Digital platforms will help bring the labor market out of the shadow: Gaidar Institute study

Over the past five years, the number of participants in the hidden leased labor market (employees who actually perform labor duties under the guise of temporary or occasional employment with the mandatory involvement of an intermediary) has decreased by almost a quarter, from 17.9 mn people in 2020 to 13.9 mn at present. However, despite this, the market volume (the sum of all money earned through hidden contingent labor) has grown one and a half times over the same period, reaching an estimated Rb 11.4 trillion in 2025.

The authors of the study believe that the development of digital employment platforms can significantly contribute to bringing the employed out of the shadows. This is due to the easy entry threshold to the platform, simple connection mechanism and flexible employment schedules that allow combining such activities with the main job or cooperating with several DEPs.

Gaidar Institute experts note that digital platforms, having access to algorithmic solutions and IT technologies, can effectively legalize the self-employment regime by suppressing the practice of concealing labor relations. It is also emphasized that the authorities have begun to pay increased attention to the fight against shadow employment, publishing registers of employers who evade registration of labor contracts and developing action plans to counter illegal employment.

According to experts' projections, if the current trend towards reduction of those employed in hidden leased labor continues, their number may decrease by another 20% in the next five years. This shows the significant potential of digital platforms in legalizing the labor market. The Organization for Economic Cooperation and Development and the World Labor Organization also note that platform employment has a great potential for legalization of labor if performers register as self-employed and are part of the formal sector.