The Informal Economy

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 aim of this chapter is to introduce the concept of the informal economy, and its manifestation in Western Europe. Therefore, I start by discussing the most influential definitions and taxonomies of the informal economy. This overview is far from exhaustive and does not cover definitions of related terms such as informal employment, informal work and so on. It is aimed more at illustrating the problematic nature of the conceptualisation and at stimulating the use of broad working definitions for empirical purposes than at offering an exhaustive overview. After clarifying the working definition, I problematise the measurement of the informal economy and offer some recent findings regarding its size and prevalence in Western Europe. Subsequently, I explore the underlying causes and determinants of the informal economy. Having done this, I proceed with a European literature review of the informal economy and seasonal work, street selling and prostitution (i.e., the three cases covered in the remainder of the book). The chapter ends with an overview of the methodology used in this book.

This chapter reports on the case study of seasonal work in fruit-growing in the southern part of the province of Limburg. The results of this case are based on a combination of semi-structured interviews, document analyses and case file analysis. In total, 58 semi-structured interviews were conducted with a total of 87 respondents between the spring of 2011 and the winter of 2011–2012. Twenty interviews were done with employers, eighteen with seasonal workers (six with Belgians and twelve with foreigners) and twenty with experts. Experts fell into three categories: regulation (six interviews), enforcement (six interviews) and support (eight interviews). I analysed 43 case files (completed in the period 2010–2011) related to the fruit sector. The chapter starts with a sketch of the case, after which the policies on seasonal work are described. Subsequently, an overview of the types of informality is provided, along with the major reasons for working and hiring informally. After that, the perceived influence of the policy on informality is discussed. The chapter ends with a brief conclusion, summarising the first support for the main arguments of this book.

This second empirical chapter reports on the case study of street selling in Brussels. In line with de Bruin and Dupuis (2000), Smart (1986) and Witkowski (1993), the fieldwork has been conducted in two formal open-air markets (one private and one public) and the surrounding sales venues. The results of this case study are based on 41 semi-structured interviews, document analyses and approximately 50 hours of observation. Between the spring of 2012 and the summer of 2013, 17 interviews were carried out with street sellers and 24 with experts (2 with regulators, 14 with enforcers and 8 with other experts). The outline of this chapter is similar to that of the previous chapter: it begins by sketching the case, after which the main policy stipulations regarding street selling are described. Subsequently, it brings the reader to the types of and reasons for informality. After that, an overview is offered of the influence of policy on informality, and then the chapter ends with a brief conclusion.

This last empirical chapter reports on the case of prostitution in Ghent. The results of this case are based on 38 semi-structured interviews conducted between the summer of 2013 and the winter of 2013–2014, document analyses and case file analyses. In line with previous research (see Chap. 2), interviews were conducted with both prostitutes (22 interviews) and experts/key informants (i.e., regulators, enforcers and social workers; 16 interviews) active in Ghent. Given the hard-to-reach character of prostitutes, a gatekeeper willing to facilitate access was found. As this sampling strategy entails a selection bias, I additionally searched for respondents on my own account and through snowball sampling (see Chap. 2). The sampled prostitutes were of various nationalities and between them represented all the different prostitution sectors found in Ghent. Four settled case files at the level of the Office of the Public Prosecutor were analysed. The chapter begins with a brief description of the case, after which the regulatory stipulations concerning prostitution are exposed. Subsequently, it moves to a discussion of the informal activities and the enforcement of the regulation. Before explaining the influence of the policy on informality, the chapter offers more insights into the perceptions of prostitutes regarding their work. The chapter ends with a conclusion, in which further support for the book’s main arguments are summarised.

Now that the empirical findings have been presented in the three preceding chapters, this chapter brings some of the most relevant ones together in order to make statements about the regulation and the nature of the informal economy. It begins by discussing the usefulness of responsive regulation theory for regulating the informal economy. Subsequently, some main characteristics of the informal economy are discussed on the basis of the empirical results, which will in turn lead to a re-conceptualisation of the informal economy.

This book has confirmed and expanded some earlier knowledge on the informal economy. In particular, it has confirmed the intertwinement between the formal and the informal economy, and has additionally illustrated the intertwinement with the criminal economy (see Chap. 6). Furthermore, as suggested by previous research, the case studies have illustrated that the informal economy is more than a survival strategy for the poor (Leonard 1998). Moreover, both the poverty-escape and moonlighting type of undeclared work (Pfau-Effinger et al. 2009; see Chap. 2) were found in the three cases. As such, the results confirm that there is no uniform type of informality and that there are different explanations for the different types of informality (Leonard 1998; Pfau-Effinger 2009; Pfau-Effinger et al. 2009). Moreover, the three empirical chapters have shown how economic, social, political and cultural factors play a role in explaining informality (Pfau-Effinger 2009). As a result, in one and the same sector, different theories can be useful for explaining informality, which suggests that the theories are not mutually exclusive. Furthermore, the three cases have also confirmed that formalisation and informalisation can take place simultaneously (Jensen et al. 2009). While the case on seasonal work was characterised by a process of formalisation, street selling was still highly characterised by informality, in part under the informalising influence of the policy. In the prostitution case, a double influence was discernible: a neutralising (or even formalising) one and an informalising one at the same time.