Russia’s Workforce Development Study of the Global Policy Network (GPN) – Informal Employment in Russia Oksana Sinyavskaya Daria Popova Workforce Development and Skills Mismatch — GPN Seminar 21-23, June 2004, Johannesburg

GDP, GDP per capita and population growth rates Source: Russia’s State Statistics Agency

Sectoral composition of GDP over time (in current prices) Source: Russia’s State Statistics Agency

Structure of annually employed population by type of ownership of enterprise/organisation (%, total employment = 100) Source: Russia’s State Statistics Agency

Share of population with incomes below subsistence minimum (SM) measured using different methodologies, %

Poverty rates: different estimates based on the data of Russia’s State Statistics Agency Source: Russia’s State Statistics Agency

Differentiation of income and wages: 1991 – 2003 Source: Russia’s State Statistics Agency

General and registered unemployment by gender (% of labor force)

Structure of general (ILO) unemployment by average duration of job search

Redistribution of employment across branches, (thousand people)

Dynamics of growth rates (2000 = 100%)

Share of hidden wages in total wages, %

Data sources Labor Force Surveys (Russia’s State Statistics Agency - Goskomstat), quarterly, since 1999, N = appr 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 , N = appr households (more than respondents)

Basic demographic characteristics of the samples* Rural population MalesWith higher education CMC (N=3994) RLMS (N=6481) * Adult population of Russia (18+)

Informal employment… … in formal sector – is a regular or occasional paid hired employment at an enterprise or in an organization based on verbal agreement … in informal sector – is a regular or occasional paid employment not for hire (self-employment, individual entrepreneurship) without a patent, a license or a registration, employment for hire outside an enterprise (an organization), in own-account enterprise on the basis of verbal agreement … in sector of households – is a regular or occasional non-paid employment aimed at production of goods for sale within a household

Empirical definitions 1 Employment inside informal sector CMC Own account workers (by self-identification); Individual entrepreneurs with paid employees (size of firm less than 5 workers); Paid-employees in private sector (size of firm less than 5 workers) RLMS Those working outside an enterprise or an organization (by self- identification), including own account workers, individual entrepreneurs with employees, family and domestic workers and farmers; Paid-employees working at private enterprises or organizations (size of firm less than 5 workers)

Empirical definitions Data sources: CMCRLMS Non-registered contracts ++ Grey wages/salary etc. +- Shadow economy: informal labor relations in formal sector

Empirical definitions 2 Informal employment CMC Own account workers (by self-identification) without patent or license; Individual entrepreneurs with paid employees working without a contract; Paid-employees working on the basis of verbal agreements RLMS Those working not at enterprise or organization (by self-identification), including own account workers, individual entrepreneurs with employees, family and domestic workers and farmers; Paid-employees working on the basis of verbal agreements at enterprises/organizations

Dynamics of main employment in informal sector based on different approach to its definition (thousand people)

Official estimates of employment inside informal sector, years (thousand people)

Structure of employment in informal sector in 2002, years Rural – 47,7% Agricultural activities – 42,1% Self-employed – 66,8% Less than 5 employees – 78,2%

Share of informal employment among those with regular and occasional employment, 4 quarters of 1998, 2000, and 2002

Total informal employment = 19,2% N = 4081 Share of informally employed among respondents with regular and/or occasional employment, RLMS 2002 (15-72 years)

Dynamics of informal employment and employment in informal sector, years, RLMS data

Formal and informal primary employment, years, RLMS panel data N=4711

Stability of informal employment, RLMS panel data for 1998, 2000 and 2002 гг. 24,1%29,4% 19,3% 4,6% 6,7% 11,3% Sum of the area of 3 circles = N = 523 = 100%

Matrices of informal employment and employment in informal sector on main job (18+ years), 4 q , CMC Survey (%) N=2049

Matrices of informal employment and employment in informal sector on main job (18+ years), 4 q , RLMS (%), N=2693

Gender composition of employment in informal sector

Distribution of informal employment by gender, secondary sociological data, 4 quarter 2000

Employment in informal sector and informal employment by type of settlement, main job, 4 q.-2000

Informal employment in rural area: composition of per capita aggregate receipts by income groups Respondents with per capita aggregate receipts: Below 1 SM1 – 2 SMAbove 2 SM XI 1998 X 2000 X 2001 XI 1998 X 2000 X 2001 XI 1998 X 2000 X 2001 Wages 17,618,518,414,418,321,411,320,718 State transfers 27,635,840,329,53627,313,513,610,7 Receipts from household production, including: Money income Money equivalent of consumed household production 42 2,1 39,9 34,9 3, ,5 7,1 19,4 43,2 8, ,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 11,39,47,79,87,67,910,711,46,3 Other money receipts 1,61,17335,69,46,815 Total 100

Distribution of informal employment at main job by firm's size

Distribution of employment in informal sector and informal employment by occupations, main job, RLMS, 4 q.-2000

Distribution of employed informally or inside informal sector by branches, main job

Conclusions 1.Trends: IE at least does not decrease Emp. in IS – increases (individual entrepreneurs, domestics)

Conclusions (cont.) 2.Structure: Agricultural act. – by LFS – near 40% Gender: women do not prevail Less educated paid employees Services Workers, salesmen

Conclusions (cont.) 2.Structure (cont.) : Small new private firms Self-employment IE & emp. in IS – heterogeneous: regular vs. occasional

Conclusions (cont.) 3.Working Conditions & Security: Longer working hours Not subject to SS Only a few other social guarantees Better paid Not stable

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.)