WPC& v`i@DI$'klHc6Ğ㎂3ct*3ʙxX{qasHZBdO3iS /¬g-@<61sxxGCW(g-"kD>tEEҗIQ=9 U3 0:_2!f`M}/()6-+z8}Db_RY+8/2# =RBYYA7f5(:Qp'"ki:__qq !;e{VO_69z)J"hQr= kPa! exeC'oޏct8EE7xg E4`k-G"!Fݡ',yۨaE'_vAuLyR+Uek\ӍXCVS?t%:(UN0 %~ 0*U><w@(4h|v  U>   0F YaU>8E} 0FgU> ffU> h % h0 B"a " 0_4" 0"a(%v<%U>&(9 Z 6Times New Roman RegularX(p$TRW 6&A43'6&A43'T+ }UKUS.,XaXXXBXXa    <( 9Z &Courier Regularg:\wpwin\template\logo\pp.wpt KLDMDNODPDQDRSETD@x"b"3|xT l $$+ UKUS.,XMXXX XXM    !  1  /  PreparedbyMr.A.Ponomarenko,RussianStateCommitteeon b Statistics(Goskomstat).GE.97M30278(E) |'+ UKUS.,XMXXX XXM    CES/AC.68/59  page  2    |(+ UKUS.,XMXXX XXM        3      ;      C   CES/AC.68/59      3      ;      C   page  2  <( 9Z &Courier Regular1112(3|$ p!TRW 6&A43'6&A43'T+ }UKUS.,XMXXX XXM     1497302789730278  ' "CES/AC.68/590scoper mbk . 8  <( 9Z &Courier RegularG:\WPWIN\TEMPLATE\DRAFT.WPT |'+ UKUS.,XMXXX XXM    CES/AC.68/59  page  2  (3|$ p!TRW 6&A43'6&A43'T+ }UKUS.,XMXXX XXM     <( 9Z &Courier Regular  |(+ UKUS.,XMXXX XXM        3      ;      C   CES/AC.68/59      3      ;      C   page  2  H<( 9Z &Courier Regular1$@(@,@Y@Y@Y@D@D@@@H@I@L@&@"@$@   Y@ Y@ Y@   F@ H@ E@  @ "@ $@F@E@G@&@"@$@TABLE AA6@@&@? @@G@$@O@?"@@   4@  "@ Y@   &@ Y@  4@,@E@@@@W@@ @@1@TABLE B dTABLE A(c$  0  /(O3$ p!TRW 6&A43'6&A43'T+ }UKUS.,XMXXX XXM       !  0  / TABLE B l $$+ UKUS.,'XMXXX' XXM    !  1  /  PreparedbyMr.A.Ponomarenko,RussianStateCommitteeon b Statistics(Goskomstat).GE.97M30278(E)<( 9Z &Courier Regular p!TRW 6&A43'6&A43'T+ }UKUS.,XMXXX XXM     ݛb} ++X  %  % dԼ  %  CES/AC.68/59%  4March1997  ENGLISH  Original:%  RUSSIAN%$++X*X++h$%  STATISTICALCOMMISSIONAND0#COMMISSIONOFTHEEUROPEAN X  ECONOMICCOMMISSIONFOREUROPE0#COMMUNITIES(EUROSTAT)   CONFERENCEOFEUROPEANSTATISTICIANS0#ORGANIZATIONFORECONOMIC H  0#COOPERATIONANDDEVELOPMENTJointECE/Eurostat/OECDMeetingonNationalAccounts N  (Paris,3M6June1997)(Item2oftheprovisionalagenda)@ pAPPLICATIONOFTHESNAINEVALUATINGHIDDENINCOMEOFHOUSEHOLDS@N N p(TransmittedbytheStateCommitteeforStatisticsofthe@$$ pRussianFederation)7 77&7 #c  1  /    ׈ D Introduction  Amongtheproblemsconnectedwiththeintroductionofthe1993SNA,Goskomstatiscurrentlydevotingconsiderableattentiontosuchissuesasthecompilationofsectoralaccountsandthetakingintoaccountofthe hidden !L" economy.Theseproblemsarerelatedbecausethecompilationofafullsetof t"# accountsforanyinstitutionalsectormakesitpossibletomodeltheflowoffunds,whichcanproveusefulinidentifyingtheweakestspotsintheinformationbaseand,wherenecessary,tousethebalancemethodinordertocalculatethemissingindicators.̛̜  j)", b}ќ7 7777 777  Russiaiscompilingsectoralaccounts: :stepbystep;;,usingtheinformationtohandandgraduallyextendingtheinformationbase.Accountsofthehouseholdssectorarethefirsttohavebeencompiled,anapproachwhichhasenabledusnotonlytocalculatethestandardindicatorsbutalsotodeterminethevolumeofhouseholds'hiddenincomeinRussia.