Comprehensive Research Of Unreported Employment In The Regions Of The Russian Federation

Abstract

Over the period of 2010–2019, the total number of people employed in all types of economic activities in the Russian Federation increased by 5.3 %, amounting to more than 71.0 million people. In the dynamics of 2010–2019 the total number of people employed in the unreported sector of the Russian Federation increased from 11482 to 14800 thousand people or 28.9 %. The paper identifies trends in the development of unreported employment in the Russian Federation. The carried-out studies have revealed the growth of in the scale of unreported employment of the population in 2010–2019 due to the reduction of the small business and the entrepreneurs switch to the individual enterprises or self-employed. The highest rates of growth in the number of people, who work under the table, appeared to be in the age group of 65–69. The reverse all-Russian trend is characterized by the dynamics of the number of people employed in the informal sector aged from 15 to 24. To a greater extent, the unreported employment sector involves people aged from 30 to 39. In Russia the level of population involvement in the unreported employment sector increased from 16.4 to 20.6 %. In the structure of unreported employment according to the economic activity, the largest share falls to those who are employed in wholesale and retail trade, repair of vehicles and motorcycles. The regional aspect of the development of unreported employment has shown significant differences.

Keywords: informal employment, demographic factors, groupings, trends

Introduction

The development of unreported employment is of substantial significance in current economic environment. The spread of different forms of unreported employment is due to the demographic crisis, followed by the population aging, the increase in student employment, the massive entrance of women to the labor market, and the development of small business (Dulzon, 2017; Kalinina and Solovchenkov, 2018).

Problem Statement

The key reason for the proliferation of unreported employment is the necessity for greater flexibility in employment relations in labor market (Kotlyarov, 2015; Postnova, Smirnova and Alexandrova, 2020). One of the forms of non–standard employment is unreported employment.

The people employed in informal sector were those who, during the survey period, were employed at least in one of the production units of the informal sector, regardless of their employment status and whether the job was their main or additional one (Postnova, Smirnova and Alexandrova, 2020; Rozhkova, 2019).

Research Questions

The indicator of the units of the informal sector is the criterion of the absence of the state registration as a reference entity. Those employed in the informal sector include:

• individual entrepreneurs;
• persons employed by individual entrepreneurs and private entity;
• persons helping family members in their own business belonging to one of the relatives;
• working on an individual basis, without registering as an individual entrepreneur;
• individuals employed in their own household for the production of agricultural, forestry, hunting and fishing products for sale or exchange (Tikhonova, 2015).

The object of study is the population employment of the Russian Federation in the context of the subjects and in the fields of the economy.

Purpose of the Study

The aim of the study is a comprehensive assessment of the development of unreported employment.

Research Methods

To achieve this aim, the study analyzes the dynamics of unreported employment of the Russian population from 2010 to 2019, identifies the main trends in the development of this phenomenon. The object of the research was the unreported employment of the Russian population.

In the dynamics of 2010–2019 the total number of people employed in the unreported sector of the Russian Federation increased from 11482 to 14800 thousand people or 28.9 %. According to the experts, this growth is due to the reduction in small business, and the entrepreneurs switch to the individual enterprises or become self-employed (Table 01).

In terms of age groups, there is a significant reduction in the number of people employed in the informal sector at the age of 15–24, including those aged 15–19, from 273000 to 168000 people or by 38.46 %, at the age of 20–24 from 1264000 to 955000 people or 24.45 %. For the rest of the age groups, the number of employed has increased. The highest growth rates in the number of people employed in the informal sector were observed in the 65–69 age group – 97.66 %. A significant increase in the number of employed is observed among the employed at the age of 60–64 and 55–59 – 86.80 % and 67.52 %, respectively. An average age of people employed in the informal sector in 2010–2019 increased from 39 to 40.4.

The largest share in the structure of informal employment falls to the 30–34 age group (15.6 %). The second and third positions in this structure are occupied by employed people at the age of 35–39 and 25–29, which is, respectively, 14.3 and 13.4 %, respectively.

