1998 Reports

Wage Arrears, Poverty, and Family Survival Strategies in Russia

Desai, Padma B.; Idson, Todd

In this paper we use a longitudinal survey of Russian households for analyzing the impact of wage arrears on the incidence of poverty among families and their survival strategies. The failure of enterprises and government to fully pay workers in a timely fashion is shown to be associated with a higher incidence of poverty; a similar effect is found for pensioners experiencing pension arrears. As a result of pay delays, we find that individuals and families were more likely to take second jobs, increase home production for own-consumption and sale, reduce their rate of saving, sell family assets, and receive transfers of goods and money from relatives (which, in turn, reduce the effect of wage nonpayment on poverty). Wage nonpayment also contributed to a rise in barter between workers and firms, although the monetary value of these goods and services did little to arrest the upward trend in outstanding net debt to workers.