Informal Employment, Digitalization, and Economic Sustainability: Lessons from the COVID-19 Crisis

Abstract

The exacerbation of social problems during the pandemic is due not only to medical and psychological issue but also to the social factors such as the loss of work and sources of labor income. The hidden sector of the labor market is transformed during epidemics and pandemics, negatively affecting the economic sustainability and leadership in business and economics as a whole. This chapter is devoted to the analysis of the depth of the leading role of the informal employment on the structure of the Russian economy during the COVID-19 pandemic. The dynamics of the informal sector in total employment, the digitalization of the economy, the structure of income of the officially and unofficially employed, and the effectiveness of public spending on financing social policies were assessed and analyzed. This chapter presents the results of a study of the relationship between quarantine measures, shadow employment, the life quality, and well-being. The analysis concluded that social policy plays a leading role in reducing informal employment and, consequently, the strengthening of economic sustainability. Governmental policy measures identified in course of this research might help to stimulate the development of the formal labor market. The leading and most relevant policies appear to be the development of social programs, investing into the human capital and ICT, supporting the poor and families with children, and improving the life quality of vulnerable social groups.