Informal Economy/ Informal Work: Challenges for Industrial Relations

 Industrial relations has predominantly focussed on the formal workplace and formal institutions of representation and neglected the informal economy/work. Informal work, instead of being a transitory phenomenon, has been a predominant form of work in the Global South and is increasingly prevalent in the Global North (Chang 2013; Kalleberg 2009). As work continues to reach beyond the formal workplace and into the informal economy – into the community, household and the realm of social reproduction – institutional forms of industrial relations face a challenge. While Organising and Social Movement literatures address this challenge, conceptual and methodological issues remain underexplored in industrial relations.


Initially conceptualised as the ‘informal sector’ (Hart 1973), since the 1990s the term ‘informal economy’ has focussed attention on a broad and heterogeneous type of employment and enterprises that are unregulated and unprotected (Portesand Castells 1989; Hussmans 2005; Agarwala 2009). The expanded definition of the informal economy sees it as segmented into a range of informal firms and employment relationships i.e. self-employed with assets and employees, survival self-employed (own account operators and unpaid family labour), wage labour, casual wage labour, domestic labour and industrial outworkers/homeworkers. As Breman (2013) puts it ‘there is not one but a variety of regimes of informal labour, not all vicious to the same extent. These also differ in coping behaviour and resilience, some segments being more successful than others’. In sum, informality has multiple levels of exploitation as well as of forms and avenues of resistance.


Accompanying this recognition of the permanence of the informal economy is also one that recognises its significance to capitalist development. The relationship between the formal and informal economy is seen as a continuum of economic relations of production, distribution and employment where firms and workers move along the continuum or can operate simultaneously in both (Chen 2007; Lerche 2010; Harriss-White 2010).There is a recognition of diverse socio-economic relations that can result from the interaction of the formal and informal economy.  Agarwala(2008) captures this in her relational understanding of the informal economy where informal workers are intertwined with the formal economy, society and the state through structures, networks and political institutions. Informality is now fused within formerly formal parts of the economy, through outsourcing and supply chains.


My research in a new industrialising region in North India shows how manufacturing firms, domestic as well as multinational, tap into and structure the informal economy. Over a span of ten years they have reduced their permanent workforce while employing three times the number of informal workers. These are segmented into contract, casual, company casual and apprentice workers and often fulfil the jobs of a full-time production worker inside the firm. In addition, firms draw upon informal workers through outsourcing and long supply chains both in the textile and the automotive sector. As in earlier industrial sociology, neighbourhood comes into the firm and the firm reaches into the neighbourhood. This blurs the boundaries between the spheres of production and reproduction when analysing control and contest. Trade unions are unable to respond to the needs of informal workers or formulate a strategy to counter the state-capital restructuring of work.


For industrial relations, the challenge is how to conceptualise these interlinkages between the formal-informal work/economy and how to organise disparate, dispersed and often mobile informal workplaces and workers. This requires a rethink of definitions and conceptualisation of labour, framing options, organisational forms and strategies, and types of struggles for labour in spheres of production as well as reproduction. ‘New’ questions, with long history, have arisen. Is labour a mere production input or ‘social’ labour? Is work only in the sphere of production or is it all the work that helps in capitalist accumulation? Do we need to conceptualise labour as an actor, or only as collective actor? Can, or indeed should, the informal be ‘formalised’? Why is informal economy/work so difficult to regulate? What role do inter-firm relations play in informality? Do we need to go beyond institutional forms of industrial relations? What are the methodological challenges in researching the informal economy/work?


One of the many ways forward is Bernstein’s (2007) ‘classes of labour’. The approach provides an analytical framework that is flexible enough to capture the diversity of employment in formal-informal economy. Another possibility is the integrated framework of social reproduction (Luxton 2006; Ferguson and McNally 2015) that captures social relations of capitalism more comprehensively. Such approaches are sensitive to varied economic survival strategies of different groups of informal workers and the diverse means of resistance.


A more differentiated understanding of work and labour, and links between oppression and exploitation and production and consumption may help in framing strategies to address the challenges informal economy/work poses to industrial relations and to the labour movement.

Anita Hammer is a member of CROWE at Leicester Business School, De Montfort University, UK. Her research focuses on the Global South and examines the development trajectories of new industrial regions, changing patterns of work and employment and the role of the informal economy