THE SCALE OF EMPLOYMENT IN THE INFORMAL ECONOMY: MEASUREMENT PARADOXES

Abstract

The presence of a sufficient number of jobs in the formal sector of the economy helps to reduce the size of informal and shadow employment. Its measurement requires an assessment of the actual scale of informal employment considered by the world community in two complementary aspects, namely, employment in the informal sector and informal employment. The literature lacks a single methodological basis for measuring informal employment, and the domestic Russian approach is based on the 1993 methodology, which does not reflect modern trends. Thereby, the authors of this article pursue several goals: to argue the inconsistencies of officially reported data with the realities of the labor market, to identify the shortcomings of the characteristics applied to the sampling units of the informal sector, to assess the extent of informality in the segment of small and medium-sized enterprises (SMEs) based on the results of a sociological survey, and to formulate recommendations for improving the methodological basis for assessing employment in the informal sector. The study employs the adapted Putniņš-Sauka methodology, which allowed determining the Informal Economy Index and the boundaries of employment in the informal sector. The results obtained are of practical importance for conducting regional socio-demographic research. The study revealed inaccuracies in statistical data on employment in the informal sector of SMEs and characterized the factors affecting the degree of involvement of entrepreneurs in the informal economy regarded as a social phenomenon. It was established that in the absence of intensive restraining state interventions, on the one hand, and with the support of business and the provision of conditions for its development, on the other hand, the interest of entrepreneurs in shadow activities decreases. The authors note that it is impossible to completely eradicate informal employment and discuss the prospects of reducing its scale both from the standpoint of repressive interventions and the full implementation of preventive procedures introducing incentives within the social ecosystem of interaction.