation to the equivalent socially acceptable consumer budget that accounts for the savings in consumption and also includes the dependency burden. Table 6 shows the models of the families of different types and compositions, with adults working as employees in the organizations that offer the salaries corresponding to the average nominal accrued wage for employees in Russia as a whole in 2022 (65338 RUB/month) (Rosstat 2024f). With accounting for dependency burden, the set conditions predefine the considered models of the families as economically unsustainable with incomes lower than the threshold criterion.

Table 6. The Russian Federation: the income deficit of the economically unsustainable families in 2022

Family composition*	Dependency burden**	Money income, RUB/month***		SACB equiv. RUB/month****		Income deficit*****, %
		Family	Per capita	Family	Per capita
Single-parent family
1 adult +1 child	0.50	65338	32669	92868	46434	-29.6
1 adult+2 children	0.33	65338	21779	123773	41258	-47.2
Two-parent families
2 adults+1 child	0.67	130676	43559	149153	49718	-12.4
2 adults +2 children	0.50	130676	32669	178708	44677	-26.9
Families with many children
1 adult +3 children	0.25	65338	16335	153749	38437	-57.5
2 adults+3 children	0.40	130676	26135	207859	41572	-37.1
Note:* Adults include persons of working age who are employed by organizations. ** Authors’ calculations. Indicator of the dependency burden was calculated as a ratio of the number of working adults to the total number of the families’ members. *** The income of each adult corresponds to the average monthly accrued wage of the employees of organizations for Russia as a whole in 2022 (65338 RUB/month). **** Authors’ calculations. ***** Income deficit is defined as the family SACB equivalent surplus over the family income.

The data in Table 6 show that there is the most significant income deficit in the economically unsustainable families with a high dependency burden coefficient (to 0.33). In 2022, in such families, with 1 adult and 2 children, or 1 adult with 3 children, the income deficit in the given example amounted to 47.2–57.5%. With the reduction of the dependency burden coefficient to 0.40–0.50, the income deficit was reduced to 26.9–37.1%. With the low dependency burden coefficient amounting to 0.67, the income deficit went down to 12.4%. This shows that with a decrease in the dependency burden coefficient (fewer adults per 1 child), families’ risks to economic sustainability increase, and in the conditions of income deficit, this leads to an increase in the depth of unsustainability, worsening their situation. But this worsening is less severe, given the effect of savings on the consumption in the threshold values of the criterion of economic sustainability.

3.4 EMPLOYMENT CHARACTERISTICS FOR THE PERSONS LIVING IN THE ECONOMICALLY (UN)SUSTAINABLE HOUSEHOLDS

With labour remuneration as the main source of income (see Section 3.1), the employment situation in households can be considered as an important factor in the formation of their economic position. In order to consider the situation from this perspective, taking into account the availability of data, the employment characteristics were identified for the persons living in economically sustainable and unsustainable households with children, based on household types and composition considered in this paper. Table 7 shows that there are no unemployed persons among the people living in economically sustainable households (B), while in the other group (A), the share of unemployed varies from 1.1% to 16.7%, taking into account the composition of the household. The situation with the share of employed is less clear and varies, depending on the type and composition of household. For example, in the case of a two-parent family with 1 child (III) and 2 children (IV), when it comes to the households’ economic sustainability (B), the share of employed is 100% and 85.7% respectively, and with economically unsustainable households (A) – 86.1% and 85.8%. The income from basic employment of the persons from the economically unsustainable households, (A) in most cases (from 75.6% to 100%, taking into account the type and composition of the household) are less than 50% of the economic sustainability threshold. In the economically sustainable households (B), the situation is different. In case of two-parent families (III, IV, VI), the ratio (share of persons with the employment income < 50%/≥ 50% of the economic sustainability threshold) is 50%/50% or 78%/22%. For single-parent families (I, II) – 0%/100% or 100%/0%.

Table 7. Distribution of persons aged 15 and over living with children in households of different composition, according to the employment characteristics, depending on the economic sustainability of their households for 2022.

