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More than third of Russians involved in shadow economy

August 18, 2014, 15:42 UTC+3 Alexandrova Lyudmila
Police sweep of a street market in Russia

Police sweep of a street market in Russia

©  ITAR-TASS/Artyom Korotayev

MOSCOW, August 18. /ITAR-TASS/. More than a third of Russians are linked to the shadow economy to some degree, according to experts. The share of those who work with no labor contract, getting get paid “in an envelope” and evading taxes, is increasing.

According to research by a center of the Russian Presidential Academy of National Economy and Public Administration (RANEPA), about one in nine Russians (11.9%) was employed only in the shadow labor market last year. Forty-one percent of the population, or about 30 million of economically active Russians, use shadow employment schemes.

Deputy Prime Minister Olga Golodets estimated the shadow sector of Russia's economy at 20 million people a year ago. Those employed in the shadow sector fell into several categories, one of the study’s authors, senior research fellow at RANEPA social and political monitoring center Andrei Pokida told ITAR-TASS.

“These are firstly people whose employment is not at all connected to the state - 11.9% of the employable population against 8.6% 10 years ago. Then, those who do not register their side job. Finally, people who get an envelope salary, and unregistered entrepreneurs,” he said.

According to the poll, almost 36% of respondents combined main work with regular or occasional grey income.

“Envelope” payments are quite widespread, even in the official employment. Last year, the share increased by 4.4% as compared to 2006; the percentage of occasional grey payments increased by 5.6%.

An even greater portion of the population consumes shadow services. Over one month of 2013 alone, 52% of respondents paid for services provided unofficially. According to the sociologists, a Russian family pays for such services an average of 3,130.9 rubles, or about $90, a month.

Society is increasingly tolerant of shadow economic activities, said Pokida. In 2001, 2.1% believed the shadow economy was rather useful than harmful, and the share had now increased to 10.5%, the expert said.

A total of 42.1% does not think it is unacceptable when business evades taxes, whereas 45.6% have a positive attitude towards people who provide construction, repair and other services without declaring their work.

“Unless the government takes measures, the shadow sector will only expand,” said the expert. What was done was insufficient, while bans alone would not defeat the shadow economy, Pokida added. One of the urgent measures, he said, was a stable business climate. As the legislative framework for business changed year-on-year, entrepreneurs did not know what to expect in the future.

 

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