Russia can afford to keep Putin's social promises

Reuters ^ | Tue Sep 24, 2013 | Maria Tsvetkova and Jason Bush

[MinorityRepublican]

Russia is committed to improving education, health and social welfare and will have no problem financing their long-term development, Deputy Prime Minister Olga Golodets told the Reuters Russia Investment Summit.

Concerns about Russia's poor demographics, an eroding skills base and the high cost of social security obligations are mounting, amid signs that these chronic problems are taking a toll on overall economic performance.

But Golodets, charged with coordinating social policy in the government formed by President Vladimir Putin in May 2012, said resources had been earmarked to deal with these challenges for decades to come.

"Our social goals are the absolute priority for our state," she said. "When we're talking about investment in people, in education and in health, we understand that these are not simply expenses - this is our fundamental goal."

CHRONIC UNDERINVESTMENT

Golodets, a 51-year-old former head of personnel at Arctic miner Norilsk Nickel (GMKN.MM), said despite improvements much work remains to be done to address chronic underinvestment in human resources.

Total government spending as a share of GDP amounts to 3.7 percent for education and 4 percent for health, still well below the shares seen in developed economies. In the U.S., she noted, spending on healthcare is 15 percent.

"What's important for us is not how much you spend but the results," she said, vowing to continue recent improvements in life expectancy and mortality rates.

Life expectancy for men, still among the lowest in Europe at 64, has increased by five years since 2003. The birth rate has also picked up, from 1.3 children per woman in 2003 to 1.69 today. Russia's population, which has fallen by 5 million since 1991, has been rising since 2009.

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thanks to Bernake easy money pushing oil prices up...