Up to 15 Million Russians Supported by Shadow Economy: Deputy Minister

Аbout 15 million Russian citizens are employed in the country’s shadow economy, Russian Deputy Prime Minister Tatyana Golikova has said, according to Komsomolskaya Pravda.

“According to the latest data, their number reached 15 million people,” the newspaper cited her as saying.

In addition, Golikova commented on the forecast that the number of those in the working-age population will decline by 2 million people by 2025. The prediction is not causing alarm in the government, she said.

The Deputy Prime Minister noted that “in fact, the number of employed persons” in Russia “is significantly smaller” than the working-age population. According to her, a decline in the working-age population can be compensated by removing informally working Russians “out of the shadow”.

Alexander Safonov from Russia’s Academy of Labour and Social Relations says that it is impossible to determine how many citizens are informally employed.

“No one will report on working without a labor contract. Therefore, Golikova only voiced the estimates based on interviewing people who agreed to provide information to Rosstat. Of these, some may not work at all, respectively, the real number of such citizens be more, or less. Only the census provides more accurate information,” he said.

According to the expert, the total potential amount associated with the loss of income tax payments, payment of contributions to the social fund system and all other funds can be up to 4 trillion rubles ($62) every year.

“But it should be understood that some people working in the shadow sector, forced to evade taxation – they earn too little to earn a living and pay taxes. And there is a very thin line here: if one makes wrong calculations, people who do not burden the state with an appeal to social employment services will turn out to be unemployed and ask the government for help,” Safonov pointed out.

Yuri Yudenkov, professor at the RANEPA Faculty of Finance, Money Circulation and Credit said that the problem of shadow employment is the problem of shadow business in the first place.

“People work, receive a backdoor salary and, unwittingly, find themselves in the shadow economy. They are not to blame for the fact that their employers do not pay social contributions for them. That is, they need to deal with the business that organizes such activities. I can assume that a small business in the whole country works on the edge of a gray business, this is true. But the figure of 15 million people voiced by Golikova, in my opinion, is noticeably overestimated,” Yudenkov said.