Growing informal employment in Russiaraises concerns about fiscal sustainability, productivity,and social protection. Cutting through various data anddefinitions, this report finds one consistent outcome:informal employment is on the rise. As of 2016, Russia’sinformal employment was estimated to range between 15.1 and21.2 percent. The fiscal loss of underpayment by informalworkers is estimated at between 1 to 2.3 percent of GDP.However, Russia’s share of informal employment is not thathigh when compared to other middle-income countries. Infact, countries such as Kazakhstan and Turkey, who have asimilar GDP per capita as Russia, exhibit higher informalemployment rates – 30 and 33 percent, respectively. Informalemployment is a pervasive phenomenon in Russian labormarkets, and its growth cannot be solely attributed tochanges in the sectoral or demographic composition of thelabor force. Rather, informality appears to have beengrowing across all sectors and particularly among workerswithout at least some tertiary education. Migrants tend tobe more informal: the 2016 share of informal migrant workers(only partially captured in the surveys) was 26.2 percent,versus 15.7 percent of Russian workers. The increase ininformality is attributed mainly to the lack of formal jobcreation, which in recent years, was close to zero. Thereport focuses on three aspects that affect informality:labor market regulations; taxes and benefits; and labor mobility.
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