BUSINESS OF RUSSIAN FUNERAL SERVICES IS ON THE VERGE OF BANKRUPTCY

The increase in mortality in Russia during the COVID-19 pandemic, which is recorded by official statistics, inevitably should have increased the revenues of ritual agencies. However, it turned out that Russians are in no hurry to raise their expenses for funeral services.

Moreover, the representatives of the ritual business are talking about possible bankruptcy of their enterprises. The main reasons are the savings of citizens on memorial and other services, fear of infection, the departure of a significant part of the business to the ‘gray’ zone and a general decrease in the level of income.

Anton Avdeev, the head of the trade union of funeral service workers, told the media about the prospects for the industry's bankruptcy. Agency revenues are shrinking and profits are falling. Costs (rent, taxes, transportation) cease to cover income.

According to the expert, this process may threaten the complete collapse of the current model of ritual business.

Official statistics show that mortality in the first six months of 2021 increased by 16% (946.6 thousand people in the first half of 2020 against 1.1 million in 2021). However, if we compare these figures with data on the number of deaths for the same period, we will have to admit that citizens began to spend less and less money on memorial services. After all, the total revenue of companies working in the field of funeral services grew by only 9%, amounting to almost 37 billion rubles.

The statistics for the entire 2020 are even more telling. Over the year, mortality in Russia increased by 25% compared to 2019, while the revenue of funeral services grew by only 10%. At the same time, the employees of funeral services record such a decline not only during the period of the pandemic.

Experts note that the downward trend in funeral expenses has been observed since 2012.

At the same time, the costs of organizations operating in business are only growing.

Almost all representatives of the funeral services market note that its significant share continues to remain in the area hidden from the fiscal services and official statistics. The real expenses of Russians for organizing a funeral can be several times higher. However, the reduction in costs is recorded both in services for the installation of gravestones, monuments, and in the care of graves.

Fear of possible infection with COVID-19 infection during the commemoration of the deceased and the funeral has led to the fact that Russians have become less likely to attend such events and more often resort to cremation. This is cheaper than burial (40% on average).

In large cities like St. Petersburg, the share of cremations is already about 70%. On average in Russia, this share is still estimated at 10%, since not all regions have such an opportunity, but the upward trend in the number of cremations continues.

Experts note that burial costs differ significantly in different regions of the country.

As a criterion for the cost of services, the state funeral allowance is often taken - it is up to 18.4 thousand rubles per one unemployed pensioner.

For comparison, in the United States, compensation for expenses from the federal budget for the burial of victims of COVID-19 is provided by FEMA (an analogue of the Russian Ministry of Emergencies). The program was launched in April 2020. US citizens applying for help can get help from $ 1100 to $ 3500, including paying for cremation, gravestones and other funeral services.