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N.R. Gural, Postgraduate student
Lviv Commercial Academy, Ukraine
Labor potential of domestic enterprises in conditions of informal sector of trade
The
sphere of trade is one of the leading types of economic activity, which is
growing to larger and larger scale, becoming a powerful source for creation of
working places and increasing the population employment rate. In present
conditions of domestic economy development in the field of trade there is
observed a trend for increase of unprotected types of employment, which slow down the
processes of efficient usage of its available labor potential, as far as they
are not covered (partly or completely) by active normative-legal acts. Those
are just that unregistered subjects and half-legal objects of trade, which are
taken to informal sector of trade.
The
problem of informal employment is being recently by-passed by attention of mass
media, politicians and governmental officers. It looks like majority agreed
with the fact of its existence, and all the responsibility was transferred to
the taxation system and hard load upon the labor payment fund, while that leads to
“shadowing” of economy. In general, there are a lot of solid theoretical
investigations of shadow sector of economy, both in foreign and domestic
economic and periodic literature.
In Ukraine the problems of employment in the informal sector of economy were investigated by the following scientists: À. Balanda, S. Bandur, Z. Varnaliy, Î. Vlasyk, S. Kovalenko, ². Kravchenko, Å. Lianova, V. Mandybura, ². Petrova, V. Onikienko, Î. Turchynov, Ì. Shalenko et. al. The foreign scientists have also worked out the corresponding methods for investigation of shadowing economic processes, as well as financial machinery for illegalization of world economy, especially in the works of J. Grossman, G. Kolodko, Yu. Latov,
E. Feig, D. Kassel et. al.
Still, the conditions of functioning of labor potential in
informal sector of trade remain insufficiently investigated and require more
detailed studying and analysis.
Informal sector of trade presents a specific field of activity within the frame of national economy – for both legal and natural persons, whose activity is directed to getting incomes from legal or illegal types of economic activity (in money or natural form), which they try to hide from accounting by official authorities. Depending upon specificity of manifestation of economical development stage of state it may be neutral, positive or negative relative to society [1].
Quantity of employed in the informal sector of Ukrainian economy in the 1st half-year of 2011 comparatively to the corresponding period of the previous year increased by 41.1 thousand persons and formed 4.6 thousand persons or 22.6% from the total quantity
of employed population aged 15 to 70, while that witnesses about the growth of fraction of
persons employed in the informal sector of economy.
As per
estimate of International Labor Organization, World Bank and different
sociologic services, the rate of illegal employment in Ukraine forms from 2 to
4.7 million persons. Actually, this is from 14 to 33 percent of the officially
employed. And this entire people do not by-pass possibility to get social
guarantees today, but in the future they will be getting miserable pension [2].
The informal sector of Ukrainian economy is the largest one among the CIS countries and
countries of the former socialist camp. Austrian economist Snider, who has been
investigating informal economy in the world for more than 30 years, point out
that in Ukraine its fraction forms 56%.
It
shall be remarked that increase of fraction of employed in the informal sector
of trade may facilitate the increase of small-scale enterprises quantity. That
is because regarding the branch structure of small-scale enterprises in Ukraine
there distinctly appears an orientation towards trading-intermediary activity. Thus,
among all retail trade enterprises there predominate enterprises, where the
employees’ quantity does not exceed 10 persons. According to the data of
Ukrainian State Committee on Statistics, in 2010 the fraction of small-scale
enterprises in the field of trade in Ukraine constituted 95% (94.9% in retail trade) from the total
quantity of enterprises; fraction of turnover of the sold products of
small-scale enterprises relative to the total rate of sales constitutes 14.2%, while the quantity
of employed staff on such enterprises constituted about 2.1 million persons.
Sector of small-scale entrepreneurship in the foreign countries with developed market economy is one of the most important ones and provides about 70% of working places and 50-65% of production of
gross national product. Thus, in the USA in small-scale enterprises there work 54% of the entire
population, in Italy– 73%, in Japan – 78%. These are countries with stable economic development, stable-high living standards of population, significant part of which forms its living standards owing to functioning of right that small-scale business and thanks to their participation in it [3].
Unfortunately, in our country the quantity of employed staff in small-scale enterprises often is followed by absence of social guarantees, unsatisfactory working conditions and deprivation from concluding labor agreements, and as a consequence –
informal employment. Especially it concerns those ones employed on
marketplaces, kiosks and trays. We shall remark that doubtless problem of such
small-scale enterprises is high personnel fluidity and predominantly low rate
of employees’ qualification.
In the
field of retail trade their stable positions retain the marketplaces. By the 1st
of January 2011 the quantity of marketplaces constitutes 2758. Marketplaces created more
than 886 thousand of trade
places. (This is certainly without taking into account non-legalized working
places). And it is just on the marketplaces, where there is observed the
improper formalization of employees on the part of employers and low
responsibility of employees (a person receives unemployment aid and
simultaneously works illegally), and such situation is quite widespread
phenomenon in Ukraine.
Regardless
from a number of negative consequences of informal sector of trade development,
there shall be also mentioned a positive influence of employment in this field
of economy. That is because in our country still in process are discussions
regarding positive and negative features of informal employment. Especially
rather often representatives of executive authorities make emphasis on positive
features of informal employment, which facilitates resolving problems of
employment and earnings of population, broadening of market for goods and
services and creating basis for development of small-scale business.
Still
it shall be remarked that informal sector of economy is unable to provide for
the efficient usage of the available labor potential, because employees are
completely excluded from system of state social insurance and norms of labor
legislation. Prolonged employment in the informal sector leads to loss of
professional-qualification habits of a person, decrease of its material and
cultural level, i. e. to gradual ruination of labor potential.
References:
1.
N. Yu.
Muschynska, Some theoretical aspects of economy shadowing problem / N.
Muschynska // Municipal economy of the cities: Scientific-technical proceedings.
V 61. – Kharkiv: Technika, 2005.-P.258-262.
2.
Undeclared
employment: Ukrainian realities. Society and social policy. [Electronic resource]
// SSP ¹8/2011. – Excess mode: http:ukrsocium.com
3.
V.
Bykovets, Influence of public amalgamations of entrepreneurs upon the formation
and development of small- and middle-scale business in Ukraine: regional aspect
/ Viacheslav Bykovets // Analytical Center Academy. December 04, 2011. – Excess
mode: http:academia.org.ua
4.
R. Noiwirt,
Shadow economy – hope of capitalism / Robert Noiwirt // Foreign policy,
21.11.11. – Excess mode: http://texty.org.ua