Experts attribute the record growth in hiring under civil-law contracts to economic problems.

A new trend has emerged in the labor market: people are being hired much more frequently under civil contracts. According to Rosstat, there are currently approximately 2 million such workers—one and a half times more than a year ago. Experts estimate that this record-breaking increase is linked to the overall state of the economy. More specifically, it is linked to businesses' desire to minimize costs amid high wages, depleted payroll funds, and increasing tax burdens.

Moreover, freelancers have significantly fewer social security benefits; in particular, if someone takes sick leave, they receive no payment. The 28-day paid vacation per year stipulated by the Russian Labor Code is irrelevant to a civil-law contract. There is also no severance pay, since the very concept of "dismissal" does not apply to this type of employer-employee relationship. And so on.

According to Rosstat, the largest number of people employed under civil contracts this year were in the trade, financial, healthcare, and education sectors. Of course, the total number of freelancers at 2 million seems modest compared to the 33 million people currently employed by Russian organizations (excluding small and medium-sized businesses). But the issue isn't the absolute numbers, but the trend: this year, there has been a sharp increase in employment under civil contracts. By contrast, this segment is expected to decline by 2% in 2024.

As a reminder, under a civil law contract, the contractor undertakes to perform a specific job or provide a service, and the client undertakes to pay for the result. The document is concluded for a specific (usually short) term and does not constitute official employment. While an employment contract specifies the employee's working hours, a civil law contract does not: the employee is free to work at any time convenient for them (and from any location, even at home), since they are paid for the result, not the process.

For employers, a civil-law contract is more advantageous primarily for financial reasons: according to various estimates, such an employee can cost the company 30-50% less than a full-time employee. Furthermore, the contract is less time-consuming to formalize and doesn't require the extensive paperwork associated with a labor contract. Meanwhile, for certain categories of employees, the civil-law contract format offers clear advantages (such as the ability to plan their schedule and juggle tasks for multiple clients), such as students, young mothers, and retirees.

"I see this as a manifestation of hidden unemployment," says Alexey Zubets, director of the Center for Social Economic Research. "That is, companies can't keep people on full-time payroll, but they don't want to lay them off either. It's more a matter of transferring existing full-time employees to fixed-term civil-law contracts than attracting new staff. In this case, the job description changes (for example, a person doesn't need a dedicated workstation), which means wages are reduced."

The overall picture is clear: our industry is stagnating, and in the auto industry and metallurgical plants, a huge number of people are laid off. Management has neither the ability nor the need to pay them their full salaries. According to Zubets, the situation is not related to the labor shortage, which worsened in 2023, when the economy and manufacturing industries experienced rapid growth. If civil-law contracts had been signed more frequently two years ago, the logic of the situation would have been the same. But today, the issue is different – ​​the internal problems of many sectors, forcing businesses to cut wage bills.

"The economy is slowing, that's no secret," says Sergei Smirnov, a leading researcher at the Institute of Scientific Information on Social Sciences of the Russian Academy of Sciences. "A number of large companies are being forced to switch to a four-day workweek and reduce their administrative and managerial staff. Last year, the defense industry hadn't yet exhausted its growth potential, but today these industries are also stagnating. Transportation volumes are declining, and agricultural machinery production is decreasing... In other words, the external environment itself is creating the preconditions for cutting social obligations. If an employer needs to get rid of, excuse the word, an extra employee, it's easier to sign a fixed-term contract with them. Of course, a fixed-term contract may be necessary, but in a fundamentally different economic situation than today."

Moreover, Smirnov summarizes, overdue wage arrears in Russia at the end of September amounted to 1.95 billion rubles, an 18.6% increase from the previous month. According to official data, the amount of arrears has quadrupled since September of last year. The reason is well known: organizations' lack of internal funds.