national work
The Informal Economy
The global informal economy is growing and the UK is no exception. The reasons for its existence and growth are many and varied, but essentially, it is driven by greater tax and benefits burdens along with increased state regulation.
The informal sector is not clearly understood, those involved are often labelled lazy or and greedy. The truth is far more nuanced. Many people are forced to work informally to counter desperate financial need; they operate out of need, not greed.
Defining the informal economy
Informal work involves the paid production and sale of goods and services which are unregistered by, or hidden from, the state for tax, benefit and/or labour law purposes, but which are legal in all other respects.
This excludes activities in which the goods or services are illegally gained or provided such as fraud, drug dealing or facilitating prostitution.
What causes it to exist?
Low wages and benefits levels interact with increasing rents, mortgage repayments and childcare costs to create desperate financial need.
What needs to be done?
We need to develop an accurate understanding of this phenomenon to be able to harness it effectively. We advocate changing attitudes through raising public awareness of the diverse issues driving the growth of the informal economy. This will help in educating informal workers as to the benefits of transferring to the informal economy, as well as society at large as to what causes informal working. This needs to be carried-out in conjunction with a change in policy so those working informally can be assisted in locating and retaining fulfilling formal work.
Our work
To keep in touch with our latest work on the informal economy visit the campaign website or view our recent blog posts.
A summary of our findings to date from our JRF-funded Journeys to Formalisation project is available to download.
For more information, please contact Maeve McGoldrick, Links Campaigns, 020 7473 9644 or Aaron Barbour, LinksUK Research and Policy Manager, or telephone on: 020 7473 9666