The expert gave forecasts on shadow employment: business ceases to play fair

Demand for freelance services will grow

In Russia, the share of people employed in the shadow sector remains quite high – about 20% of all employed in the country. Now it is about 13-14 million. At the same time, during a crisis, as a rule, the share of such a workforce begins to grow. Business under the pressure of circumstances ceases to play white, and people in a period of economic instability are more willing to agree to any work, including without a contract. However, the crises of recent years, both pandemic and current, on the contrary, reduce the number of informally employed, rather than increase them. Why is this happening and how will the situation develop next year? Anastasia Uskova, CEO of the Rocket Humans technology group, told MK about this.

– What is happening with the shadow sector of the economy now?

– By the end of summer 2022, the number of informally employed in the country has decreased by 10% compared to last year. Then the shadow labor market decreased by 1.5 million people, and the total number of people employed in the shadow sector amounted to approximately 18% of all employed in the country. At the same time, if we compare 2021 and 2020, a decrease is again recorded – 1.8 million people year on year. Then such a sharp reduction was associated with measures to support employment. Benefits motivated business to whitewash, and the number of those receiving envelope wages declined. Now, the contraction of the informal sector is a consequence of the general economic recession caused by socio-political factors, the outflow of foreign labor, and the growing popularity of hiring staff and self-employment.

– According to the results of the third quarter of 2022, the decline in the Russian economy accelerated to 5% in annual terms. Along with this, the labor market is also stagnating – companies are in no hurry to invest in hiring, businesses are reluctant to create jobs. Everyone prefers to take a wait-and-see attitude. How does the shadow sector of employment behave?

– He’s under pressure. In particular, due to the slowdown in the flow of foreign labor into the country. Traditionally, labor migrants were more willing to agree to work without a contract, and made up a significant part of all shadow workers, now the volatility of the national currency and difficulties with international bank transfers reduce the flow of labor migrants. In addition to this, the labor market as a whole is now experiencing a shortage of personnel due to the demographic pit of the 90s. So, from 2019 to 2030, according to the HSE, Russia will lose 1.9 million people from the labor force. The share of people under the age of 40 in the labor force will decrease from 42% to 37.4%. And if the number of available workers decreases in the real sector, the same thing happens in the shadow sector.

– How does the increasingly popular model of staff hiring affect shadow employment?

– It slows down the growth of the number of informally employed. Business, in order to increase its own mobility in flexibility, and as a reaction to the shortage of personnel, begins to cut competencies and give them away for the staff. At the same time, the opportunity to subscribe to services with the self-employed or individual entrepreneurs and at the same time reduce the taxable base by the amount of the cost of services, deprived the fees in the envelope of any meaning. It is legal now to work not only safely, but for many and profitable. Therefore, the number of companies cooperating with self-employed freelancers is growing, and the number of specialists receiving a salary in an envelope is falling. Thus, over this year the number of companies cooperating with the self-employed increased by 19% compared to last year and amounted to about 52%.

– And what awaits us beyond the crisis line? What will 2023 be like?

– Nothing will happen to the factors that are currently holding back the growth of shadow unemployment even after the crisis. Working conditions for the self-employed promise not to change until at least 2030. A business that has now appreciated both the operational and economic advantages of working with freelancers is unlikely to start reviewing current models and returning en masse to classic hiring, and the shortage of personnel, which will be felt more and more every year, will not allow them to do so. Therefore, the demand for freelance services will grow. In turn, the economy in 2023 will still feel the inertial pressure of the events of this year. The biggest decline, according to experts surveyed by Bloomberg, will occur in the first quarter of 2023, when Russia’s GDP will decline by 8%. On our side is the forecast of the Central Bank, which expects a bottom point in late summer or early autumn next year. That is, any factors that would make it possible to turn the trend towards economic growth, and, as a result. no employment yet.