Adjusted for the latest numbers, Russia’s unemployment rate now stands at 9.5 percent.

The increase in unemployment was higher than anticipated.  The prognosis from the Ministry of Health and Social Development expected the number to rise by 2.2 million for the year.  Russia’s lower house, the State Duma, also used this number in writing its anti-crisis budget for 2009.

Many Russians who had not lost their jobs were also feeling the pinch at work.  In an effort to cut costs, companies were slashing workweeks and hours for workers.  A recent survey also found that 32 percent of Russians had encountered delays in wage payments in March.

Russian President Dmitri Medvedev earlier announced that 1 million temporary jobs would be created in 2009.  Medvedev also suggested that workers who lost their jobs undergo retraining.

The number of officials in regional bodies more than doubled, growing by 2.25 times, while the number of federal employees rose by 1.6 times.  The number of municipal officials grew by 2.07 times.

The report reveals that as a whole, women outnumber men in the government service.  In the highest managerial positions, the reverse is true, and men outnumber women two to one.  The average Russian civil servant is 40 years old.

Russia’s bureaucrats have a bad name in the country.  With already rampant corruption increasing steadily in recent years, the government is now taking steps to boost their image.

According to a March 12th report in the Vedomosti newspaper, the state is allocating nearly 700 million rubles (€15.3 or $21 million) of the federal budget to raise public trust in the civil service.

The initiative, signed by President Dmitri Medvedev on March 11th, will take steps to raise the index of confidence in state employees.  It also hopes to reduce the percent of bureaucrats who leave the civil service before reaching retirement age by as many as 30 percent.

Medvedev, a lawyer by training, has called for streamlining the civil service and getting rid of ineffective managers.

The new model, called the Shopper Centric Information Flow (SCIF) index, measures consumption by households, and monitors growth in consumption and costs. A number of households are asked to scan the barcode of every item they purchase for home use, from groceries to toilet paper. Over time, the model allows researchers to track both increases in prices of goods, and also increases in consumer incomes. The SCIF index ultimately tracks which items are consumed, where and when they are purchased, the price paid for them, and even who they are purchased for.

The firm’s experts believe this provides an alternative to official inflation figures, which only keep track of changes in price for a wide basket of goods.

For their latest finding, Romir polled 8520 residents (3000) households in 32 major Russian cities. The group discovered that urban residents have seen expenses rise by 40.7% from the start of 2008 to the end of August.

Andrei Fedotov, the general director of Romir Panel, which released the report, said lower-income households were hit the hardest. “Inflation hits low-income groups most of all, whose consumer basket consists of basic food-stuffs,” he said. “The SCIF index turned out low for high net worth groups—the price of the consumer basket has risen less for them.”

The numbers suggest that inflation is becoming worse, and that prices growth is accelerating. In May alone, consumer prices are expected to grow by more than 1%. The largest price hikes were seen in food products, including sugar, rice and flour.

It was earlier reported that President Vladimir Putin’s government was not planning to take major steps to battle inflation, in an attempt to maintain strong economic growth. Responsibility for inflation has been entrusted to Russia’s Central Bank.

The Russian Ministry of Economic Development and Trade has also continued to raise its inflation forecasts. In April, the agency upped their predicted rate for 2008 to 9.5%. Currently, that same forecast has grown to 10.5%.

Many economists are skeptical that the Ministry is adequately gauging inflation, and predict that the actual rate will be closer to 15 or even 20%.

The inflation rate is significantly higher than previous years. The first quarter of 2008 saw a 4.8 percent rise in inflation, as compared with a 3.4 percent rise in the first quarter of 2007. Rosstat’s figures also seem to indicate that inflation is accelerating. Weekly inflation in March rose from .2 percent at the start of the month to .3 percent in the last week.

The highest price growth was noted in bread, baked goods and wheat flour.

Prime Minister Viktor Zubkov was furious with the Finance Ministry: “Over the past several years the government managed to meet the forecast inflation target only once,” Itar-Tass quoted. “That was in 2003. In all of the subsequent years inflation proved higher. Last year alone the forecast level was exceeded by a hefty 4 percentage points,” the prime minister said.

The official prognosis for the year was initially 8.5 percent, and was raised to 9.5 percent in March. Many economists discount this estimate as conservative, and believe the real rate could come to 15 percent or more. In 2007, the rate reached 11.9 percent, 3.9 points over the 8 percent estimate.

A recent poll conducted by VCIOM, the state-owned public opinion organization, found that nearly three fourths of Russian residents believe inflation to be very high. 18 percent believe inflation is moderate, and 2 percent, insignificant.

