Vladimir Putin called for easing elements of a plan to raise pension ages that had angered Russians and pushed his poll ratings to the lowest levels in more than seven years.
“We can’t put this off any longer,” Putin said of the reform in a prepared text of a televised address to the nation Wednesday. “I propose a series of measures that will allow us to soften the decisions as much as possible.”
The main change he outlined was to reduce the planned increase in the retirement age for women to five years from the originally proposed eight, thus bringing it into line with the rise for men. He also called for some measures to smooth the transition to the new rules and to help older workers find jobs.
For Putin, the compromise appeared to be an effort to reinforce his image as the “good czar,” intervening on behalf of the people with his government. He had sought to distance himself from the pension plan after it was announced in June, but officials said he’d approved its outlines and polls showed most Russians still blamed him for it. Whether Wednesday’s shift will be enough to turn around the drop in his ratings isn’t yet clear.
While Putin defended the overall thrust of the reform plan, Wednesday’s speech was an unusual public retreat in the face of popular opposition on such a high-profile issue. At the same time, the latest changes still achieve the government’s main goal of raising pension ages — currently some of the lowest in the world — to ease the financial burden on the system amid longer lifespans and a shrinking workforce.
“In the long-term, if we are indecisive now, that could threaten the stability of society and thus the security of the country,” Putin said. “Many experts still think we waited too long to deal with the issues we’re discussing today but I don’t think so. We weren’t ready for this before.”
The initial plan had called for raising the retirement age for men from 60 currently to 65 by 2028 and to 63 for women by 2034 from 55 at present, sweetening the pill with pledges of higher pensions. Putin’s proposal would bring the age for women to 60 years, with early retirement available to mothers with three or more children. The original plan triggered criticism immediately, even though it was announced at the same time as the start of the World Cup soccer championship in Russia.
Putin’s poll ratings fell to the lowest levels since anti-government demonstrations in 2011. Critics charge the moves are extreme in a country where life expectancy is under 68 for men and below 78 for women.
For two months, Putin kept largely quiet on the issue in public, allowing other officials to discuss possible amendments. The lower house of parliament gave initial approval to the proposal in July. The government’s initial plan had been drawn to leave some room for softening its terms without fundamentally changing it, according to people familiar with the preparations.
What our economists say..“Putin has smoothed some of the sharp edges of the pension proposal, but most of the fiscal savings will remain intact. Efforts to boost employment for older workers could reap benefits for the labor force, even with a less aggressive increase in the retirement age for women.”-Scott Johnson, Bloomberg Economics
The pension changes are among a series of belt-tightening initiatives the Kremlin has undertaken since Putin was elected to a fourth term in March. Tax hikes and spending cuts are planned to help reduce the deficit as the government seeks to tighten its finances amid U.S. and European Union sanctions and the uncertain outlook for prices on oil, Russia’s main export.
For the government, the main benefit of the pension changes will be to reduce the burden of the system on the budget. Officials have warned that without reform, the cost of paying for pensions could overwhelm government finances. Higher retirement ages will also help offset the shrinking workforce. The government’s original plan would have boosted growth by about 0.2 percentage points a year, according to Scott Johnson of Bloomberg Economics.
—With assistance from Anna Andrianova.