ECONOMY
Which Groups Are the Biggest Beneficiaries of Russia’s Full-Scale Invasion of Ukraine?
June 19, 2025
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Ekaterina Kurbangaleeva
Visiting scholar, George Washington University
Political scientist Ekaterina Kurbangaleeva looks at Russian federal tax receipts from 2022 to 2024 to understand to whom the biggest economic gains from the war have accrued. Previously poorly paid, blue-collar workers in underdeveloped regions are the primary beneficiaries, she argues. They are now helping to stabilize Russia’s authoritarian regime.
Monument to the T-34/85 tank near the Uralvagonzavod complex. Source: Wiki Commons
More than three years have passed since the start of the war with Ukraine, and the Putin regime still enjoys stable, high support among Russians. This is evidenced by data from both regime-loyal and independent pollsters.
Among the most important factors for this popular support, as well as the confidence of the Russian government, are the relative resilience of the economy and the continuing growth of household incomes.
By end-2024, a consensus had emerged among experts that the Russian government, at least at that time, had managed to adapt the economy to sanctions pressure while significantly ramping up military spending. According to the Stockholm International Peace Research Institute, Russia’s military spending increased 40% year over year in 2024. Idle defense firms were revived, and new production launched at old plants. Meanwhile, statistics for 2022-24 indicate that, despite rising inflation, a significant percentage of the population has seen its well-being improve.
The Russian economy has been furiously restructuring. Driving the changes are not only unprecedented state defense orders but also import substitution amid sanctions and the exit of Western companies, as well as growing domestic investment thanks to capital returning to Russia and strengthening ties with Asian countries to replace severed ones with Europe.
Among the most important factors for this popular support, as well as the confidence of the Russian government, are the relative resilience of the economy and the continuing growth of household incomes.
By end-2024, a consensus had emerged among experts that the Russian government, at least at that time, had managed to adapt the economy to sanctions pressure while significantly ramping up military spending. According to the Stockholm International Peace Research Institute, Russia’s military spending increased 40% year over year in 2024. Idle defense firms were revived, and new production launched at old plants. Meanwhile, statistics for 2022-24 indicate that, despite rising inflation, a significant percentage of the population has seen its well-being improve.
The Russian economy has been furiously restructuring. Driving the changes are not only unprecedented state defense orders but also import substitution amid sanctions and the exit of Western companies, as well as growing domestic investment thanks to capital returning to Russia and strengthening ties with Asian countries to replace severed ones with Europe.
Source: Federal Tax Service
About the research
The sustainability and scale of popular support for the Russian government can be assessed by analyzing which economic actors benefit most from the current situation. In other words, which regions, industries and social groups are showing the biggest gains against the backdrop of broadly rising incomes.
This study is based on an analysis of tax revenues, both headline and broken down by individual taxes, such as the profit tax and personal income tax for 2022-24, versus the baseline, prewar year of 2021.
The study identifies at least three groups of intersecting economic “winners” from the current situation.
Before we describe them, it is worth briefly dwelling on the general dynamics of federal tax revenues.
Overall, total tax revenues were up 53% in 2024 versus 2021. In the same time frame, profit tax receipts rose 32% and personal income tax receipts recorded the highest growth at 71%.
The year 2023 was seemingly the best (relatively to previous year) both for corporates and for individuals (profit tax receipts were up 36% versus 2022, and personal income tax receipts 27%). In 2024, the trend bifurcated: corporate taxes were down (minus 2.2% versus 2023), while individual taxes continued to rise (plus 22.0% year over year).
Underdeveloped regions and manufacturing industry as ‘winners’ from war
The sustainability and scale of popular support for the Russian government can be assessed by analyzing which economic actors benefit most from the current situation. In other words, which regions, industries and social groups are showing the biggest gains against the backdrop of broadly rising incomes.
This study is based on an analysis of tax revenues, both headline and broken down by individual taxes, such as the profit tax and personal income tax for 2022-24, versus the baseline, prewar year of 2021.
The study identifies at least three groups of intersecting economic “winners” from the current situation.