In the structure of the informal sector, there is a significant decrease in the share of the age group of 20–24 from 11.0 to 6.5 % or by 4.6 percentage points. The share of employed aged 45 to 49 decreased by 2.0 percentage points, which was 11.2 % in 2019. A decrease in the share in the structure of the number of people employed in the informal sector is also observed in the age groups of 15–19, 25–29, 50–54 y.o.

Gender analysis of those, who were employed in the informal sector, showed an increase in the number of men from 6424 to 8181 thousand or by 27.35 %, women – from 5058 to 6619 thousand or 30.86 %. The share of informal employment among men is higher than among women.

In the gender structure of employment men account for 55.3 %, women account for 44.7 % employed in the informal sector. During 2010–2019, the gender structure of informal employment has not changed significantly.

The study of the informal sector by age groups showed that over the period of 2010–2019 the degree of involvement increased from 16.4 to 20.6 % (Table 02).

Workers aged 15–19 are most involved in the informal sector, while their share in the total number of employed increased from 38.9 % in 2010 to 48.0 % in 2019. A high degree of involvement in informal employment is also characteristic for the age group of 70 and older – 39.3 %. To a lesser extent, the informal sector involves those employed at the age of 55–59 and 60–64 – 17.4 % and 17.9 %, respectively.

Over the past 10 years, the involvement of the workers in the informal sector has increased in the following age groups: 20–24 years old (by 7.1 percentage points), 25–29 y.o. (by 5.1 percentage points), 50–54 y.o. (by 4.9 percentage points), 55–59 y.o. (by 4.6 percentage points), 30–34 y.o. (by 4.5 percentage points).

Analysis of the employed in the informal sector of the Russian Federation by the educational level showed an increase in the number of employed with higher education by 64.84 %, with vocational secondary education – by 34.62 %, with secondary general education – by 9.66 %, with compulsory education – by 15.73 %. The number of the employed in the informal sector without compulsory education decreased by 23.26 % during 2010–2019. In the structure of the employed in the informal sector of the Russian Federation by the level of education, the largest share is formed by the employed with a secondary vocational education – 46.4 %.

In the structure of the workers in the informal sector of the Russian Federation by the level of education, the largest share is presented by the employees with secondary vocational education – 46.4 %. The share of the employees with secondary general education is 26.8 %, which is 4.7 percentage points lower than in 2010. The employees with higher education account for 18.5 % of the total number of the employees. Over 10 years, the share of this category of the informal sector staff has increased by 4.0 percentage points. The share of workers without education does not exceed 1 %.

The study of the number of the employed in the informal sector of the Russian Federation by type of economic activity revealed a significant increase in the number of the employed in the extraction of minerals (by 3.09 times), the hotel and public catering industry (by 2.68 times), activities in the field of health care and social services (by 2.58 times), education (2.31 times), provision of other types of services (2.19 times), activities in the field of culture, sports, organization of leisure time and entertainment (2.12 times).

In agriculture, forestry, hunting, fishing and fish farming, the number of the employed in the informal sector decreased from 3342 to 2434 thousand people or by 27.17 %. The number of informally employed personnel in other types of activity decreased by 36.36 % (Table 03).

In the structure of unreported employment according to the economic activity, the largest share falls to those who are employed in wholesale and retail trade, repair of vehicles and motorcycles.

Over the period of 2010–2019, the share of this type of economic activity decreased from 32.4 to 31.3 %. Agriculture, forestry, hunting, fishing and fish farming, despite a decrease in the share by 12.7 percentage points, take second place. The share of this industry is 16.4 % of informally employed. Construction accounts for 10.7 % of employed in the informal sector. A significant share of the informally employed is in manufacturing, transportation and storage, and the provision of other types of services (10.5 %, 10.4 % and 6.9 %, respectively).

In the number of employed in the informal sector by type of settlement, there is an increase in the number of employed living in urban areas, from 6775 to 9935 thousand or 46.64 %. The rural population, informally employed, increased from 4707 to 4865 thousand people, amounting to 103.36 % to the level of 2010.

In the structure of those, who are employed in the informal sector of the Russian Federation by type of settlement, the largest share falls on the urban population. The share of urban population for the period from 2010 to 2019 increased from 59.0 to 67.1 %. The share of the rural population in the number of informally employed, on the contrary, decreased by 8.1 percentage points, amounting to 32.9 % in 2019 (Table 04).

