Study of living standards of the national municipal district of the Karelia Republic

The article presents the results of the study of living standards in the Pryazhinskiy region of the Karelia Republic, which made it possible to identify the factors differentiating property and social status of rural residents, and identify areas to improve their welfare.

The Karelia Republic, the national municipal region, standard of living.

Anatoly I.

SHISHKIN

Inna V.

CHUBIEVA

Ph.D. in Economics, Scientific associate of the Institute of Economics of Karelian SC RAS

Within the project “Elaboration of territorial development scheme in the Pryazhinskiy municipal region of the Karelia Republic in 2008” a research work highlighting key trends and indicators of rural people’s life quality was organized and carried out. The researchers’ attention was focused on the following macroeconomic indicators for assessing the standard of living: real disposable income, the average monthly wage in the economy, the availability of income from employment, economic activity in rural areas. To assess the quality of life additional social indicators taking into consideration the duration of families’ stay in the settlements of the region, the degree of allocated land and their role in the family budget were also used [6].

In terms of the rural population size the Pryazhinskiy municipal region refers to the average level for the Republic of Karelia. In January 2008 the district’s population totaled 17,060 people, including 76% of rural population. The total area of the region is 6,395 square km, the density of the population is 2.6. In the region there are 81 rural settlements, and 1 urban settlement – the administrative center Pryazha.

In general, the prevailing trend in the region is population decline in small settlements with fewer than 50 people. At the same time there is a tendency to revive the abandoned rural settlements located in the waters adjacent territory with transport access and the unique recreational features, resulting in the acquisition of their land by residents of Moscow, St. Petersburg and Petrozavodsk.

Analyzing the demographic structure of the population one can reveal a trend of increase in the proportion of persons aged 25 – 45 years who of acquired land under the individual building or bought country houses located in an area of 30 – 40 km from Petrozavodsk for the past 5 – 10 years. Appearance and the territorial expansion of the “summer” settlements was the impetus for their development in the new quality and content as “dormitory towns” for the urban population, with both fast-growing improvements.

Sample collection accounted for 68 families, with a total of 212 people including 46 retirees; the average age of respondents is 46.5. The average number of years respondents lived in rural areas of the municipal region was 31.7 years.

Sampling of respondents was based on the mentioned above basic and additional social indicators, as a result six groups of families were allocated:

• •    well provided families (with incomes above the average for the region);

• •    families with low income (dysfunctional or unsecured, with incomes below the subsistence level established in the country or equivalent to it);

• •    families with average income;

• •    families living in the village temporarily from spring to fall (in their houses or part of the house);

• •    young families up to 35 years living in the settlement all the time;

• •    families who came to the settlement during the last 3 years.

A questionnaire designed for the sample population survey consisted of three sets of issues: characteristics of families living in the municipal area, assessing the level of income from various sources, including real estate and suggestions for improving life in rural areas.

As a result of the survey and opinion poll there had been received opinions and suggestions of families’ members living in 6 villages of the Pryazhinskiy municipal region on the territory of which activities related to produc- tion and processing of agricultural products dominate1.

The survey has taken into account the views and suggestions not only of the resident population in the settlements, but temporarily living in the area (in the holiday villages, garden and horticulture cooperatives, own private homes).

The average family size of respondents in the municipal region amounted to 3 people. Among the surveyed families couples with children under the age of 18 years predominate – 47%. Of the respondents 17% are single, rural residents mostly of retirement age whose main source of income comes from public pension payments, and additional income of this group of families is formed from employment with low wages and in occupations that do not require special knowledge and professional skills.

According to the official data of regional statistics for the period from 1998 to 2007, residents’ real per capita cash income of the Republic of Karelia has grown from 1038.6 rub. up to 10081.0 rub. in 2007 (the observed increase was 10-fold, fig. 1 ). In 2007, average cash incomes in Pryazhinskiy municipal region exceeded Republican figures by 10.5% (at 1065.0 rub.) [3, 6].

The number of employed in enterprises of the Pryazhinskiy municipal region in 2007 amounted to 3,694 people. This indicator has tended to decline: for example, in 2001 it amounted to 5,727 persons, i. e. 1.55 times more than in 2007. This trend is due, above all, to the overall downsizing of the region as a result of loss due to natural causes, migration loss, and the aging of the population, i.e., reduction in the proportion of the able-bodied population.

The survey identified the following social and property differentiation of rural residents ( table ).

Figure 1. Main indicators characterizing living standard in the Karelia Republic, rubles

Distribution of families into income groups according to income source (% of respondents in each group)

Family’s income source	Family’s cash income
	Up to 5 thous. rub.	10-20 thous. rub.	25 thous. rub.
Work for hire	20	74.2	100
Entrepreneurship	-	-	22
Self-employment	40	12.9	11
Working pensioner	-	25.8	-
Unemployed	40	-	-
Others	80	19	33

According to the respondents' self-assessment average monthly income per family member was in Pryazhinskiy municipal region at the time of the survey about 5377.0 rub., which is more than the subsistence minimum established in the republic at 1027.0 rub.

