Introduction
In recent decades, it has been widely recognized that informal employment is a sizeable and expanding sphere of the contemporary global economy (Charmes 2009; Feige and Urban 2008; ILO 2002a, 2002b; Jutting and Laiglesia 2009; Rodgers and Williams 2009; Schneider 2008). The result has been a refutation of the long-standing view that this realm is some minor residue or leftover from a previous era of production that is disappearing from view. Instead, there have emerged various competing perspectives that seek to explain the normality of informality. The aim of this article is to begin to evaluate critically the validity of these contrasting explanations.
To do this, the first section introduces the major schools of thought that seek to explain the normality of informality. These are firstly the structuralist school, which reads participation as driven by laborers' "exclusion" from state benefits and the circuits of the modern economy (Davis 2006; Gallin 2001; Hudson 2005; Sassen 1997) and secondly, several schools that explain participation as driven by the voluntary decision to "exit" the formal economy (Cross 2000; Gerxhani 2004; Maloney 2004; Perry and Maloney 2007; Snyder 2004). These include, on the one hand, a neo-liberal perspective that portrays informal workers as voluntarily opting to work in this manner due to the costs of working legitimately and, on the other hand, a poststructuralist school that again depicts informal employment as a choice but more driven by social and redistributive rationales than pure cost-benefit calculations. To evaluate critically the validity of these competing explanations, the second section then introduces a survey conducted in Ukraine during 2005/6 based on 600 face-to-face interviews. The third section reports the findings. This will not only display the normality of informality in contemporary Ukraine but also how participation is not the result of either exit or exclusion but instead, how some is conducted due to exit, some due to exclusion, and some for both reasons. (Hal ini tidak hanya menampilkan normalitas informalitas kontemporer di Ukraina tetapi juga bagaimana partisipasi yang baik bukanlah pengecualian atau keluar tetapi sebaliknya, bagaimana beberapa dilakukan karena untuk keluar, karena beberapa pengecualian, dan beberapa untuk kedua alasan.). The article thus concludes by calling for a move beyond the current either/or explanations and for a greater appreciation of how various explanations are more relevant in relation to different types of informal employment and population groups. (Artikel ini kemudian menyimpulkan dengan memberitahukan untuk bergerak baik saat ini / atau penjelasan dan untuk apresiasi yang lebih besar tentang bagaimana penjelasan - penjelasan yang lebih relevan dalam kaitannya dengan berbagai jenis pekerjaan informal dan kelompok populasi).
At the outset, however, informal employment needs to be defined. Reflecting the strong consensus, informal employment here refers to paid work that is not declared to the authorities for tax, social security, and/or labor law purposes when it should be declared (European Commission 1998, 2007; OECD 2002; Renooy et al. 2004; Schneider 2008; Sepulveda and Syrett 2007; Williams 2004; Williams and Windebank 1998). This is the only difference between formal and informal employment. If the goods and/or services are illegal (such as drug-trafficking), for example, then this is "criminal" activity. If the activity is not remunerated, similarly, it is part of the unpaid informal economy. Of course, in practice, the boundaries sometimes blur. Those in informal employment and those engaged in criminal activities sometimes overlap and informal employment can be rewarded with gifts or in-kind rather than purely with monetary payments.
Explaining Informal Employment: A Product of Exit or Exclusion?
Throughout much of the 20th century, informal employment was commonly depicted as a leftover or residue from a previous era. As such, its continuing presence was seen to be a sign of "underdevelopment," "traditionalism," and "backwardness" whilst the formal economy represented "progress," "development," and "advancement" (Geertz 1963; Lewis 1959). Formal and informal employment were therefore temporally sequenced by viewing formal employment as in the ascendancy and informal employment as "the mere vestige of a disappearing past [or as] transitory or provisional" (Latouche 1993: 49). In recent decades, however, numerous studies have revealed not only that informal employment is extensive and persistent but also that it is growing relative to formal employment in many populations (Charmes 2009; Feige and Urban 2008; ILO 2002a, 2002b; OECD 2002; Schneider 2008; Schneider and Enste 2000).
