GENERICO.ruEconomicsA shadow “army” of labor has been discovered in Russia: almost 10 million people

A shadow “army” of labor has been discovered in Russia: almost 10 million people

Economist Belyaev told how to put an end to salaries in envelopes

The Ministry of Labor estimated the number of Russians working in the shadows. At the end of last year, there were no more or less than 9.6 million people. In fact, every 7th citizen of working age receives a salary in an envelope. It is noteworthy that the department conducted such a large-scale study for the first time in modern Russia: previously there was no method for counting those who do not show their income.

Economist Belyaev told how to put an end to salaries in envelopes

But it turned out that everything ingenious is simple. The Ministry of Labor took the total number of non-working able-bodied population by age – from those insured under the compulsory medical insurance policy. Then from these millions we subtracted those who do not work for objective reasons – students, disabled people, officially registered unemployed and some other categories. The bottom line is that we got exactly those who, in theory, should be working, but for some reason are not listed anywhere, do not appear or appear. 

There were 9.6 million such irresponsible citizens last year. They, according to officials' suspicions, receive salaries in envelopes from employers and do not pay any taxes or contributions to social funds. At the same time, they safely use clinics and other social benefits on an equal basis with all other citizens. Meanwhile, according to researchers, due to shadow employment, GDP loses about 10% annually. 

How to bring these workers out of the “shadow”?

— It is good that the Ministry of Labor has finally paid attention to this phenomenon, — says Mikhail Belyaev, PhD in Economics and financial analyst. — I am ready to consider the data on 10 million to be close to the truth. Although earlier, enthusiastic scientists counted 15 and even 18 million people in the shadow economy. However, even 10 million for our 70-million labor market is a huge figure that causes colossal damage to the country's economy.

– Yes, many of us openly declare that they do not owe anything to the state and will not pay anything. They need to be reminded that the country’s border is guarded by border guards, doctors treat their parents in clinics, and teachers teach their children at school… These are all state employees, from whose maintenance the “gray zone” is eliminated by hook or by crook. At the same time, they also consider themselves the smartest, because they work for their own pocket.

– Every 7th able-bodied citizen is engaged in who knows what… There are some figures who do not see this as a particular problem, they say, people are still at work, engaged in the production of a product.  All this is baby talk. They produce goods that are not counted in GDP – gross domestic product. Which understates our macroscopic indicators.

Next, let’s take tax evasion. This is done by both individuals with their personal income tax and employers who do not submit information about salaries in an envelope to social funds and compulsory medical insurance. In simple terms, this is called theft of funds from the budget. Even if an individual did not pay a symbolic amount to the treasury. But multiply it by 10 million and you will see the scale of the losses.

In addition, against the backdrop of “gray” employment, shady offices and firms appear, such as “Horns and Hooves”, which cash out money that is unknown how they earned it. Thus, they create a breeding ground for corruption.

This is a real undermining of the economy – no matter how you look at it.

– We also have laws for this , and sanctions – both for employers who evade payment and for individuals. If these measures are not enough, let's take new, more severe ones. Let's say, paying a fine for tax arrears in the amount of 10 times…

We need to intensify the fight against companies that cash out their income. If there is no criminal article or any severe punishment in this regard, such measures need to be urgently introduced into laws. To begin with, it would be useful to ban advertising of law firms that advise on how to legally avoid paying taxes. This business is thriving in “skillful hands”… Without any persecution from the state, as if this is how it should be. 

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