In this case 7.4% of families interviewed had an average monthly per capita income of less than 5000.0 rub. person, 77.9% of families – from 10 to 20000.0 rub. and 14.7% – 25000.0 rub. and more. If you rely solely on these indicators, the situation in rural areas indicates that the group with monthly cash income of up to 5000.0 rub. includes single people families receiving pensions of less than 5000.0 rub., single-parent families and families, united by kinship ties of several generations, in which able-bodied people are unemployed, and the main source of revenue is pension payments.

Average nominal wage per worker employed in the economy of the Pryazhinskiy municipal region (for large and medium-sized businesses and organizations), without welfare payments amounted to 12038.5 rubles on January, 1, 2008 – compared with December 2006 it increased to 12.4%. Average nominal wages in the Republic of Karelia on January, 1, 2008 amounted to 16758.5 rub. – compared with December 2006 it increased to 15.6%. Having analyzed the average monthly wages by sectors of the Pryazhinskiy national municipal region economy we can note the general trend is apparent in the Republic of Karelia in 2000 – 2008: rising wages is prevailing in the construction, power generation, transport, communication and little in agriculture.

The average pension in 2007 in the Pryazhinskiy national municipal region was 4781.3 rub. which is by 5.7% higher than the value of a similar social indicators for the Republic of Karelia. The level of subsistence minimum established by the Republic of Karelia in 2007 was in excess of 4350.0 rub. [3].

The results of a 2008 study suggest that, contrary to common arguments about the passivity of the rural population, each family member tries to use all available means of improving the material and social status, with the active involvement of existing individual education, skills and personal potential. Money income of families living in rural areas is 80% derived from the work of its members, as well as approximately 10% through self-employment. Most retirees under age of 65 – 70 are trying to find additional income source to government labor and social pension. Young families (under 35) search of jobs with high wages, often outside their own localities, or trying to start a business in the provision of services for local people or those who come to stay in the countryside.

Along with the economic and social indicators of social and property differentiation of the rural population, a significant role is played by psychological factors, namely the population’s attitude to work on the ground2.

According to the agricultural Census in the Republic of Karelia, the average area of personal plots in rural areas is 0.2 hectares (0.52 ha in Russia), in the urban area – 0.15 ha (0.14 ha in Russia). In the Pryazhinskiy municipal region the population use plots of land with an average area of 0.3 ha, summer plots – 0.1 ha, collective garden – 0.03 ha, land share – 1.35 ha, agricultural land for lease – 1.01 ha. In the municipal areas of the republic in 2006 – 2008 the process of legal registration of the owners or heirs of the land shares of former employees of large agricultural enterprises intensified, which in the 1990s have been transformed into joint stock companies in the region. Most land shares owners apply for a marked and expose their plots of land for sale or lease to individual building or keeping a personal sub sidiary farming.

Several plots of land in the territory of the municipal region are transferred with ownership to the rural population by the local authorities, identified in the use of collective farms, transferred by succession or gift of property rights and treated by families for more than 10 years (respectively 62.9 and 75.8% ; fig. 2 ).

Among the rural population there is differentiation not only in terms of monetary income, but also the size of land holdings in the possession and use of families (in total, the families participating in the sociological survey had in the ownership or long-term use 32.365 ha). With the growth of welfare of the population growth of land area used by the family is fixed. This factor is becoming one of the most important criteria when considering the theme of socio-economic stratification of the rural population. The average size of land owned by the respondents was: farmland – 0.3 ha, plots – 0.1 ha, plots in collective gardens – 0.03, leased agricultural land – 1.01 ha, land shares – 1.35 ha. Most of the land area of household plots is assigned to grow potatoes and vegetables, farm buildings (fig. 3) .

According to the all-Russia agricultural census in 2006 the total land area of gardening partnerships located in the Pryazhinskiy municipal region (710 plots, total area 0.6 thousand hectares) includes crops – 23%, perennial plantations – 8%, lawns and decorative plants – 52%, buildings, structures, paths – 13%, the rest of the land is not used (in the Republic of Karelia these figures are respectively 29; 9; 36 and 14%). The share of gardening partnerships accounted for nearly half (27 ha) of fruit and berry plantations available in the farms area.

After the example of the Pryazhinskiy municipal region of the Karelia Republic the trend of the loss of the agrarian nature of farming, with a gradual transition to new forms of natural resources, including land is confirmed among the emerging regions of the North-West [2].

With the growth of the families’ welfare there is a trend to formalize the rights of private ownership of land and houses, as well as the acquisition of the land unit and the additional real estate outside the personal holdings.