Employment characteristics	Households with children*
	I	II	III	IV	V	VI
Household money income below the economic sustainability threshold (A)
Employed, %	84.9	81.8	86.1	85.8	83.3	69.6
Unemployed, %	1.1	6.3	2.7	2.2	16.7	3.4
With incomes from basic employment, which is in relation to the economic sustainability threshold, %:
< 50%	75.6	92.0	92.8	96.4	100.0	100.0
≥ 50%	24.4	8.0	7.2	3.6	0.0	0.0
Household money income is not lower than the economic sustainability threshold (B)
Employed, %	100.0	50.0	100.0	85.7	-	66.7
Unemployed, %	0.0	0.0	0.0	0.0	-	0.0
With incomes from basic employment, which is in relation to the economic sustainability threshold, %:
< 50%	0.0	100.0	50.0	77.8	-	50.0
≥ 50%	100.0	0.0	50.0	22.2	-	50.0
Notes: Authors’ calculation based on data of the 31th round the RLMS-HSE. * Households with children: I – 1 adult and 1 child, II – 1 adult and 2 children, III – 2 adults and 1 child, IV – 2 adults and 2 children, V – 1 adult and 3 children, VI – 2 adults and 3 children. “-” – not enough observations for evaluations.

4 DISCUSSION

The dynamics of the gross domestic product (GDP) in Russia, the most important macroeconomic indicator that determines the resource opportunities achieved in the society, creates favourable conditions for positive changes in the economic situation of households. GDP per capita at purchasing power parity in 2023 (44071 USD) increased by 42.3% compared to 2019, and the volume index of GDP per capita increased by 6.6 percentage points (Table 1). This made it possible, in the context of a decrease in unemployment (to 3.2% in 2023), to ensure an increase in wages – the main source of household income – by 56.4% (to 74854 RUB in 2023), and an increase in nominal per capita money incomes of the population by 50.8% (to 53139 RUB) in 4 years. In 2023, Russia was included in the group of high-income countries by the World Bank, while one year earlier it had been classified as an upper-middle-income country (Anisimova 2024).

The results received confirm the importance of taking into account the level of employment income (e.g., Bobkov and Odintsova 2023;Korchagina and Prokofieva 2023). At the same time, the revealed variability of situations, including involvement in employment and the level of income generated from it for persons from economically (un)sustainable households, indicates the role of other sources and different income “contributions” for the employed living in households. Thus, as follows from the data obtained by the authors, for single-parent families in the conditions of economic sustainability, there may be cases when income from employment does not reach 50% of the threshold of economic sustainability, i.e. there is a role of income not related to employment, which covers the existing deficit up to the threshold. In the case of two-parent economically sustainable families, employment may not be 100%, i.e. to meet the threshold for such families it is “sufficient” to have income from the employment of one parent, or other sources. In addition, differences in the levels of income from the employment of parents in such families can be “balanced”, where a lower income of one of the parents is compensated for by a higher income of the other parent, thus bringing the family to the necessary threshold of sustainability. This suggests the need for further study of the economic sustainability of households in terms of its sources and their structure, with the identification of “strategies” for achieving sustainability with different levels of employment in households, and its efficiency (level of income from it).

The main risk factors for the household economic sustainability are concentrated in the field of income inequality. The index of income concentration – the Gini index (40.5% in 2023) – remains relatively high compared to the widespread cross-country values of the indicator (29–37%, according to data for 2009–2022). However, the downward trend for this indicator shows positive processes in the distribution of income of the population. Statistical data indicate the outstripping growth rates of per capita money income of the lower income population.

The most severe manifestation of the economic unsustainability of households is monetary poverty. Based on the national criterion, in 2023, the poverty rate, defined as the share of the population with per capita money incomes below the poverty line, amounted to 8.5% in the context of a downward trend. According to the international criteria of 3.2 USD, poverty rate in Russia is “zero”, and calculations of the poverty rate according to higher international threshold values show that the scale of poverty is relatively low and steadily decreasing.

In the conditions of lack of funds for both maintaining the usual way of life and for other purposes, households tend to turn to bank loans. This phenomenon has become widespread in Russia, despite the fact that it leads to a debt burden. At the same time, households are becoming more actively involved in financial savings strategies. It is indicative that in 2022 the share of the funds allocated in households for savings increased by 1.8 percentage points (to 13.9%) compared to 2019. At the same time, the fact stands out that the lower the income security, the less the share of funds allocated for saving. This bears the potential risks for the economically (un)sustainable households.

The income deficit of economically unsustainable households is directly influenced by the dependency burden. In families with a high dependency burden – up to 0.33 – the income deficit is close to 50% and can reach even greater share. In contrast, with a low dependency burden, such as 0.67, the income deficit is significantly reduced (up to 12% in the examples considered).

