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Wrap 2: Putin highlights demographic slump as Russia's biggest problem

President Vladimir Putin highlighted a demographic crisis as the most serious problem facing Russia and proposed radical measures to deal with it in his state of the nation address Wednesday.

MOSCOW, May 10 (RIA Novosti) - President Vladimir Putin highlighted a demographic crisis as the most serious problem facing Russia and proposed radical measures to deal with it in his state of the nation address Wednesday.

The United Nations has warned that Russia's population - which stood at roughly 145 million in a 2002 census - could fall by as much as a third by 2050, and Putin said it was falling at about 700,000 people every year.

In an hour-long speech, Putin said demographics were a key issue for Russia's socio-economic development, and identified three ways of dealing with a falling population: higher birth rate, lower mortality rate, and effective migration policy.

He added that very little had been done to reverse the trend, although the problem had been raised many times before, including in last year's address.

"We have raised this problem many times, but little has been done [to solve it]," he said.

To boost birth rates, Putin said monthly child benefits should be raised from 800 rubles to 1,500 rubles ($55) for the first child, and mothers should be paid 3,000 ($110) a month for their second child.

He also said the government should give women at least 250,000 rubles ($9,225) as financial aid following the birth of a second child.

"The state must support women who give birth to a second child - to give them a primary basic mother capital to raise their social status. Experts say the size of such state obligations should be at least 250,000 rubles," Putin said.

Putin said women could use the benefit to solve housing problems, spend it on the education of their children, or channel it into the funded part of their pensions, adding that the sum should be indexed annually in line with inflation. He also said companies should pay female employees on maternity leave at least 40% of their salaries within 18 months.

Russia's first president, Boris Yeltsin, hailed Putin for focusing on the demographic crisis and outlining specific ways to address the problem.

Yeltsin, who introduced the tradition of presidential speeches to the Federal Assembly, which comprises both houses of parliament, was quoted by his spokesman as praising the address as "very meaningful."

"It [the address] pays much attention to the demographic problem and outlines ways to solve it," the spokesman said.

Putin also said migration policy was also important to improve Russia's economic development.

"We need to encourage an inflow of qualified migrants, educated and law-abiding people," he said, adding that people who came to work and live in Russia should have respect for Russian culture and traditions.

Putin said a program drafted this year to boost Russia's population should be implemented starting next year.

"I request [the government] to calculate its growing obligations and set a timeframe for the program, which must be at least 10 years. Funds to fulfill the measures under the program must be earmarked in next year's budget. This mechanism must be launched January 1, 2007," Putin said.

Finance Minister Alexei Kudrin said after the address the objectives set out in it were "ambitious, but realistic," and added that 30-40 billion rubles ($1.11bln - $1.48bln) would have to be allocated for them, which would require changes in the three-year financial plan.

Agriculture Minister Alexei Gordeyev said the measures proposed by Putin should be implemented primarily in rural areas.

"Villages have traditionally been [the main] source of human resources for the country," he said, adding that 80% of conscripts in the armed forces had been drafted from rural districts.

Putin also called for new programs to encourage adoption and other schemes to raise orphaned children in families, adding that most Russian children were currently adopted by foreign families.

"I suggest that pay to adopters and foster families be raised almost twofold to levels of at least 4,500 rubles [$166] a month," he said.

Putin said that elder generations should also not be neglected. He said pensions would be increased by another 20% in 2007, and promised other measures to support elderly people.

The latest in a series of pension increases took place in 2005, when they rose 9.3%, according to the Federal Statistics Service. The average pension in Russia is currently 2,764 rubles ($102) a month.

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