Before we describe them, it is worth briefly dwelling on the general dynamics of federal tax revenues.
Overall, total tax revenues were up 53% in 2024 versus 2021. In the same time frame, profit tax receipts rose 32% and personal income tax receipts recorded the highest growth at 71%.
The year 2023 was seemingly the best (relatively to previous year) both for corporates and for individuals (profit tax receipts were up 36% versus 2022, and personal income tax receipts 27%). In 2024, the trend bifurcated: corporate taxes were down (minus 2.2% versus 2023), while individual taxes continued to rise (plus 22.0% year over year).
Underdeveloped regions and manufacturing industry as ‘winners’ from war
“Among the three biggest beneficiaries from the war, first and foremost, are regions that can be described as underdeveloped – Russia’s ‘sleepy hinterland’.”
This is comparatively sparsely populated areas with a high concentration of economic activity in one or a few areas like defense and machine building – manufacturing in general.
These regions include Chuvashia (plus 100% growth in overall federal tax receipts in 2024 compared to 2021), Mari El (plus 93%), Smolensk (plus 79%), Kostroma (plus 76%), Ivanovo (plus 76%), Udmurtia (plus 73%), Kurgan (plus 71%) and Pskov (plus 70%). For two years in a row, in 2023 and 2024, they posted year-over-year growth in overall federal tax receipts of more than 50%.
Most of these “winner” regions are located in Central Russia, around the Volga and in the Urals. Yet the geography extends to the Russian Far East, with regions such as Amur (plus 310%) and Zabaykal (plus 79%), and the North Caucasus, like Karachay-Cherkessia (plus 78%).
These regions include Chuvashia (plus 100% growth in overall federal tax receipts in 2024 compared to 2021), Mari El (plus 93%), Smolensk (plus 79%), Kostroma (plus 76%), Ivanovo (plus 76%), Udmurtia (plus 73%), Kurgan (plus 71%) and Pskov (plus 70%). For two years in a row, in 2023 and 2024, they posted year-over-year growth in overall federal tax receipts of more than 50%.
Most of these “winner” regions are located in Central Russia, around the Volga and in the Urals. Yet the geography extends to the Russian Far East, with regions such as Amur (plus 310%) and Zabaykal (plus 79%), and the North Caucasus, like Karachay-Cherkessia (plus 78%).
Source: Federal Tax Service
Of course, large regions with developed machine building industries, such as Sverdlovsk (plus 58%), Voronezh (plus 53%) and Krasnoyarsk (plus 20%), have received tangible gains from the new economic situation, as well. However, the pace of income (tax revenue) growth there is not as high.
The outperformance by less developed regions can be explained partially by a low base. It is precisely these “backwaters,” which have seen little improvement for at least the past three or four decades, that have posted huge growth in 2023-24. What makes this trend significant is the sustained tax receipt growth versus 2021 of above 50% for two years in a row, as well as the sharp increase in the number of such regions in 2024.
Another important element of the whole picture is industries that have shown, in terms of profit tax receipts, stable, outstripping growth.
The outperformance by less developed regions can be explained partially by a low base. It is precisely these “backwaters,” which have seen little improvement for at least the past three or four decades, that have posted huge growth in 2023-24. What makes this trend significant is the sustained tax receipt growth versus 2021 of above 50% for two years in a row, as well as the sharp increase in the number of such regions in 2024.
Another important element of the whole picture is industries that have shown, in terms of profit tax receipts, stable, outstripping growth.
“This group of beneficiaries includes virtually all manufacturing sectors, ranging from defense to textiles and food.”
For example, for two years in a row, it is not just “production of finished metal products” (a government statistical category where military production is particularly represented) and “production of vehicles and equipment” that have at least doubled their profit tax payments, but also meat products (plus 185% in 2024 versus 2021), dairy products (plus 181%), clothing (plus 167%), footwear (plus 161%), and chemical and electrical products (plus 121%).
At the same time, profit taxes from coal mining (minus 77%) and the steel industry (minus 72%) are freefalling. Tax receipts from the oil and gas sector have risen in the period, but relatively moderately.
