Chapter 3. Earning and Spending Money
In Britain, in 2009, we suffer from a huge difference of incomes between the rich and the poor. The range is not as wide as yours, and the rich and poor come from different sectors, but in comparison with other EU countries with similar wealth and population, we are a very unequal society. The present government introduced a minimum wage. By law no employer is allowed to pay less than this amount. It seems that this law is obeyed almost all the time except by some employers who try to cheat foreign workers who do not know their rights. What we do not have is a 'maximum wage.
Besides the injustice in this situation, it seems that it is bad for the effective functioning of society. People mind less about the amount they earn than they mind about comparisons with other people. If someone is getting twice as much for a similar job, that is obviously unfair. Unfairness bites deep. The simple solution is to make incomes converge by imposing heavier income taxes. But politicians know that this is a very unpopular move. What they don't know is how quickly such taxes would become acceptable when the advantages were made clear. Since nobody knows, nobody quite dares to do it. (This is another example of the sensitivity and also the impotence of political leaders in a democracy.)
If - in terms of your earnings - you are part of the bottom one-fifth of the British population, you do not have any choice: money goes on accommodation, heating, food, essential clothing and things for your child or children. If you are among the top ten per cent in your earnings, you will have many choices and still be able to save money. What follows is a brief discussion of the priorities of those in the broad middle ranges of income from the prosperous to those who have enough money but who are always anxious at the end of the month. The figures are only approximate since they change from year to year as each Chancellor (Finance Minister) juggles with the money available. In five years time they may be quite different.
The average yearly salary for a full-time adult in Britain in 2009 is about £23,500. That is approximately £2,000 a month. By Russian standards this sounds like an enormous sum - and it is true that we live in a significantly more prosperous society than you do, although your super-rich are even more rich than our super-rich!
However, £2,000 a month is not quite as immense as it sounds. First, it includes our income tax and all other taxes. Income tax at present is about 22%. although we are allowed to earn around £6,000 before our taxable income is assessed. We have to pay regular national insurance contributions (for a state pension) and our local council tax which is assessed on the size of our house. Then we have to pay for our accommodation which, as I have explained, is more expensive than elsewhere in Europe, whether we rent accommodation or are paying a mortgage. £600 a month is quite typical. We have to pay insurance on our housing if we are paying a mortgage, and most people except the poor will pay some form of life insurance and some form of insurance on the contents of their house. We have to pay for water, gas, electricity, and for our TV and Radio licence which are all significantly more expensive than they are in Russia. All these are payments which cannot be reduced.
If we have a car we have to pay for depreciation (that is, we must set aside some money to buy a new car when this one no longer works). We have to pay tax on the car, car insurance and usually money for the right to park where we need to park. If we do not have a car most of us need money for bus and train fares. (If someone wants to travel by bus from Oxford to London he will enjoy a comfortable ride lasting about 100 minutes. For this he will pay £13 - about 650 roubles. To be fair, if he wants to return the same day, he can buy a return ticket for £16 -800 roubles. This is considered very cheap and good value.)
So if we calculate all these basic essentials from the £2,000 - payments over which we have little choice - it is easy to see that we have left for food, clothes, furniture and household goods, entertainment, holidays and luxuries perhaps £750 a month. For a single person that is quite comfortable, but a family would have to scrimp, which is why both partners need to be earning money if the chief earner is on average wages and they hope to live decently and bring up two children.
Within our spending limits we make different choices. The most striking impression of visitors to Russia is that young Russian women typically spend far more than young British people on their clothes, cosmetics and particularly their boots! Young British people are more likely to spend their money on eating out in pubs and restaurants, and in travel and holidays. Russian young people seem to spend at least as much and probably more on mobile phones, and - as soon as they have the money - on other new technology. Older people with family responsibilities have to think about homes, equipment and the needs of children. (In Russia as in Britain now, even poorer children have far more toys and gifts than quite prosperous children in Britain when I was young. This is a cultural change certainly across Europe and Russia and probably the rest of the world.) Perhaps the biggest difference is that reasonably prosperous educated people in Britain expect to spend more money outside the home - on hobbies, activities, visits to places that interest them, and, above all, on learning more and extending their interests. This is partly because they have more spare money, but partly it seems to be a cultural difference. (You can learn more about this difference in the chapters on Leisure and on Culture.)
In 2009 Russians have to have an Official Registration Permit, the successor to many types of registration of place of abode. This is a mystery to us because we have no such permit and no internal passport; we do not even have an Identity Card such as is carried by citizens of most EU countries. Although everyone has a home and therefore an address to which letters, forms and documents can be sent, this address has no more official validity than, say, an email address. In practice many people will know my address - people whom I need such as my GP (family doctor), employer, bank - as well as friends. In order to be listed on the Electoral Register so that I am entitled to vote at elections, I have to give an address. If I own my house, I am officially registered as its owner, but I am not required to live there; I can live wherever I like. So although the necessary bureaucracy of a complicated modern state requires me to provide an address for practical purposes, I can easily give different addresses and names if I so wish. The process of making the necessary adjustments to my addresses and letting people know where I now live is my affair, not the state's.
However, even though we do not have to think about Official Registration Permits, we cannot in practice move wherever we wish just because a job exists that suits us. In fact deciding whether to move can be a complex and often painful process for married couples with children. Suppose the husband has had a successful interview for a job which he is eager to accept but which means that the family must move. He and his wife will have to consider questions such as 'Which is more important - the promotion with its extra pay and responsibility offered to the husband, or the wife's satisfying but less-well-paid job where the family are now living?' 'Will the wife be able to find suitable work in the new area?' 'Will the children lose the happy security of the schools and friends they know or will they enjoy the new adventure? Will the new schools be better? or worse?' 'What about housing? Will it be possible to buy (or rent) a house in this new town where a wonderful job awaits them?'