Informal Employment in Russia: Overview

Oksana SinyavskayaDaria Popova

Workforce Development and Skills Mismatch — GPN Methodology Seminar 26-28, June 2003

Russia's output, population, and employment growth (% change)

GDP growth

Population growth

GDP growth p/c

Employment growth

1990 -3 … … …1991 -5 1,1 -6,1 -21992 -14,5 -0,2 -14,3 -2,41993 -8,7 -2,1 -6,6 -1,71994 -12,7 -0,4 -12,3 -3,31995 -4,1 -2,2 -1,9 -31996 -3,4 -3,2 -0,2 -0,71997 0,9 -2,7 3,6 -21998 -4,9 -2,8 -2,1 -1,31999 5,4 -5,3 10,7 0,22000 9 -5,1 14,1 0,62001 5 -6 11 0,62002 4,3 -3 7,3 2,1*

* estimate

Total (Based on the ILO Definition) and Registered Unemployment

5,25,9

8,1

9,5 9,7

11,8

13,212,6

9,88,9

0,8 1,12,3

3,3 3,62,9 2,9

1,7 1,5 1,6

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Number of unemployed, % to active populationNumber of registered unemployed, % to active population

Distribution of Unemployed by Average Duration of Searching a Job: 1992 - 2001

0

10

20

30

40

50

60

70

80

90

100

1992 1996 1997 1998 1999 2000 2001

more than 1 year

6 - 12 months

3 - 6 months

less than 3 months

Differentiation of Wages and Incomes: 1991 - 2001

0.3960.3990.4000.4010.3870.3810.4090.260Gini Coefficient for Incomes

13.813.813.913.813.013.515.14.5Decile Coefficient for Incomes

0.5070.4830.4800.4470.4450.4540.4390.317Gini Coefficient for Wages

39.634.032.125.024.026.423.47.8Decile Coefficient for Wages

20012000199919971996199519941991Indices of Differentiation

Poverty Rate and and Poverty Gap: 1992-2000

0

5

10

15

20

25

30

35

40

1992 1993 1994 1995 1996 1997 1998 1999 2000

Share of the population with income below the poverty linePoverty gap, % of the gross money income of the population

2001

Poverty rates (per cent): Russia’s Statistics Committee data

22

49,3

65,1

32,1

37,8

50,2

40

27,629,128,4

23,320,3

22,424,7

59,3

47,9

35,934,5

42

31,533,5

73,1

65

48,1

56,8

46,7

0

10

20

30

40

50

60

70

80

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

According to Goskomstat RF—based on the balance of money income and expenditure(average, per year)According to household budget survey, using money income (average per year), of which:Rural residentsAccording to household budget survey, using disposable resources, of which:Rural residents

A Conceptual Framework: the Informal Employment

Informal Employment

In informal enterprises

Outside informal enterprises

= “shadow” employment

For formal enterprises

For households

With no fixed employer

Informal own-account enterprises

Enterprises of informal (unregistered) employers with

less than 5 employees

DATA SOURCES

• Population Surveys on Employment Issues (Russia’s State Statistics Agency - Goskomstat), quarterly, since 1999, N = appr. 250-260 thousands respondents

• Population Survey on Social and Economic Situation of Russia’s Population (Carnegie Moscow Center), 2000, N = 5000 households

• Russia’s Longitudinal Monitoring Survey (Institute of Sociology and Institute of Nutrition of Russian Academy of Sciences, and Paragon Research International), panel since 1994, autumn of 1998-2001, N = appr. 4500 households (more than 10000 respondents)

• VCIOM’s Monitoring (Russian Center for Public Opinion and Market Research - VCIOM), 1998-2001, November, N = appr. 2400 respondents

EMPIRICAL DEFINITIONS

Data sources:

Russia’s State

Statistics Agency

 

CMC RLMS VCIOM

Non-registered contracts

- + + +

Grey wages/salary etc.