Officials say manufacturing has become the driver of the Russian economy. Overall, with a more than tripling of profit tax receipts from “hospitality and catering” (plus 252%) and a doubling from the transport and construction sectors, the country has arguably managed to lessen its dependence on oil at least temporarily (albeit for a combination of reasons, including sanctions and OPEC+ supply cuts).
Blue-collar incomes soar
The third group of “winners” from the war can be understood by looking at incomes of individuals and their areas of employment.
By end-2024, quite a lot of evidence had built up that Russians' incomes had been growing. For one, Rosstat reported a year-over-year increase in real disposable income of 7.3% in 2024 (6.1% in 2023) and a significant rise in individual deposits.
According to Russia’s Deposit Insurance Agency, deposits rose 2.7% in 2024 to RUB 57 trillion. Note that the number of depositors has also grown significantly, especially those with RUB 3-10 million in the bank. For example, for deposits in this range, the year-over-year growth in 2023 was 40% in terms of money and 37% in terms of depositors. In 2024, the growth was 42% and 45%, respectively.
As mentioned above, even though tax rates have not changed, the growth in overall personal income tax receipts in 2024 was 71% compared to 2021. Bear in mind that my analysis does not take into account one-off signing bonuses and death/injury payments to soldiers (they are not subject to taxation). Moreover, this growth can hardly be explained solely by an increase in employment.
Firstly, amid a slight decrease in the unemployment rate in 2022-24 from 3.7% to 2.5%, payrolls (in monetary terms) rose 55% over the same period. Secondly, according to the latest Rosstat survey, the percentage of Russians satisfied with their compensation has jumped from 50.6% to 61.3% over the last two years.
Data from sociological surveys for 2023 and 2024 (see Russia.Post here) also indicates rising satisfaction among Russians with their personal financial situation (albeit to a lesser degree than what Rosstat claims).
Yet an analysis of the growth of personal income tax receipts broken down by individual industries shows that regardless of their profitability, wages have been growing over the past two years. It seems the overall labor market situation has been driving up wages even in industries that are going through hard times.
Among workers whose salaries have grown faster than others are, first of all, those employed in manufacturing, like welders, machine operators, mill operators, turning machine operators and textile workers. This is explained chiefly by labor shortages in these fields. In April 2025, Industry and Trade Minister Anton Alikhanov put the shortage of workers in the manufacturing sector at 1.9 million.
At the same time, profit taxes from coal mining (minus 77%) and the steel industry (minus 72%) are freefalling. Tax receipts from the oil and gas sector have risen in the period, but relatively moderately.
Officials say manufacturing has become the driver of the Russian economy. Overall, with a more than tripling of profit tax receipts from “hospitality and catering” (plus 252%) and a doubling from the transport and construction sectors, the country has arguably managed to lessen its dependence on oil at least temporarily (albeit for a combination of reasons, including sanctions and OPEC+ supply cuts).
Blue-collar incomes soar
The third group of “winners” from the war can be understood by looking at incomes of individuals and their areas of employment.
By end-2024, quite a lot of evidence had built up that Russians' incomes had been growing. For one, Rosstat reported a year-over-year increase in real disposable income of 7.3% in 2024 (6.1% in 2023) and a significant rise in individual deposits.
According to Russia’s Deposit Insurance Agency, deposits rose 2.7% in 2024 to RUB 57 trillion. Note that the number of depositors has also grown significantly, especially those with RUB 3-10 million in the bank. For example, for deposits in this range, the year-over-year growth in 2023 was 40% in terms of money and 37% in terms of depositors. In 2024, the growth was 42% and 45%, respectively.
As mentioned above, even though tax rates have not changed, the growth in overall personal income tax receipts in 2024 was 71% compared to 2021. Bear in mind that my analysis does not take into account one-off signing bonuses and death/injury payments to soldiers (they are not subject to taxation). Moreover, this growth can hardly be explained solely by an increase in employment.