The outcome is that various attempts have been made to explain the persistence and growth of this sphere. Until now, commentators have largely adopted one of two broad perspectives. Either they have adopted a structuralist perspective, which reads its persistence and growth as driven by laborers' "exclusion" from state benefits and the circuits of the modern economy, or adopted one of several schools that explain its continuation and expansion as driven more by a voluntary decision to "exit" the formal economy. Here, each is briefly reviewed in turn
Informal Employment: A Product of Exclusion
For a group of structuralist scholars, the contemporary prevalence and growth of informal employment is the outcome of the advent of a de-regulated open world economy and such work is characterized as unregulated work conducted under "sweatshop-like" conditions by marginalized populations excluded from the formal labor market who conduct such work out of necessity due to no other options being open to them (Amin et al. 2002; Castells and Portes 1989; Davis 2006; Gallin 2001; Hudson 2005; Portes 1994; Sassen 1997). As Fernandez-Kelly (2006: 18) puts it, "the informal economy is far from a vestige of earlier stages in economic development. Instead, informality is part and parcel of the processes of modernization." Indeed, for Davis (2006: 186) informal employment signifies the re-emergence of "primitive forms of exploitation that have been given new life by postmodern globalization."
Informal employment is therefore depicted to be at the bottom of a hierarchy of types of employment and akin to "downgraded labor" with its participants receiving few benefits, low wages, and with poor working conditions (Castells and Portes 1989; Gallin 2001; Portes 1994; Sassen 1997). On the one hand, informal employment is thus viewed to result from employers reducing costs, such as by subcontracting to businesses employing off-the-books workers under "sweatshop-like" conditions, as exemplified in the garment manufacturing sector (Bender 2004; Espenshade 2004; Hapke 2004; Ross 2004) but also by "false self-employment." On the other hand, informal employment is viewed to be a direct product of the demise of the intended full-employment/comprehensive formal welfare state regime characteristic of the Fordist and socialist era (Amin et al. 2002; Hudson 2005). In the new post-Fordist and post-socialist era, those of no use to capitalism are no longer maintained as a reserve army of labor and socially reproduced by the formal welfare state but, instead, are off-loaded, resulting in their increasing reliance on informal employment as a survival practice. Informal employment is thus extensive in marginalized populations where the formal economy is weak, since its role is to act as a substitute. It is undertaken by those involuntarily decanted into this realm and conducted out of necessity as a survival tactic (Amin et al. 2002; Castells and Portes 1989; Sassen 1997).
Informal Employment: An Exit Strategy
For others, informal employment is the result of a decision to voluntarily exit from the legitimate realm, rather than a product of involuntary exclusion (Cross 2000; Gerxhani 2004; Maloney 2004; Perry and Maloney 2007; Snyder 2004). As Gerxhani (2004: 274) puts it, workers "choose to participate in the informal economy because they find more autonomy, flexibility and freedom in this sector than in the formal one."
Conventionally, this has been usually advocated by neo-liberals who have depicted informal workers as heroes who are casting off the shackles of a burdensome state (Sauvy 1984; De Soto 1989). For them, over-regulation of the market is to blame for its existence (Minc 1982; Sauvy 1984; De Soto 1989). As De Soto (1989: 255) asserts, "the real problem is not so much informality as formality." Informal employment is the last bastion of untrammeled enterprise culture in an over-regulated economic system, and its recent growth evidence of the resurgence of the free market against state regulation. Informal employment, in consequence, is the people's "spontaneous and creative response to the state's incapacity to satisfy the basic needs of the impoverished masses" (De Soto 1989: xiv-xv). Such work is portrayed as undertaken largely by micro-entrepreneurs choosing to operate off-the-books in order to avoid the costs, time, and effort of formal registration and in preference to declared employment (Cross and Morales 2007; De Soto 1989, 2001; Perry and Maloney 2007; Small Business Council 2004).
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