̛  Indefiningthe hiddeneconomyconcept,peopleoftenspeakonlyof   hiddenproduction.Yetitwouldbemorecorrecttospeakalsoofhiddenincomeandofconsumptionfromunrecordedsources.Likehiddenproduction,hiddenincomeisnotnecessarilyillegal.Somehiddenincomemaybecompletelylegal,althoughmuchofitwill,ofcourse,beattributabletothedesiretoevadetaxation.  Wedonotlumptogethertheconceptsof hiddenand mixedincome.   Mixedincomerelatestoproductionactivitiesofunincorporatedenterprisesorhouseholdsandisanimportantindicatoroftheinformaleconomy.Itisconnectedwiththeassessmentofvalueaddedinthissectorandisdetermined,inaccordancewiththegeneralrecommendationofthe1993SNA,bydeductingcompensationofemployeesandtaxesonproductionfromthevalueaddedobtainedbytheproductionmethod.However,sincehiredlabourisrarelyusedintheinformalsectorandsincethetaxesonproductionareliabletobelow,mixedincomeisnumericallyclosetovalueadded.  Hiddenincomemaybeeithermixedincomeorhiddenwagesorsalaries.ManyentrepreneursinRussia,seekingtoevadetaxation,paytheiremployeesexclusivelyincashanddonotshowsuchpaymentsintheiraccounts.Inthefinancialsector,banksmayopenspecialaccountsfortheiremployeesandthenpayabnormallyhighinterestonthem;untilrecently,thisinterestwasnotsubjecttotax.Therearenodoubtothermethods,too,ofconcealingincome.Inourcalculationswehavenottriedtodeterminethesourcesofincomeorthemethodsofobtainingit.Ourobjectwastoidentifyincomewhich,forawidevarietyofreasons,cannotbetakenintoaccountdirectlyonthebasisoftraditionallyavailablesourcesofinformation.Itissuchincomethatwecall hidden. x!   Inaccordancewiththegeneralapproachofthe1993SNA,GDPisnotcalculatedbytheincomesmethod,i.e.themixedincomeandoperatingsurplusindicatorsareobtainedbybalancing.Therefore,ifthehiddenincomeindicatorisofreasonablesize(ifitdoesnotexceedtheoperatingsurplus),Ϝintroducingitwillnotaffectthemagnitude,butmaysubstantiallyalterthestructureofGDP,theshareofhouseholdincomeincreasingwhilethatoftheoperatingsurplusisreduced.  TherealsituationintheRussianeconomyis,unfortunately,suchthatitisdifficulttodenytheexistenceoftheproblemofhiddenincome.From themacroeconomicpointofview,manyresearchersnotethelowshareof '"- compensationofemployeesintheRussianGDP(about40%intheearly1990s);& 0  thisshareis,moreover,variableandcanbeevenlowerattimes.ThissituationimpliesthattheformaldataareincompleteandindirectlyconfirmstheexistenceoflargeMscalehiddencompensationofemployees.̜Accountingparticularities    Greatcareisgenerallytakentoconcealincomefromthestatistical'0jauthorities.Attemptstogatheradditionalinformationonit,e.g.byorganizingsupplementarysurveys,arethereforenotoriouslyineffective.Theonlyhopeofachievingsuccessinthisinstanceliesinusingindirectmethodsofcomputation,especiallythebalancemethod.