Put our Shoulder to the Wheel: Confront the Informalisation of Employment

Recently Jan Bremen gave a public lecture at the University of Copenhagen on the rise of the informal economy in the ‘West’. At this and another seminar I attended relating to informal employment, experts in social research suggested that the phenomenon is practically non-existent in Denmark. Perhaps the root of this belief lies in the different understanding of the various collocations, inflections and modifications of the word ‘informal’.

The ILO has emphasized the need to distinguish between employment in the informal sector and informal employment. They provide the following definitions:

The informal sector refers to private unincorporated enterprises; that is, “enterprises owned by individuals or households that are not constituted as separate legal entities independent of their owner and for which no complete accounts are available that would permit a financial separation of the production activities of the enterprise from the other activities of its owner(s).Informal employment meanwhile refers to jobs where there is “non-standard, atypical, alternative, irregular, precarious employment”. The OECD describes informal employment as “jobs performed outside the formal structures that govern taxes, workplace regulations and social protection scheme“. Both of the latter definitions include being employed as a freelancer or consultant, being employed on a zero-hour contract, being employed part-time, working irregular hours or with unpaid overtime. Undeclared work, defined by the EU as “work that in itself is legal, but is not declared to the authorities for tax, social security and/or labour law purposes”, is not the same as informal employment, even though many do substitute one for the other (see for example Jensen Pfau-Effinger and Flaquer 2009, 3).

Is it possible that informal employment is not visible rather than non-existent or ‘on the fringes of society’ in Denmark? Informal employment includes the hundreds of migrant workers employed in major public and private projects that have zero-hour contracts (and also employers who create a working environment based on fear in order to exploit their precarious situation). It includes thousands of jobs in the booming restaurant industry, which often employs staff without a contract or guarantee of hours on top of paying low salaries, particularly to dishwashers and other support staff. Entrepreneurism is increasingly encouraged which on the one hand is great because of work and job creation; on the other hand it is also a type of informal employment as it leaves many people (owners and employees) without job security and without social protection (e.g. pensions and private health insurance) like many others who engage in informal work.

I recently met a creative talent from the UK who had just arrived in Denmark. He moved to Copenhagen with his wife, also a successful creative talent, because they wanted to try living in Denmark, i.e., they chose to move here and contribute to the Danish economy and society by paying tax and sharing their knowledge and skills. The fact that they were freelance posed great challenges for them in obtaining their social security number, which in Denmark gives access to everything from healthcare to opening a bank account to securing a place to live. They spent hours, days and weeks trying to find a solution instead of getting on with the work they came here to do.

I have encountered countless doctoral students in different places who are informal workers with no paid employment contract with their home institution. When they get funding, they must spend a significant portion of their limited paid time filling out applications for further funding to continue their research. If they do not or cannot get it, they either stop their research and the time and funding is ‘wasted’ or put on hold, or they register as unemployed, start job searching and continue their research in their spare time. It may well be possible to calculate the financial cost of this situation in terms of both benefits and grants/stipends. However, there are additional costs in terms of human resources and human capital that are more difficult to measure.

These are only two examples of the challenges that the informalisation of work poses for individuals and the state, not to mention the obvious and less obvious financial and social costs. Whether employment is indeed becoming more and more informal in Denmark and the ‘wealthy’ industrialized world or not, the simple fact that over half of the world’s 3 billion strong workforce is in informal employment means that perhaps it is time to put our shoulder to the wheel, confront the issue, explore the challenges and come up with actionable solutions.

Any suggestions?

Sources

  • Huitfeld, H and Jütting, J, (2009). Informality and Informal Employment. In the OECDs Promoting Pro-Poor Growth. Employment. Paris: OECD. Accessible here.
  • Husmans, R. (2004). Defining and Measuring Informal Employment. Bureau of Statistics, International Labour Office, Geneva. Accessible here.
  • Jütting, J and de Laiglesia, JR (2009). Is Informal Normal? Towards More and Better Jobs in Developing Countries. Paris: OECD. Accessible here.
  • Pfau-Effinger, B, Flaquer, L and Jensen, PH (2009). Formal and Informal Work. The Hidden Work Regime in Europe. New York: Routledge. Accessible here.

And

  • Access Jan Bremen’s paper, Informalizing the Economy? The return of the social question at a global level, here.
  • EnVeritas Group are doing a survey on freelance work. If you work freelance, complete the short questionnaire here.

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