Firstly, amid a slight decrease in the unemployment rate in 2022-24 from 3.7% to 2.5%, payrolls (in monetary terms) rose 55% over the same period. Secondly, according to the latest Rosstat survey, the percentage of Russians satisfied with their compensation has jumped from 50.6% to 61.3% over the last two years.
Data from sociological surveys for 2023 and 2024 (see Russia.Post here) also indicates rising satisfaction among Russians with their personal financial situation (albeit to a lesser degree than what Rosstat claims).
Yet an analysis of the growth of personal income tax receipts broken down by individual industries shows that regardless of their profitability, wages have been growing over the past two years. It seems the overall labor market situation has been driving up wages even in industries that are going through hard times.
Among workers whose salaries have grown faster than others are, first of all, those employed in manufacturing, like welders, machine operators, mill operators, turning machine operators and textile workers. This is explained chiefly by labor shortages in these fields. In April 2025, Industry and Trade Minister Anton Alikhanov put the shortage of workers in the manufacturing sector at 1.9 million.
“Blue-collar workers in manufacturing – as well as drivers, couriers and some service-sector professions – make up the third group of beneficiaries from the war.”
Comprehensive data on wage growth for types of employment or professions over the last 3-4 years is hard to find. But even aggregated data and comparative estimates presented on national recruiting sites give an idea of blue-collar wage dynamics.
In 2023, according to Avito, among the top 10 jobs by year-over-year growth in average offered salaries, eight were blue-collar, the growth ranging from 33% to 69%. The top three were construction workers (plus 69% compared to 2022), equipment technicians (plus 48%) and waiters (plus 43%). Meanwhile, only two of the 10 jobs had an average salary above RUB 100,000 per month.
In 2024, a similar top 10 list compiled by HeadHunter included seven blue-collar jobs, as well as couriers. The growth was not as big, however, ranging from 18% to 42%. The top three jobs were drivers (plus 42% versus 2023), welders (plus 39%) and installation technicians (plus 30%). All 10 jobs listed in 2024 had an average offered salary of more than RUB 100,000 per month.
The upshot is that the average pay for blue-collar workers has risen significantly over the last two years and that, in absolute figures, salaries are sometimes increasing even more sharply.
As of end-2024, the obvious economic “winners” from the war include those employed in blue-collar positions in manufacturing – from defense and machine building to food and footwear – as well as those working in certain service sectors such as catering, hospitality, construction, transportation and logistics.
In 2023, according to Avito, among the top 10 jobs by year-over-year growth in average offered salaries, eight were blue-collar, the growth ranging from 33% to 69%. The top three were construction workers (plus 69% compared to 2022), equipment technicians (plus 48%) and waiters (plus 43%). Meanwhile, only two of the 10 jobs had an average salary above RUB 100,000 per month.
In 2024, a similar top 10 list compiled by HeadHunter included seven blue-collar jobs, as well as couriers. The growth was not as big, however, ranging from 18% to 42%. The top three jobs were drivers (plus 42% versus 2023), welders (plus 39%) and installation technicians (plus 30%). All 10 jobs listed in 2024 had an average offered salary of more than RUB 100,000 per month.
The upshot is that the average pay for blue-collar workers has risen significantly over the last two years and that, in absolute figures, salaries are sometimes increasing even more sharply.
As of end-2024, the obvious economic “winners” from the war include those employed in blue-collar positions in manufacturing – from defense and machine building to food and footwear – as well as those working in certain service sectors such as catering, hospitality, construction, transportation and logistics.
“Most of these beneficiaries live in poor regions. Many have lived from paycheck to paycheck for decades, working for firms operating at half-capacity.”
Since the start of the “special military operation,” these workers have quickly become well paid and sought after.
Blue-collar workers as a pillar of the Russian regime, or “Counterrevolution of the Proletariat”
The above observations suggest that blue-collar workers have emerged as a pillar of support for the current regime (and this trend is likely to continue in the near future) and give some idea of their political significance and level of motivation.
