The Informal Economy

Seasonal Work, Street Selling and Sex Work

Dominique Boels

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9783319431222
• eBook ISBN: 9783319431239
• Topic: Social Sciences
• Subtopic: Labour Economics
• Index: Social Sciences

This book examines the nature and regulation of the informal economy by means of a collective case study in a highly regulated Western country. The book, situated at the intersection of criminology and sociology, investigates the relation between formal, informal and criminal work in three urban and rural labour markets (seasonal work, street trade and sex work) alongside the impact of state policies on informality. Boels uncovers the differential position authorities take regarding these labour markets, notwithstanding the presence of informality and often vulnerable position of workers in each one of them. With a distinctive focus on informal workers, and through in-depth interviews, this study explores the life and work of informal workers, including their experiences with regulators, their motivations for working informally and their perceptions of state policy. In short, this book gives a voice to often ignored but crucial participants of the informal economy. The detailed discussion of the results and the links to theoretical frameworks will ensure this book is of particular interest to scholars of urban economics and governance, criminology, and sociology.

© The Author(s) 2016

Dominique BoelsThe Informal Economy10.1007/978-3-319-43123-9_1

Begin Abstract

1. Introduction

Dominique Boels¹

(1)

Faculty of Law, Ghent University, Ghent, Belgium

End Abstract

The informal economy has many faces, covering both visible and hidden types of activities. Visible informal activities range from immigrant beach or street selling in Italy (Bellinvia 2013; Nelken 2006) to garbage collecting in Brazil (Coletto 2010) to income-earning activities of street children in Africa (Hendriks et al. 2013). Home-based garment work (Carr and Chen 2002/1) and domestic work (Cox and Watt 2002) are but a few examples of more hidden types of informal work. The interchangeable use of different related terms—Kazemier (2004) and Williams (2014) identify over 40 different terms in English that are used in the literature, such as unofficial economy, unrecorded economy, hidden economy, unobserved economy or black economy—has further expanded the research scope on the informal economy (Feige 1990). But since when has research on the informal economy expanded?

The concept of the informal economy became a popular topic of study after the publication of Hart’s study on urban labour markets in Ghana in 1973 (Coletto 2010; Portes and Sassen-Koob 1987). This study gave rise to the development of a number of studies and theories on the informal economy, mainly starting from the situation in Third World or developing countries, assuming that informal economy sectors would not occur in developed ones (Sassen 1988). The basic assumption, initially, was that industrialisation automatically leads to formalisation of labour. Later on, however, academics started to pay attention to the role and content of the informal economy in industrialised countries or regions (Chen 2004; Coletto 2010; ILO 2002; Harding and Jenkins 1989), its interrelationships with immigration, the origins of ‘informalisation’ and the impact of the informal economy on the formal economy. According to Leonard (1998, 135), the world recession, the crisis of unemployment, shorter working hours and the rise in more precarious types of formal employment led to a flourishing interest in the informal economy from the 1970s onwards, as a panacea for the problems inherent in modern capitalist societies.

After more than four decades of research, the spectrum of the informal economy that is studied has only broadened in scope, perspective and outlook (Shapland and Ponsaers 2009). The nature of the phenomenon, however, remains very ambiguous. Economists, anthropologists, geographers, and sociologists have studied the topic from their own perspectives, focusing on different objects of study. Each of the disciplines involved have developed their own questions and have mounted research that has given rise to new ones. In addition, the informal economy has not only been studied by academia, but also by several governmental institutions and international organisations, often focused on policymaking. Throughout this book—which is situated at the intersection between criminology and sociology—some of the existing insights regarding the nature of the informal economy and its regulation have been explored and discussed. Based on a comparison of three original case studies, this book will not only confirm some previous findings and present new data, but, more importantly, it will also offer some arguments that could steer further research and inform policy decisions regarding the informal economy.

Comparative Analysis of Seasonal Work, Street Selling and Sex Work

Previous research on the informal economy has covered various topics and angles, but some important gaps still remain. This book addresses one of them by providing in-depth case-specific accounts of individuals’ motivations for engaging in informal economic activities and workers’ perceptions of the influence of specific policy stipulations on these motivations (Aden 2009; Haigner et al. 2013; Schneider 2011; Williams and Round 2010). The book offers a description and comparison of the main characteristics of informality in three labour markets (seasonal work, street selling, and sex work) and assesses the influence of the governmental policy applicable to labour in the three cases. A main distinctive and innovative element of the book is its focus on the perceptions of informal workers: through in-depth interviews with informal workers, it explores their life and work, including their experiences with regulators, their motivations for working informally¹ and their perceptions of state policy. Often, research on the informal economy has been more concerned with estimating its extent and significance than establishing the motives of the actors engaged in informal work and employment. Therefore, a focus on the participants in informal economic activities may tell us a great deal about the workings of the informal economy (Leonard 1998). Based on extensive empirical research, this study provides readers with a unique view of who the informal workers are and what choices they make regarding their work. By bringing together an original set of findings from three contexts (a collective case study), the book offers new insights into existing scholarship. Moreover, throughout the book, some arguments regarding the informal economy are developed and illustrated on the basis of the empirical material. In short, this book is aimed at offering new insights into the nature of the informal economy and its regulation via an in-depth study of three labour markets in a highly regulated Western European country, Belgium. Following Williams (2010), I recognise that a fuller understanding of the informal economy will only derive from a more socially, culturally and geographically embedded consideration of this sphere. One way of achieving this is by stepping away from generalised analyses and universal generalisations. In this book, this has been achieved by comparing three cases (labour markets) in detail, with sufficient attention being paid to their social and geographical domains.

