5. Meeting: Informal Sector and Informal Practices in Everyday Life - The Informal Sector in Russia - The Meaning of Blat in the Soviet and Post-Soviet.

5. Meeting:Informal Sector and Informal Practices in Everyday Life- The Informal Sector in Russia- The Meaning of Blat in the Soviet and Post-Soviet Period- Informal Networks in Russia

"Sociology of Everyday life. Lifestyles, образ жизни,

Theoretical Approaches and Empirical Findings in Russia."

The Informal Sector in Russia

• Rosser and al. (2000) show that the size of the informal economy is positively correlated with income inequality

• Foley (1997) and Kolev (1998) find evidence of higher wage rates in Russia of secondary jobs compared to wage rates of primary jobs

• Kim (2002) emphasizes that in Russia working in the informal sector or having more than one job is a way to get well-paid and to make additional money

c.f.: Beuran/Kalugina 2006: Social exclusion and the informal sector: the case of Russia

The Informal Sector in Russia

• Even though working in the informal sector presents some disadvantages (higher job insecurity, worse working conditions), informal activities provide individuals with an employment that enables them to fit their needs and increase their well-being

• Foley (1997) and Kolev (1998) notice that in Russia individuals participate in informal activities because of the higher incomes available in this sector despite the higher risk

• furthermore the informal sector provides more autonomy and flexibility for individual initiative and creativity than the formal sector (De Grazia, 1982; Renooy, 1990)

c.f.: Beuran/Kalugina 2006: Social exclusion and the informal sector: the case of Russia

• following Goskomstat (2004), shadow economy comprises no more than 25% of the GDP and informal sector employs around 17% of the labor force

• officials of the Ministry for Internal Affairs, executive agency responsible for tax enforcement, estimate the size of shadow economy by at least as much as 40% of the GDP

• Maslova and Baranenkova (2003) conclude that informal employment amounts to 25 million people, or about 30% of the labor force

• Schneider and Enste (2003) state even higher values of 35 million people (42% of labor force) in shadow employment

• according to Ryvkina (2001), at least half of Russian population is employed informally

• Eliseeva and Schirina (2003) state that in case of St.-Petersburg region, which officially comes very closely to the national average, shadow economy actually exceeds its official counterpart

c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages, Heriot-Watt University, Edinburgh , p.1

The Informal Sector in Russia

Set of survival strategies in the Informal Sector

• (1) having another job; • (2) using a dacha or other plot of land to grow

food; • (3) working as private taxi driver; • (4) renting out one’s apartment;• (5) business trips abroad (to purchase goods for

resale), and• (6) renting out one’s garage (Johnson, Kaufmann, Ustenko 1997:185-6)

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• worsening of formal employment conditions, reduction in real wages and quasi absence of social security

• during the first decade of transformation a lot of households with working age member fall into poverty

• "new” phenomenon of "working poor" has become wide-spread• facing negative economic conditions, Russian population has to change its

behaviour on the labour market: selfemployment, moonlighting and informal activities have become a reality for many individuals (Kim, 2002)

• since 1998 the number of persons working in the IS increased

The Informal Sector in Russia

c.f.: Beuran/Kalugina 2006: Social exclusion and the informal sector: the case of Russia

The structure of informal employment in Russia

• among all types of informal employment the major input — over 50% — comes from the employees of informal sector

• self-employed, multiple job holders and incompliant formal sector employees account respectively for 21, 13, and 15%

• c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages, Heriot-Watt University, Edinburgh, p.6

• age structure of informal employment by gender shows that the highest informal employment rates are observed among younger age groups

c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages, Heriot-Watt University, Edinburgh, p.7

The structure of informal employment in Russia

The structure of informal employment in Russia• Informal employment on average provides lower wage rates as well as

lower monthly wage amounts

c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages, Heriot-Watt University, Edinburgh, p.8

The structure of informal employment in Russia• the prevalence of formal employment — 90% — is observed in the

organizations owned by different levels of government• 50% of the employees of private sector are employed on informal basis• 10% of municipal and 8% of federal and regional employees work

informally

c.f. Merkuryeva, Irina (2006): Informal Employment in Russia: Combining Disadvantages and Opportunities, Discussion Paper, CENTRE FOR ECONOMIC REFORM AND TRANSFORMATION, School of Management and Languages, Heriot-Watt University, Edinburgh, p.9