BUSINESSWEEK ONLINE : OCTOBER 16, 2000 ISSUE
INTERNATIONAL ECONOMICS So Far, the Mobility Is All Upward Muscovite Ella Sytnik, 26, had her hopes raised by Michael Gorbachev's perestroika in the mid-1980s, and she became even more excited when the Soviet Union itself toppled in 1991. But her living standard today, as a person solidly in the center of her city's emerging middle class, surpasses her wildest teenage imagination. Sytnik is head of the Moscow representation office of Petroplus, a Dutch industrial equipment manufacturer. Her wages, which range from $2,000 to $2,500 per month depending on the size of a bonus, support herself, her physician mother, and her retired father. Virtually all of her pay is disposable income--the family got the apartment for free during privatization and pay just $20 a month for utilities. Sytnik recently plunked down $700 for a chestnut mare she keeps at a local riding stable for $200 per month, plays pool at an upscale billiards parlor, and is planning a scuba-diving vacation in the Red Sea. IKEA SHOPPERS. So it goes--decidedly upward--for Moscow's new middle class. Nothing in Samara or any other provincial town can rival its transformation as a haven for folks such as Sytnik. The Yolki Palki restaurant chain, opened in 1996 to cater to families and singles, currently has 11 restaurants in Moscow. A bowl of hot borscht and a main course of grilled pork, washed down with a half liter of Russian-brewed Baltica beer, goes for about $8.50. There are at least 10 Dolby-sound movie complexes. Back in March, traffic backed up for two miles as some 40,000 middle-class Muscovites, in their Ladas, Volgas, Volkswagens, and Skodas, attended the opening of Russia's first IKEA, the Swedish home furnishings store, in a suburb just outside the city. Some 20% of Moscow's adult population is middle class, according to ComCon, a Moscow market-research firm. The ability to speak passable English is a must. Job sources include banks and financial-services companies, the headquarters offices of Russian manufacturers, and representative offices of Western companies. Russian accountants and investment bankers laid off during the crisis are being rehired. Law firms, too, offer a growing number of middle-class jobs. One reason is that foreign companies are relying more on Russian firms these days for staple services--their fees are considerably cheaper than those charged by Western ones, their training has improved, and many expat lawyers bolted Moscow after the crisis. In a city nearly as conscious of status and style as New York or Paris, sharp markers have evolved to separate the middle classes from each other. Depending on the dacha you repair to on the weekend, the car you drive, or the watch you are wearing, whether it's a $100 Japanese Citizen, a $300 Swiss Tissot, or a $1,000 Swiss Raimond Weil, any seasoned Muscovite can peg you as a lower-middle, a middle-middle, or an upper-middle class resident. What binds the class is its shared lot of being neither poor nor rich--and its sense of its current station as an earned achievement. This entitlement mind-set is not entirely deserved--there were plenty of middle-class Muscovites who reaped paper windfalls in the heady precrisis days through speculations in the infamous GKO government-bond market. The crash of that market just about wiped them out--and in some cases wrecked their lives. Sytnik's ascent to the middle class has had its rocky moments. After graduating from Moscow Polytechnical Institute with a degree in international economics in 1994, she landed her first job as a receptionist at a Western hotel, for $600 per month. To gain experience as an economist, she took a cut in pay to $300 to join Gazprom, the big Russian energy conglomerate, but she was turned off by the Soviet-style culture. Then she joined the Moscow office of the Dutch ING Barings bank for $1,700 per month, only to be laid off, with other Russian staff, during the crisis. ''I will never feel stable again,'' she says. Still, she thinks the crisis helped to sober folks who once behaved as if the money would keep flowing along with the French champagne they were guzzling. Her long-term goal is to run her own company in Moscow. ''I don't want to leave Russia,'' Sytnik says. ''It's improving.'' Could the good times screech to a halt? Sure. Many middle-class Muscovites, who tend to be more liberal in their political sentiments than their provincial peers, worry that Putin could permanently damage the business environment with the sort of strong-arm tactics the Kremlin has displayed toward Media Most, the media conglomerate operated by Putin critic Vladimir Gusinsky. Bureaucratic corruption and excessive taxation also threaten the growth of Moscow's middle class. So cross your fingers: This is, after all, Moscow, where good things have a way of getting quashed. By Paul Starobin, with Olga Kravchenko, in Moscow _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Russia's Middle Class CHART: Russia's Rebound TABLE: Snapshots of the Russian Middle Class So Far, the Mobility Is All Upward INTERACT E-Mail to Business Week Online

Copyright 2000-2009, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use   Privacy Notice