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Informal Employment in Russia: Overview Oksana Sinyavskaya Daria Popova Workforce Development and Skills Mismatch — GPN Methodology Seminar 26-28, June 2003 Russia's output, population, and employment growth (% change) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 GDP growth -3 -5 -14,5 -8,7 -12,7 -4,1 -3,4 0,9 -4,9 5,4 9 5 4,3 * estimate Population growth … 1,1 -0,2 -2,1 -0,4 -2,2 -3,2 -2,7 -2,8 -5,3 -5,1 -6 -3 GDP growth Employment p/c growth … … -6,1 -2 -14,3 -2,4 -6,6 -1,7 -12,3 -3,3 -1,9 -3 -0,2 -0,7 3,6 -2 -2,1 -1,3 10,7 0,2 14,1 0,6 11 0,6 7,3 2,1* Total (Based on the ILO Definition) and Registered Unemployment 16,0 13,2 14,0 12,6 11,8 12,0 9,8 9,7 9,5 10,0 8,9 8,1 8,0 6,0 5,9 5,2 3,3 4,0 2,0 3,6 2,3 0,8 2,9 2,9 1,7 1,1 1,5 1,6 0,0 1992 1993 1994 1995 1996 1997 1998 1999 2000 Number of unemployed, % to active population Number of registered unemployed, % to active population 2001 Distribution of Unemployed by Average Duration of Searching a Job: 1992 - 2001 100 90 80 70 more than 1 year 6 - 12 months 3 - 6 months less than 3 months 60 50 40 30 20 10 0 1992 1996 1997 1998 1999 2000 2001 Differentiation of Wages and Incomes: 1991 - 2001 Indices of Differentiation 1991 1994 1995 1996 1997 1999 2000 2001 Decile Coefficient for Wages 7.8 23.4 26.4 24.0 25.0 32.1 34.0 39.6 0.317 0.439 0.454 0.445 0.447 0.480 0.483 0.507 4.5 15.1 13.5 13.0 13.8 13.9 13.8 13.8 0.260 0.409 0.381 0.387 0.401 0.400 0.399 0.396 Gini Coefficient for Wages Decile Coefficient for Incomes Gini Coefficient for Incomes Poverty Rate and and Poverty Gap: 1992-2000 40 35 30 25 20 15 10 5 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 Share of the population with income below the poverty line Poverty gap, % of the gross money income of the population 2001 Poverty rates (per cent): Russia’s Statistics Committee data 80 73,1 70 65 65,1 59,3 60 56,8 50 42 40 30 48,1 46,7 34,5 33,5 49,3 50,2 47,9 35,9 40 37,8 32,1 31,5 20 22,4 24,7 28,4 29,1 27,6 1999 2000 2001 23,3 22 20,3 1996 1997 10 0 1992 1993 1994 1995 1998 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 residents According 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 Informal own-account enterprises For formal enterprises Enterprises of informal (unregistered) employers with less than 5 employees For households With no fixed employer DATA SOURCES • Population Surveys on Employment Issues (Russia’s State Statistics Agency - Goskomstat), quarterly, since 1999, N = appr. 250260 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 Shadow Economy: Informal Labor Relations in Formal Sector Russia’s State Statistics Agency CMC RLMS VCIOM Nonregistered contracts - + + + Grey wages/salary etc. - + - - Data sources: EMPIRICAL DEFINITIONS Informal Economy Russia’s State Statistics Committee - Goskomstat Criteria for a firm / enterprise Individual entrepreneur Working for a person Working for an employer in paid employment Firm is not registered Individual entrepreneurship without registration + 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 DEFINITIONS Informal Economy Household Survey of Carnegie Moscow Center (2000) Criteria for a firm / enterprise Individual entrepreneur Less than 5 employees/ individuals 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 DEFINITIONS Informal Economy Russia’s Longitudinal Monitoring Survey Criteria for a firm / enterprise Individual entrepreneur Working for a person Working for an employer in paid employment Family enterprises/ cooperatives/ individuals Individual entrepreneurship & self-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 DEFINITIONS Informal Economy VCIOM’s Monitoring Criteria for a firm / enterprise Individual entrepreneur Working for a person Working for an employer in paid employment Individuals Self-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 * Main job Urban Rural Total informal sector % of employed Total number of jobs Jobs in nonagricultural sector value per cent value per cent value per cent 4570817 2565148 64,1 35,9 5150954 4039384 56,0 44,0 4352073 971165 