The informal sector of the Russian economy has broken an employment record in eight years

According to Finexpertiza, in the first quarter of this year, 14.4 million people worked in the informal sector in Russia, the highest number since the fourth quarter of 2021.

According to the official Rosstat methodology, informal sector workers include people who work individually for natural persons or work in a company without legal personality. This also includes the self-employed, sole proprietors and employees of sole proprietors. The activities of the informal sector of the economy are not identical to the parallel sector and are not associated with illegal sources of income or tax evasion; labor relations in it can be formalized.

Informal employment grew more strongly in the third quarter of 2024 compared to the same quarter of 2023 in Moscow (156%, or 678 thousand people), in Chukotka (108%, or 800 people), in Sevastopol (a 45%). or 23 thousand) and St. Petersburg (by 44%, or 104 thousand). In 2022, the highest percentage of informal employment by region was shown by Ingushetia, Kabardino-Balkaria and Dagestan (48-51% of total employment).

In 2023, the largest number of people worked informally in the trade and automobile repair sectors (almost 4 million). The second place was occupied by agriculture, forestry, hunting and fishing with 2 million workers. Also popular among informal employees are the transportation and warehousing sector (1.4 million people), as well as construction and manufacturing (1.3 million each).

Alexander Safonov, professor at the Financial University, told RBC that informal employment grows along with informal employment and hides part of the informal sector of the economy. According to the expert, due to high inflation and expensive loans, employers are forced to move some of their employees to self-employment and pay “crazy” salaries, trying to save on labor.