- + - -

Shadow Economy: Informal Labor Relations in Formal Sector

EMPIRICAL DEFINITIONSInformal Economy

Russia’s State Statistics Committee - Goskomstat

Criteria for a firm / enterprise

Firm is not registered

Individual entrepreneur Individual entrepreneurship without registration

Working for a person +

Working for an employer in paid employment

Without registration; for own/family enterprise;

member of a producer’s cooperative

Working in a farm +

Working for a household for producing smth. for realization

+

EMPIRICAL DEFINITIONSInformal Economy

Household Survey of Carnegie Moscow Center (2000)

Criteria for a firm / enterprise

Less than 5 employees/ individuals

Individual entrepreneur Individual entrepreneurship/ self-employment without

registration

Working for a person -

Working for an employer in paid employment

-

Working in a farm -

Working for a household for producing smth. for realization

-

EMPIRICAL DEFINITIONSInformal Economy

Russia’s Longitudinal Monitoring Survey

Criteria for a firm / enterprise

Family enterprises/ cooperatives/ individuals

Individual entrepreneur Individual entrepreneurship & self-employment

Working for a person -

Working for an employer in paid employment

Working not at enterprise, not at an organization,

engaged in some additional kind of work without any

agreement, official contract or license

Working in a farm -

Working for a household for producing smth. for realization

-

EMPIRICAL DEFINITIONSInformal Economy

VCIOM’s Monitoring

Criteria for a firm / enterprise

Individuals

Individual entrepreneur Self-employment

Working for a person -

Working for an employer in paid employment

Working for an own / family enterprise with employees

Working in a farm -

Working for a household for producing smth. for realization

-

Informal Employment in Urban and Rural Area *

value per cent value per cent value per cent

Urban 4570817 64,1 5150954 56,0 4352073 81,8Rural 2565148 35,9 4039384 44,0 971165 18,2Total

informal sector

7135965 100,0 9190338 100,0 5323238 100,0

% of employed

11,1 14,3 8,3

Main job Total number of jobsJobs in non-

agricultural sector

* Russia’s State Statistics Agency – Goskomstat 2001

Informal Employment in Rural Area: Composition of Per Capita Aggregate Receipts by Income Groups

  Respondents with per capita aggregate receipts:

Below 1 SM 1 – 2 SM Above 2 SM

XI 1998

X 2000

X2001

XI 1998

X 2000

X2001

XI 1998

X 2000

X2001

Wages 17,6 18,5 18,4 14,4 18,3 21,4 11,3 20,7 18

State transfers 27,6 35,8 40,3 29,5 36 27,3 13,5 13,6 10,7

Receipts from household production, including: Money income Money equivalent of consumed household production

 42

 2,1

39,9

 34,9

 3,9

 31 

 26,5

7,1 

19,4

 43,2 

8,2 

35

 35,1

 7,4

 27,7

 37,7 

18,6 

19,1 

 55,1 

17,5 

37,6 

 37,9 

15,7 

22,2

 49,9

33,4 

16,5

Non-state transfers 11,3 9,4 7,7 9,8 7,6 7,9 10,7 11,4 6,3

Other money receipts 1,6 1,1 7 3 3 5,6 9,4 6,8 15

Total 100 100 100 100 100 100 100 100 100

Dynamics of Informal Employment in Formal and Informal Sectors, Urban Population, Multiple Jobs

(% of total employment)

CMC data

GKS data *

IX 1998

X 2000

X 2001

XI 2000

XI 2001

XI 1998

XI 1999

XI 2000

Employment in informal

sector11,2 12,2 10,3 3,8 9,9** 5,8 4,8 3,9

Total informal

employment14,3 16,4 … 8,4 … 12,8 13 13

RLMS data VCIOM data

* Goskomstat (National Statistics Agency) data do not include any of shadow employment

** 8.9% for share of urban population employed in informal sector in non-agriculcural activities

The Unit Weight of Expenditure on Work remuneration in GDP and Cost of Inputs into