81,8 18,2 7135965 100,0 9190338 100,0 5323238 100,0 11,1 14,3 * Russia’s State Statistics Agency – Goskomstat 2001 8,3 Informal Employment in Rural Area: Composition of Per Capita Aggregate Receipts by Income Groups Respondents with per capita aggregate receipts: 1 – 2 SM Below 1 SM Above 2 SM XI 1998 X 2000 X 2001 XI 1998 X 2000 X 2001 XI 1998 X 2000 X 2001 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 42 34,9 26,5 43,2 35,1 37,7 55,1 37,9 49,9 2,1 3,9 7,1 8,2 7,4 18,6 17,5 15,7 33,4 39,9 31 19,4 35 27,7 19,1 37,6 22,2 16,5 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 Receipts from household production, including: Money income Money equivalent of consumed household production Non-state transfers Dynamics of Informal Employment in Formal and Informal Sectors, Urban Population, Multiple Jobs (% of total employment) RLMS data CMC GKS data data * VCIOM data IX 1998 X 2000 X 2001 XI 2000 XI 2001 XI 1998 XI 1999 XI 2000 Employment in informal 11,2 sector 12,2 10,3 3,8 9,9** 5,8 4,8 3,9 Total informal 14,3 employment 16,4 … 8,4 … 12,8 13 13 * 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 1990 1995 1996 1997 1998 1999 2000 48,8 45,2 49,6 50,0 47,2 40,9 40,0 Official 48,8 34,8 37,9 38,3 37,1 29,9 28,9 Hidden - 10,4 11,7 11,7 10,1 11,0 11,1 13,0 10,6 11,5 12,1 12,8 11,8 12,0 … 15,8 13,7 13,7 13,3 14,1 14,4 26,9 23,8 23,0 23,0 21,9 20,8 20,3 The unit weight of wages of employees (including hidden wages) in GDP Including: The unit weight of wage costs in costs of inputs into production and sales of products (services) by branches of economy: Manufacturing industry Agriculture Construction Structure of Informal Employment, Urban Population 2000 Main job Secod job CMC data RLMS data CMC data RLMS data Formal employment Informal employment in formal sector Jobs in informal sector, including: Employees Entrepreneurs / selfemployed Total N * Value equals to 1 92,0 88,2 85,6 46,8 4,4 3,5 6,7 20,7 3,6 8,3 7,8 32,4 2,4 5,0 6,7 16,0 1,2 3,0 * 14,4 100,0 1425 100,0 3174 100,0 90 100,0 188 Gender Composition of Employment in Informal Sector, Urban Population MEN WOMEN main / the only job 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 second / additional regular job RLMS, 2000 45,1 54,9 100 RLMS, 2001 49,1 50,9 100 Goskomstat, 2001 51,6 48,4 100 Education Profile of Informally Employed, Urban Population / Main Job, 2000 Informal employment Level of education Formal sector Informal sector 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 51 15,6 55,6 12,5 100,0 100 100 100 Higher and post-graduate Total Age Profile of Informally Employed, Urban population / Main Job, 2000 35 30 25 20 15 10 5 0 14-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 age RLMS, inf.sect. CMC, inf.sect. RLMS, total CMC, total 55-59 60-64 Spheres of Concentration of Informal Employment: Branches of Economy, Urban Population Informal sector Wholesale and Retail Trade, Catering Construction, Transport and Communications Industry Housing Education and Science Health care, Social Security Culture and Art Finances, Insurance Agriculture and Forest Industry Other Total Formal sector National Statistics Agency, 2001 CMC data, 2000 * CMC data, 2000 * 54,1 46,0 52,4 15,3 18,0 12,7 11,9 3 1,2 0,9 0,6 0,1 4,0 4,0 0,0 6,0 2,0 4,0 6,4 1,6 6,4 1,6 4,8 4,8 10,6 4,0 1,6 2,3 100 12,0 100 7,9 100 * main / the only job Spheres of Concentration of Informal Employment: Professional Groups, Urban Population / Main Job Service workers Artisans (Top-) managers, officials Share of informal employment in total employment by groups, % RLMS data, 2001 Informal job in Job in informal Total informal formal sector sector employment 33,0 35,6 34,9 20,5 11,9 14,5 2,7 18,8 13,9 Blue-collar workers 9,8 13,4 12,3 Unskilled workers Specialists Other professional groups 14,3 13,4 9,2 6,9 10,7 8,9 6,3 4,2 4,8 Issues for Future Research 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 (cont.) Data: • • Comparability of empirical definitions used in surveys, Detailed questions / special survey on informal employment, • Improving both qualitative and quantitative researches