future of russian middle class
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Future of
Russian
Middle Class Daria Ivanova
St. Petersburg
Project goals • To describe and define Russian
middle class in general figures
• To identify existing and forecast
most pronounced trends that will
be shaping Russian middle class
lifestyle in the future
• To summarize results in a report
and disseminate findings via signal
session or seminar.
Middle class – Definition The middle class is a class of people in the middle of a societal hierarchy. It is the broad group of people in contemporary society who
fall socio-economically between the working class and upper class. The common measures of what constitutes middle class vary
significantly among cultures – Wikipedia.
Russian middle class are the people who have managed to
adapt their material life standards according to conditions of
modern market economy after collapse of Soviet Union.
Russian Middle Class definition & criteria
for the purpose of this project:
• Own apartment / rented, acquired
using mortgage lending or inherited
• Min 1 car in the family
• Significant expenses are used for
services – education, insurance,
entertainment
• Savings exist
• Vacation abroad 1-2 times per year.
m i d d l e c l a s s
5 mio residents of St Petersburg 12 mio residents of Moscow Share of middle class 15-20%
Cost of middle class living in Russia: 52 kEUR per year (average family; parents & 1 child)
3750
3750
3750
3750
6250
7500
9750
13500
0 2000 4000 6000 8000 10000 12000 14000 16000
Car cost (fuel, ins,service)
Vacation
Entertainment
Savings
Services
Food
Children exp
Apartment, mortgage orrent
Euro per year
Information source: Finpro expert estimation
Middle Class Expenses Breakdown
Information source: Statistics Finland. Finpro expert estimation
26,0 % 27,0 %
7,2 % 11,0 %
14,4 %
17,0 % 7,2 %
6,4 % 12,0 %
18,7 %
18,8 %
5,0 %
7,2 % 9,2 %
7,2 % 5,7 %
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
Russian middle class Average Finn
Savings
Entertainment – going out to cinema, theater, restaurant, cafe
Child – toys, activities, education, baby-sitter
Services, fitness, healthcare,education, telephone
Vacation
Food
Transport (1 car per family,insurance, gas, repairs)
Flat, mortgage or rent
Family status
66 62
13 17
11 12
0
20
40
60
80
100
120
Moscow St. Petersburg
No answer
Widowed
Divorced
Single
Couple, unmarried
Married
Information source: Synovate Comcon. Wealthy Consumer Lifestyle
Living conditions
Information source: Synovate Comcon. Wealthy Consumer Lifestyle
7 5
74 77
7 5
10 10 2 3
0
20
40
60
80
100
120
Moscow St. Petersburg
Room in theapartment
Rented appartment
Apartment fromgovernment
Private apartment
Private house
Lifestyle
Information source: Synovate Comcon. Wealthy Consumer Lifestyle
Finland
Helsinki
Russia
Moscow & St. Petersburg
City population Helsinki – 1 mln Moscow – about 10 mln
St. Petersburg – about 5 mln
Working hours 8 a.m. – 4 p.m. 9 a.m. – 6 p.m.
Approximate time of
leaving home
7 a.m. 6.30 a.m.
Approximate time of
returning home
About 5 p.m. After 8 p.m.
Vacation 30 days of annual leave converts to
5 working weeks of vacation.
In average 10 public holidays
annually.
28 days of annual leave
4 working weeks of vacation (as Sat &
Sun are included).
In average 12 public holidays per year
Sick leave 2 months with retention of salary First day of sick leave with retention of
salary (thereafter max 800 EUR
monthly compensation from public
fund)
Payment for
pharmaceuticals
80% by insurance (KELA), 20% by
patient
Usually 100% by patient
Traffic – the time killer – getting worse
Reality Desire
Lifestyle
Urbanization
Moscow 2013
Megatrends of today – shaping the future
'new entrants' - middle class is growing in
absolute number
time spent in cyber space
hectic pace of life &
congestion - demand for
services
integration of middle class into
world community
mistrust in Russian service
providers
Mega trends of today – this is what middle class says:
We want best value for our cash funds
We utilize all possible online
services for purchasing, contacting
and fun
We pay for service and quality must be good – no waiting time
tolerated
We have access to all opportunities
now
We believe in European quality in
education, food, medical
and care
Middle Class is growing
14
20
0
5
10
15
20
25
2012 2018
Middle class, mln., est
Cyber space
73 77
32
51
73 78
23
49
0
20
40
60
80
100
Moscow St. Petersburg
• marketing
• distance working
• online shopping
• travel
• VKontakte.ru
Middle class online shopping
Information source: Synovate Comcon. Wealthy Consumer Lifestyle
Hectic pace of life & increasing demand for services
10
Service spenditure in the budget, 2012
18
Service spenditure in the budget, 2018
Today - Tomorrow
Mistrust in Russian service providers
Middle class seems to appreciate foreign knowledge and know-how what comes to pharmaceuticals & medical care, education & innovation . Parents invest in education and recreation of children abroad. Medicine of foreign origin are perceived efficient.
Integration of Russian middle class into world community Europeanizing and Globalizing
Future trends
• rational consumption: sustainable instead of ‘bling-bling’
• increased online shopping: local and global products and services
• investing and purchasing real estate in Russia and abroad
• desire for natural, healthy and clean food in Russia – respect for best-
before-dates, nutrition for mothers-to-be
• careful attention to health, sports activities, using services of beauty parlors
• use of private medical services,
Trends might lead to following by 2018:
Ageing and yet active Russian middle class
Demand for private caretaking
Traffic congestion of mega-cities
Remote work
Increase in spending High level of debt
Trends might lead to following by 2018:
Disappointment with life quality
Emigration
Middle class in Russia wants to interact with middle
class
Desired schools, home address and services
Changes in educational system
More private schools and universities
Trends might lead to following by 2018:
Efficiency gains at production sites
Shrink labor market
Demand for vocational training
Eco-awareness has risen Less waste and consumers avoid heavy-packaging and
throw-away-items
More traveling for more people, time limits
Express weekend trips
Future opportunities for Finnish companies
wellbeing & healthcare
leisure &
travel
education food &
diet
• health resorts & sanatoriums
• check-up and diagnostics centers
• mothers-to-be & mothers with babies
• family centers
• Nordic walking
wellbeing & healthcare
leisure &
travel
education food &
diet
• tailor-made tours (hunting, fishing, golf, tennis, sailing, skating)Green card for new golfers
• honeymooners' weekends
• anniversary travel (photos)
• wine tastings
• mother & baby weekends
wellbeing & healthcare
leisure &
travel
education food &
diet
• short-term educational programs for children
• further education for adults
• learn English in Finland (Finglish for Russians!)
• 100 words of English during weekend
wellbeing & healthcare
leisure &
travel
education food &
diet
• baby food, bio-products for children and for mothers-to-be, super food
• traffic snacks & survival kits
• quick gourmet
wellbeing & healthcare
leisure &
travel
education food &
diet
Thank you for your attention
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