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Social benefits in Russia: mechanism and logic of provision. Benefits monetization
Grakhova E.

Social benefits in Russia: mechanism and logic of provision. Benefits monetization

The modern system of social benefits in Russia was mostly formed in 1990's when about 80 federal laws adjusting social benefits were passed. This system is characterized with categorical principle of benefits provision inherited from the soviet economy. The legislation provides for great number of benefits recipients categories including as “traditional” categories (invalids, pensioners, war veterans) as also military personnel, government personnel (tax officials, customs officials, deputies, judges and so on), budget sphere personnel (medical, educational personnel).

40% of households have benefits recipients. The most widespread benefits are benefits for payments for housing services and public transport - about 27,1% and 25,5% of households are getting them. Benefits for medical services and food are given to 3,0% and 3,4% of households; other benefits are less common. But actually almost all households uses indirect benefits – transfers to public utilities companies, cross-subsidizing and so on.

The main ways of reforming are:

  • transition from categorical to address benefits,
  • transfer of natural benefits to monetary forms (“monetization”),
  • cutting down uncovered benefits.
The essence of the proposed reform lies in two main theses. At first, financing of some benefits will be transferred from the federal level to regional authorities. In particular, regional budgets will finance benefits for labour veterans and home front workers – these two categories amounts to two thirds of total number of beneficiary. Regional authorities will also provide social benefits for families with children, victims of political repressions, indigent people and some other categories. Second, people who are entitled to get benefits from the federal budget, will have to make a choice: to get benefits in monetary equivalent or to exchange this money to natural benefits completely or partially.

In fact real “monetization” will not happen – mixed system will be created.

Not all benefits will be transferred to monetary form – only benefits for public urban and suburban transport, benefits for remedies and sanatorium treatment. Other benefits will be provided as before.

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