Production

20,320,821,923,023,023,826,9Construction

14,414,113,313,713,715,8…Agriculture

12,011,812,812,111,510,613,0Manufacturing industry

The unit weight of wage costs in costs of inputs into production and sales of products (services) by branches of economy:

11,111,010,111,711,710,4-Hidden

28,929,937,138,337,934,848,8Official

Including:

40,040,947,250,049,645,248,8

The unit weight of wages of employees (including hidden wages) in GDP

2000199919981997199619951990

Structure of Informal Employment, Urban Population 2000

CMC data RLMS data CMC data RLMS data

Formal employment 92,0 88,2 85,6 46,8

Informal employment in formal sector

4,4 3,5 6,7 20,7

Jobs in informal sector, including:

3,6 8,3 7,8 32,4

Employees 2,4 5,0 6,7 16,0 Entrepreneurs / self-employed

1,2 3,0 * 14,4

Total 100,0 100,0 100,0 100,0 N 1425 3174 90 188

Main job Secod job

* Value equals to 1

Gender Composition of Employment in Informal Sector, Urban Population

MEN WOMEN total

CMC, 2000 52,9 47,1 100

RLMS, 2000 54,3 45,7 100

RLMS, 2001 50,2 49,8 100

Goskomstat, 2001 52,7 47,3 100

RLMS, 2000 45,1 54,9 100

RLMS, 2001 49,1 50,9 100

Goskomstat, 2001 51,6 48,4 100

main / the only job

second / additional regular job

Education Profile of Informally Employed, Urban Population / Main Job, 2000

CMC data

RLMS data

CMC data

RLMS data

No education, primary or incomplete secondary

3,9 11,8 7,9 20,5

Complete Secondary 19,6 11,8 12,7 15,2

Complete Secondary Vocational

25,5 60,7 23,8 51,8

Higher and post-graduate 51 15,6 55,6 12,5

Total 100,0 100 100 100

Level of education

Informal employment

Formal sector Informal sector

Age Profile of Informally Employed, Urban population / Main Job, 2000

0

5

10

15

20

25

30

35

14-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64

age

RLMS, inf.sect. CMC, inf.sect.

RLMS, total CMC, total

Spheres of Concentration of Informal Employment: Branches of Economy, Urban Population

Formal sector

National Statistics

Agency, 2001

CMC data, 2000 *

CMC data, 2000 *

Wholesale and Retail Trade, Catering

54,1 46,0 52,4

Construction, Transport and Communications

15,3 18,0 12,7

Industry 11,9 4,0 6,4Housing 3 4,0 1,6Education and Science 1,2 0,0 6,4Health care, Social Security 0,9 6,0 1,6Culture and Art 0,6 2,0 4,8Finances, Insurance 0,1 4,0 4,8Agriculture and Forest Industry

10,6 4,0 1,6

Other 2,3 12,0 7,9Total 100 100 100

Informal sector

* main / the only job

Spheres of Concentration of Informal Employment: Professional Groups, Urban Population / Main Job

Informal job in formal sector

Job in informal sector

Total informal employment

Service workers 33,0 35,6 34,9Artisans 20,5 11,9 14,5(Top-) managers, officials

2,7 18,8 13,9

Blue-collar workers 9,8 13,4 12,3

Unskilled workers 14,3 9,2 10,7Specialists 13,4 6,9 8,9Other professional groups

6,3 4,2 4,8

RLMS data, 2001

Share of informal employment in total employment by groups, %

Concepts of informal employment:• Formal, informal and self-employment,

• Informal employment outside informal enterprises,

• Informality within labor contracts,

• Working at home, on the streets, etc.,

• Informal employment in rural area,

Policy implications:• Inequality in informal economy: vulnerable groups,

• Social guarantees, wages/salaries, and working hours

Issues for Future Research

Data:• Comparability of empirical definitions used in surveys,• Detailed questions / special survey on informal

employment,

• Improving both qualitative and quantitative researches

Issues for Future Research (cont.)