Those who have benefited from a sharp rise in income in recent years are unlikely to oppose the government. On the contrary, they have an interest in preserving the current political and economic model, which has brought them direct material benefits. Their loyalty, in this sense, can be considered economically justified.
This is a broad swath of the country. According to VEB, there are about 7 million workers in the manufacturing sector, giving it a share of about 16% in the average annual number of people employed in commercial organizations in Russia. We can reasonably add to these manufacturing workers the 4 million Russians employed in the transport and logistics sectors, as well as hospitality and catering.
In total, economically motivated supporters of the regime number 11 million, about 25% of the average annual number of employees of commercial organizations. With some caution, we can multiply this by two, since higher incomes benefit the entire family.
These estimates do not include military, security and law enforcement personnel, whose loyalty is ensured by other, but no less effective incentives.
Finally, we should take note of what it means to work in manufacturing in Russia: workers are concentrated in isolated, controlled spaces and are subordinated within a hierarchy, which makes them less resistant to informational influence and organizational pressure. This makes it easier to mobilize them and control their views so that the ones pushed by the government prevail. For example, employers attempt to systematically control their employees’ voting in elections, a practice that has long proven effective in Russia.
Blue-collar workers as a pillar of the Russian regime, or “Counterrevolution of the Proletariat”
The above observations suggest that blue-collar workers have emerged as a pillar of support for the current regime (and this trend is likely to continue in the near future) and give some idea of their political significance and level of motivation.
Those who have benefited from a sharp rise in income in recent years are unlikely to oppose the government. On the contrary, they have an interest in preserving the current political and economic model, which has brought them direct material benefits. Their loyalty, in this sense, can be considered economically justified.
This is a broad swath of the country. According to VEB, there are about 7 million workers in the manufacturing sector, giving it a share of about 16% in the average annual number of people employed in commercial organizations in Russia. We can reasonably add to these manufacturing workers the 4 million Russians employed in the transport and logistics sectors, as well as hospitality and catering.
In total, economically motivated supporters of the regime number 11 million, about 25% of the average annual number of employees of commercial organizations. With some caution, we can multiply this by two, since higher incomes benefit the entire family.
These estimates do not include military, security and law enforcement personnel, whose loyalty is ensured by other, but no less effective incentives.
Finally, we should take note of what it means to work in manufacturing in Russia: workers are concentrated in isolated, controlled spaces and are subordinated within a hierarchy, which makes them less resistant to informational influence and organizational pressure. This makes it easier to mobilize them and control their views so that the ones pushed by the government prevail. For example, employers attempt to systematically control their employees’ voting in elections, a practice that has long proven effective in Russia.
“Overall, another large and relatively homogeneous group is being added to the support base of the existing authoritarian regime in Russia.”
The group’s motivation – rising income and employment opportunities, as well as the return of previous status and living standards – is as strong as others’.
That said, if a peace agreement with Ukraine is signed – even if it is unlikely in the near future – and things start to go back to how they were before the war, it is this group, though not the only one, that could turn to ressentiment. The loss of newly acquired income, status and sense of being needed could cause a deep sense of injury and revanchist sentiments. These sentiments, in turn, could become fertile grounds of support for new military adventures and authoritarian mobilization.
Because of the natural shrinkage of some educated and creative segments of the Russian population due to emigration, as well as the suppression of liberal values and opposition views, the political importance of the above-discussed groups has increased considerably, which further fuels the regime’s general push to bring back “quasi-Soviet” values and ideals.
That said, if a peace agreement with Ukraine is signed – even if it is unlikely in the near future – and things start to go back to how they were before the war, it is this group, though not the only one, that could turn to ressentiment. The loss of newly acquired income, status and sense of being needed could cause a deep sense of injury and revanchist sentiments. These sentiments, in turn, could become fertile grounds of support for new military adventures and authoritarian mobilization.
Because of the natural shrinkage of some educated and creative segments of the Russian population due to emigration, as well as the suppression of liberal values and opposition views, the political importance of the above-discussed groups has increased considerably, which further fuels the regime’s general push to bring back “quasi-Soviet” values and ideals.
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