As Russia’s conflict with Ukraine nears its third year, the financial compensation for families of soldiers killed in action introduces a stark reality.
Economic Impact of Soldier Deaths
Russian economist Vladislav Inozemtsev has calculated that the family of a 35-year-old man who serves for a year and dies in combat would receive approximately 14.5 million rubles, equivalent to $150,000. This sum includes salary and death benefits but not additional bonuses or insurance claims, as reported by the Wall Street Journal.
In certain areas of Russia, this amount surpasses what he might have earned as a civilian working until age 60.
“Being sent to the front and dying within a year financially outstrips any economic benefits of continuing to live,” Inozemtsev explained to the Journal.
He refers to this phenomenon as “deathonomics,” which has surprisingly reduced poverty rates to their lowest since Russia started recording such data in 1995.
Rising Bank Deposits and Economic Shifts
As of June, death compensations have accumulated to about $30 billion over the past year. In regions like Tuva and Buryatia, bank deposits have dramatically increased by 151% and 81% respectively since January 2022, just before Putin initiated the full-scale invasion.
These financial encouragements are deemed essential to sustain the war effort, as widespread conscription might trigger political unrest.
Western analyses indicate that over 600,000 Russian troops have been either killed or injured in the Ukraine conflict. Economists believe Russia needs about 30,000 new recruits monthly to replenish its ranks. The demand for more troops has become so critical that Russia has sought assistance from North Korea for additional soldiers.
Competition for Manpower and Economic Strain
Simultaneously, the military is vying with the private sector for labor. The private sector is offering substantial wages to maintain operations, including those at factories producing arms for the conflict.
This competition has led to significant inflation. According to official figures, inflation reached nearly 10% in September, with the central bank raising its key interest rate to 21%. Prices of basic staples like potatoes have surged by 73% since the beginning of the year.
Although Russia’s GDP growth seems stable for now, buoyed by heavy military expenditure, economic distortions and ongoing international sanctions have led some analysts to speculate that Russia’s ability to continue its military operations against Ukraine might falter by 2025.
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Jamie Prescott specialises in economic journalism, breaking down complex topics like global trade and finance into digestible stories. Jamie helps readers stay informed about the economy and its impact on local communities.