The threshold criterion of economic sustainability of households, which is a socially acceptable consumer budget equivalent, taking into account savings in consumption due to cohabitating, forms a system of threshold values, with the following differentiating features:

– type of households (two-parent families, single-parent families, families with many children);

– demographic portrait of the household (working age population, pensioners, children – their presence in the household and numerical composition);

– dependency burden;

– normative socially acceptable standard of consumption in different categories of the population;

– the amount of savings in the consumption, due to cohabitating, according to the equivalence scale.

5 CONCLUSION

The growth of economic resources in Russia and the steady reduction of monetary poverty create prerequisites for expanding and deepening the research in the field of economic sustainability of households.

The results of the study provide evidence in favour of the proposed hypothesis, which states that the threshold values of the criterion of economic sustainability of households per household member decrease as the number of minor children per adult increases. However, the income position of such households worsens. In the conditions of unsustainability, the income deficit relative to the threshold value increases. The consequences of the economic unsustainability of households entail lower living standards and associated problems, such as unbalanced nutrition, risks to health, education, mental and physical development.

The scientific significance of this paper lies in the study of theoretical and methodological issues related to the economic sustainability of households, the basic concepts of this phenomenon, the features of the formation of threshold values for income and employment characteristics for individuals living in economically (un)sustainable households, factors of influence and differentiating features.

The results obtained allow us to outline the directions for further detailed research to create a more comprehensive picture. Firstly, this concerns the composition (type) of households. The authors’ calculations showed that the threshold of economic sustainability differs depending on the type and composition of households. This means that households with the given parameters – the number of children and the ability to share the burden of their maintenance – will require different amounts of resources that should meet this threshold, which can be comprised of different sources (income from employment and non-employment income). In the conditions where the main source of income is employment, a deeper analysis with respect to this will be important. As indicated by other studies (e.g., Chen et al. 2023;Grishina 2024), household composition is an important determinant of the employment situation in it (the number of adults capable of work and the number of adults actually working). Furthermore, detailed analysis at the household level, of the features of economic activity of the adult household members, depending on the type and composition of their households, will give depth to the consideration of the economic sustainability of households, identifying various “strategies” for achieving it, related to participation in employment. In particular, it will allow us to clarify the differences in the level of employment and unemployment in different types of economically (un)sustainable households, the underlying relationship between the “internal” (household composition, labour potential of household members, etc.) and “external” (labour market, social support, etc.) causes that determine the emerging “strategies” for households.

Acknowledgments

The paper was written as part of the Scientific Project No. 23-18-00537 (https://rscf.ru/en/project/23-18-00537/) funded by the Russian Science Foundation and carried out at the Institute of Economics of the Russian Academy of Sciences.

Data availability statement

Data are available in the manuscript.

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Footnotes

1. The consumer budget is define as “a set of concrete income and expenditures of the consumers in natural and monetary terms” and serves as “a key normative and analytical tool for the assessment, forecasting and regulation of sizes, structure and dynamics of quality of life and living standards and the system of distribution relations” (Bobkov et al. 2007: 191).
2. The monitoring surveys of the income and living standards of the population in Russia, currently being carried out by the scientists at the Institute of Economics of the Russian Academy of Sciences, serve as an example of the scientific work on the development of the consumer budgets (Bobkov and Gulyugina 2023). The methodological basis for construction of the consumer budget system as a scientific tool was developed in 1990-s by the scientists from the All-Russian Center for Living Standards (under the guidance of Pr. V.N. Bobkov). With the economy growth and consumer market saturation, the original studies have been further developed and are being updated (Bobkov and Gulyugina, 2020: 15).
3. The survey is shifted towards less well-off households.
4. The results of the sample surveys of the labour force are published on the Rosstat web site (Rosstat 2024c).
5. Collected in the period 09.2022-01.2023, the most relevant at the time of the analysis.
6. “Russia Longitudinal Monitoring Survey, RLMS-HSE”, conducted by National Research University “Higher School of Economics” and Ltd “Demoscope” together with Carolina Population Center, University of North Carolina at Chapel Hill and the Institute of Sociology of the Federal Centre of Theoretical and Applied Sociology of the Russian Academy of Sciences (RLMS-HSE 2023).
7. In 2022 the World Bank adopted the new extreme poverty indicator – at the level of 2.15 USD per person/day instead of 1.90 USD (The World Bank 2022).