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