̛̜  Inordertobeabletousethebalancemethodandtoarriveatanassessmentofhiddenincome,itisnecessarytohaveatone'sdisposalafullϜsetofbasicaccounts,includingafinancialaccount,ifonlyinthehouseholdssector.Thisworkwascarriedoutin1996.  Goskomstatdoesnot,forthepresent,compileorpublishafinancialaccount.Inmostcountriesthistaskisentrustedtothenationalbanksbecauseitistheywhoaretheprincipalholdersofinformationonfinancialassets.Inthecaseinpoint,however,anexperimentalcalculationofthemainindicatorsforthefinancialaccountofthe householdssectorwas  carriedoutinGoskomstatwithaviewtodeterminingtheindicatorofhiddencompensationofemployees.  Theindicatorsofthefinancialaccountforthe householdssectorin  Russiahaveanumberofspecificfeatures.BesidesthetraditionalindicatorsrecommendedbystandardinternationalnormsinaccordancewiththeSNA,suchasincreasesincash,bankdeposits,securitiesandforeignMcurrencyholdings,thefinancialaccountinRussiaincludesanindicatorcalled Increasein &4 indebtednessonwagesandsocialwelfarepayments.InRussia,theStateand  enterprisesowehouseholdshugesumsforbackwagesandpensions.Thisindebtednesshasbeengrowingforseveralyears,turningfromaneconomicproblemintoasocialone.  Fromthepointofviewofnationalaccounts,wageindebtednessrepresentsafinancialassetforhouseholdsandafinancialliabilityfortheothersectors(theStateorthecorporation).ButalltypesoftransferandofcompensationofemployeesintheSNAareshownonthebasisofaccruals,whereasactualhouseholdexpenditurescan,obviously,onlybemadefrommoneyactuallypaidout.Adifferencethereforeinevitablyarisesbetweenresourcesanduse,andthisdifferenceisexplainedbythepresenceofthecorrespondingentryinthefinancialaccount.  AnotherparticularityconcernsthedeterminationoftheindicatorforgrowthofforeignMcurrencyholdings.IntheconditionsobtaininginpresentMdayRussia,muchforeigncurrencyispurchasedbyhouseholdsnotfor thepurposeofsavingbuttosupplementtheworkingcapitalofunincorporated * %0 enterprisesoftheinformalsectorthatengageinforeigntrade,i.e.for&   shuttleimports.The increaseinforeigncurrencyindicator,whichis  calculatedasthedifferencebetweenthepurchaseandsaleofforeignϜcurrency,isthereforeadjustedbythenominalvalueof shuttleimportsand DR bynetpurchasesofgoodsandservicesabroadbyRussianresidents.ThesedataareincludedinRussia'sbalanceofpayments.'"  Otherdatarelatingtochangesinthevalueoffinancialassets,includingincreasesinhouseholds'depositMaccountholdingsincommercialbanksandincash,areobtainedfromtheCentralBank.TheCentralBankreportdoesnot,ofcourse,breakdownthecashincreasebysectors.TheϜshareofhouseholdsisdeterminedbyGoskomstat.  