The expansion of labour market informality poses several political challenges, which are all intrinsically intertwined. This chapter provides an overview of recent labour market trends and describes the institutional framework in Russia. It uses several different data sources to consider the evolution of informal employment and also investigates the main determinants of informality. The chapter looks at the issue of labour market segmentation by exploring mobility patterns and the consequences of informality on earnings. It discusses political challenges in relation to informality. There are many causes for informality. It is often regarded as a direct consequence of excessively rigid labour market institutions. The chapter explores mobility patterns using two complementary approaches. First, it examines transition matrices linking different labour market states to analyse the intensity and direction of labour market flows. Second, it estimates a multinomial logit model (MNL) model that controls simultaneously for past labour market states and demographic and job characteristics.