The Nature of the Informal Economy

The nature of the informal economy covers several related topics such as its conceptualisation, the characteristics of the workers, the characteristics of informal activities and motivations to conduct informal work (Williams and Windebank 1998). Regarding the conceptualisation of the informal economy, the above-mentioned multidisciplinary approach has resulted in a multitude of definitions and interpretations, all depending on the viewpoint of the researcher.² However, most definitions refer to rules and regulations as a focus to differentiate the formal from the informal economy, thus implying that the informal economy only exists because of the formal economy (the official, institutional framework of economic activity). As a result, the boundaries between formal and informal economy are not fixed in time or space (Aden 2009; Ponsaers et al. 2008), implying a varying nature and extent of the informal economy (Shapland and Ponsaers 2009).

Nevertheless, as there is no universally accepted definition of the informal economy for academic purposes, the empirical work on which this book draws was steered by a working definition. Several arguments, which are outlined in the following chapter, support the use of a broad working definition of the informal economy. Thus, the informal economy was conceptualised at the outset of the study as the opposite or the reverse of the formal economy (ILO 2002, 11; Ponsaers et al. 2008, 645), comprising all economic activities that are not officially regulated, enforced and registered by the state (Adriaenssens et al. 2009; Chen, Jhabvala and Lund 2001; Dell’Anno 2003; Dobovsek 2009; Henry and Sills 2006; Lippens and Ponsaers 2006; Slot 2010). According to Ponsaers (2013), this implies that informal activities are ultimately not taxed. This working definition is an activities-based one, which is in line with the widespread consensus to use an activity-based definition of the informal economy in OECD countries (Williams 2014; Williams and Lansky 2013; Williams and Padmore 2013). One of the main arguments of this book is to include criminal activities in the study of the informal economy. The reason for this is that the informal economy is often linked to the criminal economy, as will become clear throughout this book. Many academics have already acknowledged the linkage between the formal and the informal economies (Castells and Portes 1989), but in this book I take this further and argue that the formal, informal and criminal economies are intertwined. This will be developed and illustrated in the chapters covering the separate case studies. Given this, the book stresses the importance of not excluding criminal activities per definition. Doing so would result in a partial account and understanding of the nature of the informal economy.

Regulation of the Informal Economy

Previous research on the informal economy has framed its regulation into different, broader ‘policy approaches’ (Williams 2014; Williams and Lansky 2013; Williams and Windebank 1998). Given the various disadvantages and advantages of the informal economy for different stakeholders³ (Ketchen et al. 2014; Williams and Lansky 2013), authorities can struggle between several policy approaches regarding informality (Leonard 1998): doing nothing or ignoring the informal economy (Leonard 1998; Williams and Lansky 2013), deregulation of the formal economy (Leonard 1998; Williams 2014), eradicating the informal economy (Williams 2014)⁴ or promoting formalisation (Leonard 1998; Williams and Lansky 2013). The deregulatory approach, which argues that informality is the result of overregulation of the market by the state and dependency on welfare, basically aims to eradicate it by reducing regulations imposed on employment (Williams and Windebank 1998). The conventional approach to eradicating the informal economy is to alter the cost/benefit ratio of participating in it, by focusing on the cost side and increasing perceived or actual likelihood of detection and penalties for those caught (Williams 2014). Finally, promoting formalisation is not aimed at fully eradicating the informal economy, but at bringing informal workers and their enterprises as much as possible into the formal economy. This approach is divided into a hard approach (‘sticks’), which seeks to engender compliance by using deterrence measures such as improving detection and increasing penalties (Williams 2014; Williams et al. 2008), and a soft approach (‘carrots’), which seeks to enable compliance by encouraging compliant behaviour, for instance by preventing people from engaging in undeclared work and changing attitudes (Williams 2014; Williams et al. 2008).

Clearly, such a ‘policy approach’ framework is highly valuable. One of its strengths is the distinction between regulation and enforcement, which I assume allows for a more nuanced empirical analysis of the influence of policy on the informal economy. Therefore, at the outset of the study, I chose to use this distinction in my own empirical work and used the term ‘policy’ to refer to the combination of regulation and its enforcement. The term ‘regulation’ is used to refer to the official body of laws and decrees at the federal, regional, provincial and/or local level. The term ‘enforcement’ is used to refer to actions taken by different official actors to verify compliance with the regulation. Obviously, these working definitions ...

Table of contents

• Cover
• Frontmatter
• 1. Introduction
• 2. The Informal Economy in Western Europe
• 3. Seasonal work in fruit-growing and the Informal Economy
• 4. Street Selling and the Informal Economy
• 5. Prostitution and the Informal Economy
• 6. The nature of the Informal Economy
• 7. Conclusions
• Backmatter