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



The UK labour market and the visible hand of George Osborne.

George Osborne’s 2016 budget appears to have been a much less successful political exercise than his immediate post-election efforts. This is perhaps unsurprising given the contradictions involved in the joint pursuit of austerity, traditional Conservative instincts, and the attempt to manage party tensions on Europe through the mechanism of a referendum on European Union membership at a juncture where populist anti-elite pressures of varying political stripes are widespread and growing.

As an employment relations researcher, contradictions are particularly evident in the labour market sphere. In particular, it is worth thinking about the relations between the legislative attack on trade union freedom of the Trade Union Bill (which coincidentally sustained non-fundamental, but non-trivial damage in the House of Lords on the the day of the budget), the National Living Wage, the continued confusion around the introduction of an Apprenticeship Levy, and the wider approach to political economy of the current government.

Of these, the Trade Union Bill is the simplest to decipher, representing as it does a straightforward continuity with Thatcherism. Nobody with experience of the 1980s and 1990s history of regulation of industrial relations would be particularly surprised that a Conservative government would pursue such policies. In industrial relations terms most initial academic commentary seems to have concentrated on the increased balloting thresholds for strike action, and to a lesser extent on the issue of trade union facility time. Important as these are, it is regrettable that the proposal to lift the ban on using agency workers to replace permanent staff during strikes, which represents a fundamental challenge to the right to strike as understood in ILO conventions, has not taken greater prominence in the debates on and opposition to the Bill.

The National Living Wage and Apprenticeship Levy, however, need somewhat more thinking about. Having worked as a researcher on wage protection at the time that the National Minimum Wage was proposed and introduced by the first Blair government, and witnessed the extent of Thatcherite-Conservative opposition to the “interference” in the labour market that statutory wage protection represents, it is clear that Osborne represents something of a departure here from Keith Joseph.

The current upgrading of the minimum wage, while welcome if taken on its own, does not represent a progressive policy, coming as it does in the context of a shrinking of the benefits system that of course is profoundly regressive. It is also worth noting in passing the “National Living Wage” is nothing of the kind – any basic or minimum income level, however calculated, clearly has to be expressed on a weekly or monthly basis. Very obviously, if sustenance comes from waged labour, then an hourly rate is only as good as the multiplier of how many hours of work are paid for. Given those at the bottom of the labour market are generally on marginal part-time or zero-hours contracts, a vocabulary of “living” wage is not appropriate. That George Osborne is prepared to use this language for political reasons is one thing, but those in favour of redistribution to the working poor should not.

Nonetheless, proposing non-trivial increases to minimum wages, in the context of austerian governance, does represent something of a change of thinking as to how the right goes about shrinking the state. The Thatcherite position of avoiding ‘constraints’ on employers in order to encourage the free market to clear has morphed into a position where the over-riding imperative is that the poor are not sustained by the state, even if this involves what a previous generation of Conservatives would have termed “interference” in labour markets. Whether George Osborne is a convert to established social democratic arguments that increasing minimum wages has positive effects on productivity is unclear. Still, to some extent, austerity seems to have trumped the “old school” brand of neo-liberalism of the Thatcher/Major era.

This is also the case with the apprenticeship levy; essentially, a pay-bill tax on large employers to be dedicated to apprenticeship training, sweetened in the Budget by a government top-up. How this will work, in particular what the resources raised will be used for in an, at-best, confusing system of initial vocational training (see the work of CROWE colleague Jonathan Payne) is unclear. However, some of the motives are not dissimilar to the minimum wage increase; vocational training needs to be improved, and the state does not want to bear the financial or coordination costs, notwithstanding the exceptionally poor degree of coordination between firms on skills and training in the UK. It is worth noting that in my conversations with practitioners aiming to attract foreign direct investment to the UK, it is clear that the idea of a levy has a substantial degree of opposition from mobile firms, including many that do require advanced skills. Again, while individual labour market policies need to be looked at within the context of the overall political economy and distributional policies of the government, it remains interesting that the Osborne strategy does in places require a fairly visible hand.


Phil Almond is Professor of Comparative Employment Relations at DMU. His research interests are in the theoretical and practical challenges of the governance of work and employment in contemporary global capitalism, with specific expertise on the social relations of multinationals.