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Russia’s shadow labor market grows 5% amid crisis — vice-premier

April 07, 2015, 18:24 UTC+3 MOSCOW

The vice-premier said the volume of the so-called "grey wages" had been observed to decline in 2013-2014

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Olga Golodets

Olga Golodets

© Stanislav Krasilnikov/TASS

MOSCOW, April 7. /TASS/. Russia’s shadow labor sector has grown by 5% from last year amid negative developments in the Russian economy, Deputy Prime Minister Olga Golodets said on Tuesday.

"We now estimate this growth at about 5% compared with shadow employment observed last year," Golodets told journalists.

"That is, we see an increase in part-time employment and we see that these people are not joining the jobless category. They are working somewhere, i.e. they are moving into the shadow sector," Golodets said.

Golodets said earlier on Tuesday at the international conference entitled: "Modernization of the Economy and Society" that Russia’s shadow labor sector had started to grow again at the start of the year.

The vice-premier said the volume of the so-called "grey wages" had been observed to decline in 2013-2014 while the share of the workforce employed in the "normal, transparent space" had grown during that period.

"But in the first months of this year we can again see a growth of the shadow sector, which is related to the crisis developments I’m speaking about," she said.

"In this area, we need to work jointly and come to agreement that after all our trends and our common strategic positions on how we perceive the workforce, wages and pension provision should not change," the vice-premier said.

This approach will help Russia switch to "a new structure and a new quality of employment," Golodets said.

Federal Labor and Employment Service (Rostrud) Deputy Head Mikhail Ivankov said in late March that about 11% of Russians were receiving "envelope wages" without officially registering their employment or making any deductions to the Pension Fund.

"In our estimates, about 11% of people fully receive their wages in envelopes today, i.e. they work without officially registering their employment," Ivankov said.

"About another 15-16% are people who are registered as employed but receive some part of their wages officially and the remaining part illegally," the labor official said.

Frequently, employers that breach the labor legislation and pay wages in envelopes without the need to make any social security tax payments gain competitive advantages on the labor market, the official said.

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