The research of the employed people in the informal sector by type of economic activity in the context of the type of settlement showed a significant decrease in the number of people employed in agriculture, forestry, hunting, fishing and fish farming for the period from 2015 to 2019. The number of the urban population, informally employed in this industry, decreased by 28.11 %; the number of the rural population – by 30.51 %. The decline in both types of employed is also observed in construction, trade and real estate operations. In other sectors, the number of informally employed has increased. At the same time, the growth rate differs significantly in such sectors of the economy as electric power supply, gas and steam, water supply etc., insurance and financial activities, health care and social services.

For example, the growth of the informally employed urban population in electric power supply, gas and steam, water supply amounted to 92.31 %; the rural population amounted to 50 % only. In insurance and financial activities, the largest growth in the number of informally employed people in rural areas was 2 times more compared to 12.9 %. In the field of health care and social services, the number of informally employed people living in urban areas has increased by 49.55 % over the past 5 years, in rural areas – 2.06 times.

The research of the structure of the informally employed urban and rural population by the type of economic activity made it possible to reveal significant differences by the type of population. Thus, trade prevails in the structure of informally employed people living in urban areas – 35.3 %. A significant share is accounted for informally employed people in transportation and storage, in the field of information and communication that is 12.8 %. Manufacturing and construction rank third, that is, 11.1 % and 11.2 %, respectively.

In the structure of the informally employed living in rural areas, the predominant share is occupied by agriculture, forestry, hunting, fishing and fish farming. This sector of the economy accounts for 37.8 % of the informally employed. A high proportion of such people employed in the industry of trade is 23.2 %. The third position among industries is occupied by construction with a share of informally employed 9.8 %. In manufacturing, the share of informally employed reaches 9.3 %, in transportation and storage, in the field of information and communications that is 8.1 %.

The assessment of the number of people employed in the informal sector of the Russian Federation by status revealed a positive trend in the number of hired workers – from 5997 thousand people in 2010 up to 9395 thousand people in 2019 or 56.66 %. The number of self-employed people has not changed significantly over 10 years.

In the structure of employed in the informal sector of the Russian Federation by status in 2010, the share of employed and self-employed was practically equal. In 2019, due to the significant growth of the first category, the share of employed people increased, amounting to 63.5 %. Accordingly, the share of self-employed people decreased from 47.8 % to 36.5 %, or by 11.3 percentage points.

Informally employed people living in rural areas can be conveniently classified into employed in agricultural and non–agricultural activities. For the period from 2010 to 2019 the total number of employed in the first category decreased from 2302 to 1838 thousand people, or by 20.16 %, including men by 4.96 %, women by 37 %. The number of people employed in non-agricultural activities, on the contrary, increased by 25.86 %, amounting to 3027 thousand people in 2019, including the number of men, that is 28.44 %, and women, that is 22.65 %.

The decrease in the number of informally employed in agricultural activities is due to lower wages, unattractiveness of the industry and hard–working conditions.

Findings

The ranking of federal subjects of Russia by the degree of involvement of the employed in the informal sector made it possible to determine six groups (Table 05). The lowest share of employed in the informal sector was observed for four subjects – Moscow, Murmansk region, Saint Petersburg, Chukotka Autonomous District.

In 28 federal subjects of Russia, the share of the employed in the informal sector of the total number of population varies from 10 to 20 %. This group also includes the Ulyanovsk region. The degree of involvement of the employed population in the informal sector for 33 subjects ranges from 20 to 30 %, the rest 11 subjects account for 30–40 %.

A high level of involvement of the employed in the informal sector, exceeding 40 % of the employed, has developed in 6 federal subjects of Russia (Kabardino-Balkarian Republic, Altai Republic, Republic of Dagestan, Republic of Ingushetia, Republic of Crimea, the Chechen Republic). The highest value of the share of informal employment was observed in the Chechen Republic – 62.1 % of the total number of employed in 2019, which exceeds the lowest degree of involvement in the informal sector that has developed in Moscow 15.5 times.

