Informal Employment in SCO Countries: Realities and Prospects

Abstract

Introduction "The Shanghai process" has started since 1960s due to the essentially changing international relations, the need to solve the issue about the Soviet and Chinese boundary and the allocation of spheres of influence in the Central Asian region. Many years' cooperation in this area resulted in the foundation in 2001 of the regional international organization with six permanent members--Russia, China, Kazakhstan, Kirgizia, Tadzhikistan and Uzbekistan. This agreement was called the Shanghai Cooperation Organization (SCO). Now its importance and sphere of influence in the Asian region is expanding. It resulted in India and Pakistan entering the organization in the middle of 2015. In spite of the fact that this grouping is considered mainly as a political union, nevertheless, each of its members pursues its own trading and economic interests from cooperating within the SCO. Russia and China try not to allow the USA to enter the region under consideration in order to preserve the Central Asia within their influence, both political and economic. In their turn, Central Asian republics that considerably lag behind their partners are interested in obtaining trading and economic privileges, financial and technological assistance. However, all together the SCO countries make up an economically colossal grouping that has a lot of promising investment and innovational areas of developing (Maytdinova, 2013). Method and Methodology Works of foreign and national researchers on issues related to the international economic integration, specialists on integration of Russia, Central Asian countries and China, and documents and decisions taken in the SCO made up the theoretical and methodological basis of the research. The methodological basis of the research is the dialectic method, comparative and functional, and system approaches to considering integration processes in the SCO, country analysis of the trading and economic cooperation of the organization countries. When writing the work, the information was collected and processed statistically and economically. The tasks set in the work were solved based on applying general research methods within the structural and functional, and comparative analysis, as well as analysis and synthesis, analogous and comparison, and method of economic and statistical groupings. Results Russia and China are the countries that have considerable reserves of almost all known mineral resources. Large reserves of fuel and energy raw materials are concentrated in Kazakhstan and Uzbekistan. A lot of labor resources are found in all SCO countries excluding Russia. China has a developed chain of supplies in many areas of the processing industry. Russia is characterized by a strategically advantageous geopolitical location. Subject to all above advantages in this region, there are a number of factors that restrain the development within the SCO. One of them is an informal sector of economy that is considerable by its volumes and continues growing (Loayza, 2011; Medvedeva, Komarova and Kozenko, 2015). The inter-country analysis of the share of informal sector of economy from the GDP shows that it has been developed most of all in China, then in Tadzhikistan. In Kazakhstan, Kirgizia and Uzbekistan informal economy is almost on the same level, within 42%. In Russia the situation is better as compared to other SCO members. However, the 30% value of this indicator is extremely high according to the global community (Zhusupova, 2013). In its turn a wide spread of informal economy causes the countrywide use of informal labor practices and contributes to informal employment in the region (Davydenko, 2005). The lowest number of informally employed citizens is in Kazakhstan (32.8%), and (in the ascending order of this indicator) in Uzbekistan (40%), Russia (42%), and Tadzhikistan (47.5%). In China (67%) and Kirgizia (76%) the share of informally employed people considerably surpasses half of all economically active population of the country (Sayakvaev and Mokrousova, 2014; Hushkadamova, 2013; Faizova, Kozhevnikova, Kashipova, Zinurova and Egorova, 2015). …