Growing informal employment in Russia raises concerns about fiscal sustainability, productivity, and social protection. Cutting through various data and definitions, this report finds one consistent outcome: informal employment is on the rise. As of 2016, Russia's informal employment was estimated to range between 15.1 and 21.2 percent. The fiscal loss of underpayment by informal workers is estimated at between 1 to 2.3 percent of GDP. However, Russia's share of informal employment is not that high when compared to other middle-income countries. In fact, countries such as Kazakhstan and Turkey, who have a similar GDP per capita as Russia, exhibit higher informal employment rates - 30 and 33 percent, respectively. Informal employment is a pervasive phenomenon in Russian labor markets, and its growth cannot be solely attributed to changes in the sectoral or demographic composition of the labor force. Rather, informality appears to have been growing across all sectors and particularly among workers without at least some tertiary education. Migrants tend to be more informal: the 2016 share of informal migrant workers (only partially captured in the surveys) was 26.2 percent, versus 15.7 percent of Russian workers. The increase in informality is attributed mainly to the lack of formal job creation, which in recent years, was close to zero. The report focuses on three aspects that affect informality: labor market regulations
taxes and benefits
and labor mobility.