NCFU expert spoke about the impact of informal employment on wages

Associate Professor of the Department of State, Municipal Management and Labor Economics of the Institute of Economics and Management of the NCFU Evgenia Krivokora spoke about how informal employment in the North Caucasus affects the level of wages in the regions.

She noted that the North Caucasus Federal District has always differed from other subjects of the Russian Federation with a high level of “gray” employment. In Ingushetia, for example, its share is approaching 70%.

Illegal employment schemes are particularly prevalent among women and young people and have a serious impact on the labour market, directly affecting wages.

Most often, they resort to small businesses, which are the most vulnerable in difficult economic conditions. For its sustainable development, it is necessary to legalize employment and create the necessary conditions.

In the shadow economy, taxes are not paid on the income of individuals, social payments to employees, so the real wages of the population in the region will be higher than is reflected in official data of Rosstat. Additional pressure on the labor market is exerted by the transfer of personnel to the illegal sector, where higher incomes are offered compared to the legal sector, which, because of this, has reduced opportunities to increase official salaries, the expert notes.

The growth of informal employment in the region's economy reflects the deterioration of its socio-economic situation. Despite the employment situation, informal employment makes people socially vulnerable. They cannot count on insurance payments, sick leave, pension contributions and the observance of their labor rights.

To reduce the “gray” employment helps work on the legalization of small business. Thus, in Kabardino-Balkaria, its decline is observed, which is primarily due to the active development of platform employment of the population and the corresponding registration.