In Russia, the portion of shadow employment, or work conducted without formal labor registrations, continues to shrink. A recent report by News, citing a study from the Russian Presidential Academy of Public Administration (RANEPA), outlines this trend. In the first half of 2023, roughly one in five Russian workers, about 21.9 percent, operated in the shadow economy, marking a decline of 2.1 percentage points from the previous year. The black labor market in the country shows signs of easing despite sanctions and ongoing economic challenges, according to the study. (RANEPA Researchers)
Experts point to several factors driving this improvement. A growing level of legal literacy among the population and a strong desire for stability appear to be nudging workers toward the protections and guarantees offered by formal employment. In addition, it is noted that the income tax rate of 13 percent is not perceived as a heavy burden by many earners today (Izvestia).
Nevertheless, 21.9 percent remains a high share of shadow employment for a large economy. Millions remain outside the formal economy, and their earnings do not flow into the state budget. The pattern is not uniform across the country and varies by region. In particular, younger workers aged 18 to 24 are more likely to be in the shadow sector, often due to limited work experience and the difficulty of securing official roles. There is also a sizable influx of visitors to major cities who participate in informal work, and the share of unregistered labor in private enterprises reaches 29 percent.
Industry experts expect a continued decline in shadow employment over the next several years, driven by a tightening labor market that pushes employers to present formal jobs with full social benefits. Companies are increasingly competing for skilled staff, offering competitive wages, stable schedules, and enhanced working conditions. Some firms also partner with self-employed individuals and small enterprises to reduce reliance on shadow wages, widening the move toward formalization across sectors.
Regional disparities remain significant. Izvestia reports that while the national share has fallen to 21.9 percent, the North Caucasus region still records a shadow employment rate around 38 percent. The uneven geography highlights how regional labor markets respond differently to macroeconomic pressures and policy changes. (Izvestia)
Policy developments continue to shape the landscape. In mid-August, the government announced plans to extend benefits to employees working in defense industry backbone enterprises, a move intended to strengthen job security and formal employment incentives within strategic sectors. Earlier, Russia implemented a single personal income tax model for remote workers, aligning tax treatment with evolving work arrangements and encouraging compliance among remote and gig workers. (Government Briefing)