Transcript The Informal Sector in Russia

"Sociology of Everyday life.
Lifestyles, образ жизни,
Theoretical Approaches and
Empirical Findings in Russia."
5. Meeting:
Informal Sector and Informal Practices in Everyday Life
- The Informal Sector in Russia
- The Meaning of Blat in the Soviet and Post-Soviet Period
- Informal Networks in Russia
The Informal Sector in Russia
• Rosser and al. (2000) show that the size of the informal
economy is positively correlated with income inequality
• Foley (1997) and Kolev (1998) find evidence of higher wage
rates in Russia of secondary jobs compared to wage rates of
primary jobs
• Kim (2002) emphasizes that in Russia working in the informal
sector or having more than one job is a way to get well-paid
and to make additional money
c.f.: Beuran/Kalugina 2006: Social exclusion and the informal sector: the case of
Russia
The Informal Sector in Russia
• Even though working in the informal sector presents some
disadvantages (higher job insecurity, worse working
conditions), informal activities provide individuals with an
employment that enables them to fit their needs and increase
their well-being
• Foley (1997) and Kolev (1998) notice that in Russia individuals
participate in informal activities because of the higher
incomes available in this sector despite the higher risk
• furthermore the informal sector provides more autonomy and
flexibility for individual initiative and creativity than the
formal sector (De Grazia, 1982; Renooy, 1990)
c.f.: Beuran/Kalugina 2006: Social exclusion and the informal sector: the case of Russia
The Informal Sector in Russia
• following Goskomstat (2004), shadow economy comprises no more than
25% of the GDP and informal sector employs around 17% of the labor
force
• officials of the Ministry for Internal Affairs, executive agency responsible
for tax enforcement, estimate the size of shadow economy by at least as
much as 40% of the GDP
• Maslova and Baranenkova (2003) conclude that informal employment
amounts to 25 million people, or about 30% of the labor force
• Schneider and Enste (2003) state even higher values of 35 million people
(42% of labor force) in shadow employment
• according to Ryvkina (2001), at least half of Russian population is
employed informally
• Eliseeva and Schirina (2003) state that in case of St.-Petersburg region,
which officially comes very closely to the national average, shadow
economy actually exceeds its official counterpart
c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion
Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages,
Heriot-Watt University, Edinburgh , p.1
Set of survival strategies
in the Informal Sector
• (1) having another job;
• (2) using a dacha or other plot of land to grow
food;
• (3) working as private taxi driver;
• (4) renting out one’s apartment;
• (5) business trips abroad (to purchase goods for
resale), and
• (6) renting out one’s garage
(Johnson, Kaufmann, Ustenko 1997:185-6)
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The Informal Sector in Russia
• worsening of formal employment conditions, reduction in real wages and
quasi absence of social security
• during the first decade of transformation a lot of households with working
age member fall into poverty
• "new” phenomenon of "working poor" has become wide-spread
• facing negative economic conditions, Russian population has to change its
behaviour on the labour market: selfemployment, moonlighting and
informal activities have become a reality for many individuals (Kim, 2002)
• since 1998 the number of persons working in the IS increased
c.f.: Beuran/Kalugina
2006: Social exclusion
and the informal
sector: the case of
Russia
The structure of informal employment in Russia
•
•
•
among all types of informal employment the major input — over 50% — comes from
the employees of informal sector
self-employed, multiple job holders and incompliant formal sector employees
account respectively for 21, 13, and 15%
c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities,
Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and
Languages, Heriot-Watt University, Edinburgh, p.6
The structure of informal employment in Russia
• age structure of informal employment by gender shows that the highest
informal employment rates are observed among younger age groups
c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities,
Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of
Management and Languages, Heriot-Watt University, Edinburgh, p.7
The structure of informal employment in Russia
• Informal employment on average provides lower wage rates as well as
lower monthly wage amounts
c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and
Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION,
School of Management and Languages, Heriot-Watt University, Edinburgh, p.8
The structure of informal employment in Russia
• the prevalence of formal employment — 90% — is observed in the
organizations owned by different levels of government
• 50% of the employees of private sector are employed on informal basis
• 10% of municipal and 8% of federal and regional employees work
informally
c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities,
Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of
Management and Languages, Heriot-Watt University, Edinburgh, p.9