In the context of federal districts, the share of informally employed in the total number of employed varies from 13.5 % in the Central Federal District to 44.6 % in the North Caucasian Federal District, which is 3.3 times higher. In dynamics from 2010 to 2019 the share of the informally employed in the total number increased in 6 federal districts; however it decreased in 2 federal districts (in the Central and Ural federal districts).

The grouping of federal subjects of Russia by the number of employed in the informal sector made it possible to determine significant differences between the regions. In 31 federal subjects of Russia, the number of informally employed does not exceed 100 thousand people. In some regions, the number of people involved in informal employment is no more than 20 thousand for example in Chukotka Autonomous Region (only 1.65 thousand people) and the Jewish Autonomous Region (19.1 thousand people). In general, the share of federal subjects with a low level of informal employment is 37.8 % of the total number of regions.

The number of people employed in the informal sector of the economy for the 24 regions ranges from 100 to 200 thousand people, which is 29.3 % of the total number of federal subjects of Russia. Moreover, in 15 subjects of the country, the number of people involved in informal employment varies from 200 to 300 thousand people.

In 12 federal subjects of Russia, the number of the informally employed exceeds 300 thousand people, including 6 regions that is more than 400 thousand people: Krasnodar Territory, Moscow Region, Republic of Bashkortostan, Republic of Dagestan, Rostov Region, Stavropol Territory. The highest number of people employed in the informal sector was achieved in the Krasnodar Territory – 904.7 thousand people, which in aggregate overruns this figure in the Far Eastern Federal District.

Russian Federal State Statistics Service divides the employees in the informal sector into the employed only in this sector, and those who are simultaneously employed in the formal sector. According to the statistics service, it follows that the main share falls on the first group. 13.8 out of 14.8 mln. people informally employed in 2019 belong to the first group, which is 93.2 %.

The ranking of the subjects of the Russian Federation by the number of the employed only in the informal sector allowed determining five groups. The first group included 33 subjects, where the number of such employed does not exceed 100 thousand people. Even in 22 regions, the number of people employed only in the informal sector ranges from 100 to 200 thousand people. In the Republics of Tatarstan and Crimea, the Chechen Republic, in the Saratov region, the number of informally employed reaches 400 thousand people. In other 6 subjects (the Republic of Bashkortostan, the Stavropol Territory, the Moscow Region, the Rostov Region, the Republic of Dagestan, the Krasnodar Territory), the number of employed in the informal sector exceeds 400 thousand people, the largest number of such employed is reached in Krasnodar Territory (868.6 thousand people).

The grouping of federal subjects of Russia by the number of the employed in the formal and informal sectors also identified significant differences in the regions in terms of this indicator. In most regions of the Russian Federation, the number of people employed in both sectors does not exceed 10 thousand people (57 %), including in 26 subjects – 5 thousand people. A high number of people employed not only in the formal, but also in the informal sector have developed in 13 regions. According to this indicator, the Republic of Tatarstan is the leader, where the number of such employed reached 59.9 thousand people. More than 30 thousand people employed in the formal and informal sectors is observed in the Moscow region, Krasnodar and Altai regions. In Moscow 97.9 % of the employed in the informal and formal sectors have an additional work in the informal sector.

Conclusion

The conducted research has revealed an increase in the scale of informal employment of population of the Russian Federation over the past 10 years, which is caused by the reduction of small business and the entrepreneurs switch to the individual enterprises or self-employed.

The highest growth rates in the number of people employed in the informal sector were observed in the 65–69 age group – 97.66 %. The reverse all–Russian trend is the dynamics of the number of employed in the informal sector at the age of 15 and 24 y.o. An average age of people employed in the informal sector in 2010–2019 increased from 39 to 40.4 y.o. The share of informal employment among men is higher than that among women. In general, the degree of involvement in the informal sector in Russia increased from 16.4 to 20.6 %. In the structure of informal employment by the type of economic activity, the largest share falls to the employed in the sphere of wholesale and retail trade, repair of motor vehicles and motorcycles. The regional aspect of the development of informal employment showed significant differences.

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