Asaresult,itbecomespossibletocomparethetotaldisposableincomeofhouseholdswiththeactualuseofthatincome.Goskomstatmadesuchcalculationsforthefirsttimein1996,usingdatafor1993,1994and1995.Preliminaryresultsareavailablefor1996.Aswastobeexpected,householdsinRussiaspend,allowingforthegrowthinsavings,farmorethanwouldseempossiblefromthelevelsoftheirofficiallyrecordedwagesandotherincome,includingmixedincome.Insomeyears,thedifferencebetweenrecordedincomeandtheexpendituresofhouseholdsamountedto12M13%ofGDP.Thereiseveryreasontobelievethataconsiderablepartofthisdifferencecanbeexplainedbytheexistenceofhiddenwages.Thefigurecannot,ofcourse,beabsolutelyprecisebecauseeachofthebasicindicatorstakenintoconsiderationinbalancingiscalculatedwithacertainmarginoferror.Forthisreason,itisnotenoughtousethebalancemethodalonewhendeterminingtheactualmagnitudeofhiddenwages.Theresultmust,aboveall,lookreasonableandbereadilycomparablewithotherindicatorsintermsbothofcurrentpricesandofgrowthhistory.  Adecisiononthedefinitivemagnitudeofthehiddenincomeindicatorwastakenaftersimultaneouscalculationofthebasicaccountsincurrentandcomparableprices.AccountwasalsotakenofthechangingstructureofGDP.Asaresult,householdincomeandexpenditureswerebalancedwithastatisticaldivergenceof3M3.5%ofGDP.Thedivergenceintherateofchangeinactualincomeandactualexpendituresamountedto1.5M2percentagepointsindifferentyears.̛Resultsobtained V"d&   TheadjustmentforhiddencompensationofemployeesprovedsosignificantatthemacroeconomiclevelthatitnotonlyshowedupinthenominalamountandgrowthofincomeassuchbutalsosubstantiallyalteredthestructureofGDPintermsofsourcesofincome.̛̜  '"- Л*w!"Zddd Xdd Xdd X+#+#w,dd ,dd",dd",dd"+      Vd (%)  Vd  D: $@1993$@D1993 YO+ $@1993 $@ (@1994(@Y1994 YO+ (@1994 (@ ,@1995,@Y1995 :0+ ,@1995 ,@ : &  &Beforeadjustment    Grossdomesticproduct 6, d r  Y@100Y@6100 WM*d r  Y@100 Y@ Y@100Y@W100 WM*d r  Y@100 Y@ Y@100Y@W100 9/*d r  Y@100 Y@ 9Including: %   % %  % %  % %  %  Compensationofemployees E; &  D@40D@EЀ40 e[6 &  D@40 D@  D@40D@eЀ40 e[6 &  D@40 D@  @@33@@eЀ33 E;6 &  @@33 @@ E   n ofwhichhidden 9/r  # 9Ѐ0 MC*r  #  # MЀ0 MC*r  #  # MЀ0 9/*r  #  90   0Grossoperatingsurplus,includingmixedincome OE    H@49H@OЀ49 e[6   H@49 H@  I@51I@eЀ51 e[6   I@51 I@  L@57L@eЀ57 L!;6   L@57 L@ L0  Nettaxesonproductionandimports OE  !  &@11&@OЀ11 i!Z6   &@11 &@  "@9"@iЀ9 dZ5   "@9 "@!  $@10$@dЀ10 E;6 !  $@10 $@ E )!FT " )Afteradjustment (FT #! (Grossdomesticproduct C9$ Y@100Y@C100 WM*% Y@100 Y@ Y@100Y@W100 WM*& Y@100 Y@ Y@100Y@W100 9/*' Y@100 Y@ 9Including: %( % %) % %* % %+ %  Compensationofemployees E;Tb,  F@45F@EЀ45 e[6Tb-  F@45 F@  H@49H@eЀ49 e[6Tb.  H@49 H@  E@43E@eЀ43 E;6Tb/  E@43 E@ E   n ofwhichhidden D:0  @5@DЀ5 cY51  @5 @  "@9"@cЀ9 dZ52  "@9 "@  $@10$@dЀ10 E;63  $@10 $@ E0  Grossoperatingsurplus,includingmixedincome OE 5  F@44F@OЀ44 e[66  F@44 F@  E@42E@eЀ42 e[67  E@42 E@  G@47G@eЀ47 E;68  G@47 G@ E0  Nettaxesonproductionandimports OE (69  &@11&@OЀ11 dZ6(6:  &@11 &@  "@9"@dЀ9 dZ5(6;  "@9 "@  $@10$@dЀ10F<:(6<  $@10  $@ F  Whenhiddenwagesaretakenintoaccount,thetotalshareofemployeecompensationinthe1995GDPis10pointshigherthanwhentheyarenot.ThisbringsthestructureofRussia'sGDPconsiderablyclosertothatofmostothercountriesandbysodoingincreasesitsverisimilitudeandrationalityforpurposesofeconomicanalysis.  