In the Heritage Foundation Economic Freedom posting, I alluded to the promise of higher pensions in Crimea under the russian occupation, which was partly why Ukraines eastern demographic (which is also older) voted for upholding economic ties with russia.
Turns out, in reality there are huge caveats with this “view”:
Socio-economic development
Before the annexation, Russia has promised Crimeans an increase in wages and pensions. In 2015, the average wage in Crimea increased by 68 euros (up to 330 euros) compared to previous Ukrainian wages. Over the next period, the average earnings of Crimeans increased to 452 euros, but they have declined to 423 euros since 2020. The modal wage (received by the vast majority of the working population) is about 300 euros. Almost 18% of Crimeans receive a wage of less than 172 euros.
The situation with pensions is similar: the average pension was slowly growing during the occupation period and reached 166 euros in 2021. However, this figure does not correspond to the real situation due to the significant number of retired military who have actively settled on the peninsula after the annexation and have a significantly higher pension. So, the real pension coverage for most Crimean pensioners is not more than 130 euros.
Along with the transition to Russian wages and pensions, Crimea applies Russian prices for goods and services that are significantly higher than the Ukrainian ones. Accordingly, prices increased by 43% (for products – by 53%) in 2014, and by another 28% (by 23% for products) in 2015. In the following years, inflation rates slowed to 5-7% per year, but in 2021, food inflation was 11% in the Autonomous Republic of Crimea and 14% in Sevastopol.
Russia has invested significant funds in Crimea (more than 17 billion euros during the occupation period), but most of this money was spent on large-scale infrastructure projects (“Crimean Bridge”, Taurida highway between Kerch and Sevastopol) and the military industry.
src: click (University of Turku, Finland (2022))
see also:
From Russia with love
While the Crimean economy has done well on a surface level since its annexation, the region has received more than a little bit of help. Huge subsidies from Moscow have been a mainstay since 2014, fluctuating between $1bn and $2.7bn per annum (see Fig 1). These figures are not necessarily putting a significant strain on Russia’s economy, which is the world’s 12th-largest by nominal GDP, but they do appear to be contributing to a slowdown (see Fig 2).
Just a few months after Crimea formally rejoined the Russian Federation, Moscow launched a programme called the Socioeconomic Development in the Republic of Crimea and the City of Sevastopol. The initiative has a budget of RUB 669.6bn ($10.06bn), 95.9 percent of which comes directly from Russia’s federal budget.
src: click
