What is the informal economy?

It is known as informal economy or irregular economy to those economic activities that are carried out avoiding the taxation or administrative controls of a certain country.

It represents a high percentage of the world's active population (about 60%) and they are activities as common as undeclared domestic work, freelance work, among others that are more common. It is, therefore, a type of economy that is included within the underground economy. The difference between the latter is that the submerged economy It also includes activities such as drug trafficking, arms, prostitution or money laundering, among others of a more harmful nature to the economy or society.

Causes of the informal or irregular economy

Without the intention of justifying any act, among the main obstacles or causes for which this type of economy occurs, we highlight:

  • Corruption in the countries
  • The incapacity of workers, employers and union organization
  • Poor infrastructure or public spending in general
  • Weakness in administrations, controls or inspection
  • Lack of access to markets or financing of companies

Consequences of the informal or irregular economy

Because of these irregularities we can highlight the following consequences that arise:

  • Salaries low
  • Lack of productivity
  • Lack of primary care and help: doctor and pensions, as well as resources for education or health
  • Disadvantages for workers: informal layoffs without compensation, without help and with increasingly lousy training
  • More illnesses on the part of workers, as well as more appalling conditions
  • Terrible conditions when it comes to accessing private financing or public aid from both companies and citizens

Leave a Comment