The role of the informal sector, flexible working time and pay in the Russian labour market model

Abstract

Unlike most other transition economies in Europe, in Russia correlation between employment dynamics and GDP dynamics has been weak, contributing to a relatively low rate of unemployment. This article seeks to explain this phenomenon by investigating a combination of inefficient enforcement of labour regulations and the emergence of a vast informal sector of the labour market, leading to the unusually broad implementation of flexible working time and flexible pay, as a critical factor in the stabilisation of employment in the country.