Figure 2. Possession and disposal of land in the municipal area (% of total respondents)

□ Land owner                       □ Land cultivation

Figure 3. Functional distribution of land area in different income groups of population (% of respondents in each income group)

□ Up to 5 thous. rub.            □ 10 - 20 thous. rub.            □ 25 thous. rub. and more

We can assume that with an increase in total cash income of the family the motivation to conduct subsistence farming as a supplementary source of cash income in the family budget is weakening and motivation to use the land for a good rest and recreation is increasing.

The main reason of personal farming products sales is to obtain additional cash income. With increasing families’ income the striving for realization of products in order to generate additional income decreases, only isolated examples of commodity-money exchange are known. The priority reason is the sales of the product for further development and expansion of the economy.

The economic potential of the family takes into account both additional and current income, for example, from owning property. In accordance with the proposed method of regional regulation of minimum per capita income3 which determines the right to benefits grants and subsidies and providing for the lack of household ownership of real property in excess of a minimum prescribed standard, a significant proportion of families living in the Pryazhinskiy municipal region, do not fall under the category of poor and should pay attention to the possible additional revenue from their existing owned real estate [1].

Most people see the use efficiency of existing land holdings in the short term in the need for new housing construction or farm buildings (32.1%), purchase of agricultural equipment (21.4%), growth in livestock and poultry (32.1%) and increase the area of land (10.7%).

With the growth of the families’ welfare and economic activity in rural settlements in the municipal region in search of additional financial sources for the development of private farms also grows. This is participation in specialized programs to support the rural population and the use of credit facilities through financial institutions of the Republic of Karelia.

One of the most important social indicators in assessing the level and quality of life is its population’s well-being self-assessment. Most of the respondents classified their families as middle class, and only less than 5% of respondents believe that their family is classified as very poor. Typically, members of these families are single pensioners aged over 70. For groups with the real income of up to 5 thous. rub. a tendency to have 8.25 thous. rub. income is characteristic (average of the respondents’ number), people with 10 – 20 thous. rub. incomes want to have 17.5 – 25 thous. rub. income; a highly profitable group of rural population is characterized by a tendency to generate income of 34 thous. rub. and more.

Criteria such as the development of a modern network of social institutions, transportation, engineering and sociable accessibility and territorial location, are characteristics that allow to judge more reasonably about the preference of the rural population living in settlements. A prerequisite for the analysis of social services in rural areas of the municipal entity is available in the Institute of Economics, KRC RAS scientific groundwork for the establishment of social services system in Karelia in the case of urban households.

In the Pryazhinskiy municipal region there is a tend to purchase social services in the t district centre of Pryazha and the capital of Karelia, Petrozavodsk, as the system providing complete and high quality list of essential social services in the residence in the rural settlements of the district is broken or missing.

With an increase in family well-being demands on the quality of social services increases, as well as additional needs for modern knowledge in a professional and legal field appear, and therefore the services offered in their village or in the town do not fully satisfy the needs of the population.

One of the most important social services that encourage the formation and accumulation of human capital, family, necessary for prosperity and self-identity, is an educational service.

The growth of family needs to increase cash income, the need to change profession, place of work, start their own business tends to raise the incentive to obtain new knowledge.

This pattern is characteristic, as a rule, for the families of 35 – 45 year olds, with children aged 16 – 20 who have received specialized secondary or higher education, with incomes more than 20 thousand rubles.

With increasing levels of wealth and entrepreneurial activity of rural population there is a need in the information security, obtaining specific advice in the field of economic activity, employment and land rights, and social legislation.

Rural residents (more than 70%) which reach their own attitudes not relying on help from others are aware that knowledge of the regulatory framework will enable them not only to preserve the family's welfare, but also to open their own business, have a legally protected property rights.

Residents of the settlements made suggestions on priority actions required for the development of human settlements in the Prya-zhinskiy municipal district. These proposals are partly reflected in the scheme of territorial planning area and may subsequently be reflected in policies and programs of socio-economic development of the municipal district.

Most of the suggestions made by people of the Pryazhinskiy municipal district are connected with improvements or creation of a modern socio-cultural sphere, the opening of new facilities for the specific territory, creating the conditions for entrepreneurial activity of the population, housing and roads. The residents connect the solution of problems and implementation of new proposals to improve the socio-economic life in their settlements with the following:

• •    financial support from the budget of the Republic of Karelia and Russia in the form of increased subsidies for agricultural development, including private households, and subsidies for settlements;

• •    changes in government policy in relation to the prospects of rural development and improving the level and quality of life for rural residents;

• •    state support of all sectors of activity in the territory of municipalities in the complex;

• •    revitalization of social organizations created by the rural residents;

• •    looking for investors for the development of all areas of life in the municipal district;

• •    establish a legal framework for resolving land and property issues;

• •    organization of private business in the service sector of the rural population.

The findings of the research results confirm the all-Russia trend of interdependence of prosperity increase and life quality [8].

State economic and social and economic policies at the level of municipalities should be based on the support of the most active, skilled, enterprising members of society while creating environment and opportunities for their livelihoods.