In1993,theamountofhiddencompensationofemployeeswasrelativelysmall,about5<<%ofGDP.Thereafter,however,theprocessofformationofhiddencompensationcontinuedtodevelopstronglysothatin1994thelevelinrealtermsincreasedbyafactorofalmost1.5,tonearly9==%ofGDP.In1995theshareofhiddencompensationcontinuedtogrow(albeitmoreslowly)andexceeded10>>%ofGDP.Accordingtopreliminaryestimates,theshareofhiddencompensationin1996wasoftheorderof11??%ofGDP.  @  @Meanwhile,officiallyrecordedcompensationofemployeesmovedintheoppositedirection.Itsreallevelfellby9AA%in1994andbyasmuchas28BB9percent99%9in1995.Thereallevelofsecondaryincome(pensions,scholarships,etc.)fellstillmorerapidly.Asaresult,thesharesbothofofficialwages,includingsocialcontributions,andofsecondaryincomeinGDPdiminished.  \,j'Q   Totalprimaryincomeofhouseholds(includinghiddenincome)diminished moreslowlyin1994thanGDP(2CC%asagainst13DD%),whereasin1995thereversewastrue(14FF%asagainst4EE%).ThismaybeconnectedtosomeextentwiththeratesofinflationinthoseyearsandwiththemethodsusedtofightinflationinRussia.Duringthesameperiod,theratesofdeclineinsecondaryincomeremainedpracticallyunchanged(12G%GHpercentHin1994and11I%IJpercentJin1995).  Thechangesintheincomeofhouseholdswereparalleledbychangesintheirexpenditure.In1994,compensationofemployeesremainedpracticallystabledespiteamarkedreductioninGDPasawhole.Actualpurchasesofgoodsandservicesbyhouseholdsalsoremainedalmostatthe1993level.Inthefollowingyear(1995),actualcompensationofemployeesfellheavily,asdidincomesingeneral.Actualexpenditurewasalsoreduced.However,thestructureoftheexpenditureunderwentasubstantialchange,theshareofsavingdiminishingbyonehalf(from12.7K%KLpercentLofGDPto6.6MpercentMN%N).Theaccumulationoffinancialassetsfellparticularlysharply,OOfrom12PP%ofGDPto5.7QQ%.Ontheotherhand,theshareofspendingonthepurchaseofgoodsandservicesremainedpracticallyunchanged.Theseempiricaldataprovethatareductioninincomeleadsinthefirstinstancetoareductioninaccumulationexpenditure,thelevelofconsumptionbeingmaintainedasfaraspossible.SuchbehaviouronthepartofthemajorityofhouseholdsisentirelyconsistentwiththepostulatesofeconomictheoryforthecurrentsocialandeconomicsituationinRussia.S SParametersoftheR RhiddeneconomyinRussia    GoskomstatusesthreeapproachestodetermineGDP:byproduction,bysourcesofincomeandbyexpenditureorientations.Theinfluenceofthehiddensector,andespeciallyoftheinformalpartoftheeconomy,istakenintoaccountinallcalculationsofGDP.Theprincipalfeaturesoftheadjustmentsfortheinformalandhiddensectorsarelistedbelow.TT@TT pAdjustmentstoGDPrelatingtothehiddenandinformaleconomy   *!