For every perceived Putin victory, analysts point out serious failures and new problems that have emerged, including rising levels of inflation and widespread corruption. Furthermore, critics question the significance of Putin’s economic plan, and suggest that factors beyond the president’s control, like sky-high oil prices and reforms under Boris Yeltsin, contributed more to the economy.

As the Economist magazine explained in a recent article, GDP growth began before Putin even took office, reaching 6% in 1999 and 10% in 2000. Since then, it has leveled around 7% –an impressive result when compared to Western industrialized nations, but just average when compared with other former communist countries in Eastern-Europe. And unfortunately, much of Russia’s expansion is associated with little more than sky-rocketing energy and natural resource prices.

The Institute of Economic Analysis shows that the share of oil and gas in Russia’s GDP rose from 12.7% in 1999 to 31.6% in 2007. Natural resources constitute 80% of the country’s exports. Russia is now heavily dependent on world commodity prices, and has failed to use cash flows to diversify and improve other domestic industries. Foreign Direct Investment in sectors other than energy actually fell (from 1.6 to 0.65%) since Putin took office. Russian infrastructure, such as roads, remains disastrous and outdated, and unnecessarily raises the costs of doing business. State take-overs of privatized companies also dealt a blow to efficiency. Since Mikhail Khodorkovsky’s Yukos was dismantled early in Putin’s reign, growth in oil output fell drastically from a rate of 9% to 1% by 2007.

According to RIA Novosti, a further issue has been a widening gap between Russia’s rich and poor, which has skewed wage and income statistics. In 2007, the incomes of the top 10% were 17 times higher than the incomes of the bottom 10%, up from 14 times in 2000. Aside from a small class of the very wealthy, most Russians have felt their incomes rise quite gradually. Moscow, by some estimates the world’s most expensive city, overtook New York this year to house the most billionaires in any world city. Yet the per capita monthly wage in 2007 was just 30,000 rubles (€820 or $1,250). According to Rosstat, Russia’s statistics agency, incomes in the rest of the country are one tenth of that. More than 21 million Russians, or 15% of the population, remain below the poverty line.

The government has also been unable to conquer steady inflation, which reached double digits in 2007 and has eaten into growth. Prices on all consumer goods and services shot up in recent months, as much as 4 percent in some Siberian regions in January and February of this year alone. Some staple food items have grown by 20 and 25%. The Kremlin’s response has been largely ineffective, and the most notable methods used to deal with inflation have been fixed prices on certain goods.

Unprecedented levels of corruption and subservient courts have also emerged under Putin. Russia now ranks among the world’s worst countries for corruption, according to rankings from the World Bank, Transparency International, Freedom House and the World Economic Forum. The Kremlin’s uncanny destruction of one of Russia’s most open companies, Yukos, has removed any impression that businesses are protected by the rule of law.

The Economist quotes Vitaly Naishul, who tracks Russian institutions:
“The problem is not that the Russian legal system is weak. The problem is that it does not exist. The Russian justice system has as much to do with justice as the Soviet system of trade with trade.”

When Dmitri Medvedev formally takes over in May, with Putin as his prime-minister, he will stand at the helm of a formidable economic power. But a slight change in world energy or commodities markets could quickly reverse Russia’s fortunes, as continuing corruption pushes investors away.

Until serious reforms sweep the country, then, a crisis will always be just around the corner.

Now the forces of statistical analysis have added to the preponderance of evidence that the elections were little more than a sham. Several studies have shown that the higher the turnout of a district, the greater the margin of victory for United Russia. That is, there is an overwhelming positive correlation between turnout and percentage of votes for United Russia. Similarly, the higher the turnout, the lower the percentage of spoiled ballots, a number which should be random and roughly constant. The obvious explanation is also the only possible explanation: ballot stuffing on a massive scale. Below is one graph from an independent site, showing the correlation between voter turnout and percentage of votes for United Russia. It reaches all the way up to nearly 100% on both counts, itself an absurdity.

Nearly every turnout result of over the norm of 50-55% shows that almost every additional vote went to United Russia. No explanation has even been attempted by the Kremlin spokespeople who attempted to rationalize a 99.5% turnout for Putin in Chechnya.

The reaction of the leading western nations to such blatant fraud was stronger than their usual weak expressions of “concern” regarding the extinguishing of the democratic flame by the Putin regime. There has been little in the way of action, however, or even the suggestion of action. Russia’s continued and unchallenged presence in the Group of Eight (G-8) major industrial democracies remains a mystery.