%dZddd dd"dd"dd"!"+#+#,dd ,dd`,bdd`,: dd +  %! >L" % 4!!!!#! 4AdjustmentasapercentageofGDP ;!*.!<&"!!! ;Adjustmentasapercentageoftheindicator ;!*.!<)"! ;Contentsoftheindicator =3$h v+"  ! =GDPcalculatedbytheproductionmethod !"," !TOTAL >4 #-  6@226@>22 G=2#.U  6@22 6@ GЈ #/U   #0 Industry =3 <%J 1  @4@=4 f\1<%J 2U  @4 @  &@11&@f11 >42<%J 3U  &@11 &@ >AdjustmentforhiddenownMaccountproduction ! &!6 Construction MC"(0#7!  ?1?M1 uk>"(0#8U  ?1 ?   @8 @u8 MC>"(0#9U   @8  @ MAdjustmentforunrecordedunitsandfortheconstructionofsummercottagesandgarages %:+H&> %Agriculture MC<d  @4@M4 vl><dU  @4 @  G@46G@v46 ND?<dU  G@46 G@ NOwnMaccountagricultural productionandadjustmentsforagriculturalenterprises % B  %Trade,includingforeigntrade ND(   $@10$@N10 wm?t  U  $@10 $@  O@63O@w63 ND?t 3  O@63 O@ NSalesongoodsmarketsandmixedmarkets;adjustmentforintermediariesinforeigntradetransactions "Rz  "Transportandcommunications =3 r   ?1?=1 e[1 U  ?1 ?  "@9"@e9 =31 3  "@9 "@ =Adjustmentsforunrecordedunits  r  Otherbranches MC   @2@M2 VL> U  @2 @ V... .$ 3 .Marketservicestothepopulation,realMestateoperations,housing,advertising,showbusiness,etc. /%# /GDPcalculatedbytheincomemethod !,$" !TOTAL >4 ^%  4@204@>20 G=2^&U  4@20 4@ GЈ ^'U  ! ^( Mixedincome M!@)!  "@9"@M9 w!j>*U  "@9 "@! Y@100Y@w100 O!B@+U Y@100 Y@! OIncomeofindividualentrepreneursandinformalenterprises %Dl.! %Hiddenincome ND/  &@11&@N11 xn?0U  &@11 &@ Y@100Y@x100 OE@1U Y@100 Y@ OHiddencompensationofemployeesandotherhiddenincomereceivedbyhouseholds /%"6 /GDPcalculatedbytheusemethod (!$87" (TOTAL R!Aj%8!  4@204@R20 [!J?j%9U  4@20 4@! [Ј 2!!j%:U! 2 %j%;! %Householdspendingonconsumergoods NDP(x >  ,@14,@N14 wm?&?U  ,@14 ,@  E@42E@w42 ND?&@U  E@42 E@ NAdjustmentforpurchasesongoodsmarketsandmixedmarkets %)>!D %Householdspendingonconsumerservices MC,$H  @3@M3 uk>p*"IU  @3 @  @3@u3 MC>p*"JU  @3 @ MAdjustmentforpracticalservicesineducation,publichealthandculture %,$N %Goodsandservicesreceivedinkind MC   @5@M5 vl><dU  @5 @  W@95W@v95 ND?<dU  W@95 W@ NServicesofownerMoccupieddwellings,consumptionofownagriculturalproduce %T |  %Grossfixedcapitalformation MC:b  @2@M2 uk> U  @2 @   @8 @u8 MC> U   @8  @ MAdjustmentforcompletenessofreportingoninvestmentsandforownMaccounthousingconstruction " "Imports    M4 G= U  1@171@G17 >42 U  1@17 1@ >Adjustmentforcompletenessofcoverage,includingshuttletrade 8`     Theparametersofthehiddeneconomydeterminedbyeachmethodaresimilarthoughnotidentical.Clearly,theyoughtnottobecompletelyidenticalbecausethefactofreceivinghiddenincomedoesnotmean,forexample,thatsuchincomewillbeusedforconsumptionfromhiddensources;however,thefactthattheindicatorscalculatedindependentlyfromoneanotherbythreeseparatemethodsaresimilarindicatesthegeneralcorrectnessoftheestimatesobtained.̜@++pMMMMM