Paper

Self-employed People in the Informal Economy - Cheats or Contributors? Evidence, Implications and Policy Recommendations

How to help people in the informal economy?
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This report focuses on people working in the informal, cash or grey economy. The report aims to:

  • Raise awareness of the informal economy among mainstream organizations, government policy-makers and regulators;
  • Shift the attitude towards people working in the informal economy from one of "cheats and tax dodgers" to people who use cash transactions to:
    • Try to make ends meet;
    • Advance into financial independence from the State, etc.
  • Provide pointers to policy recommendations as well as suggestions for action research.

The report:

  • Explains the work of Street(UK), a microfinance organization assisting self-employed people and owners of small businesses by providing loans, advice and support;
  • Presents a case study to explain the obstacles that people in the informal economy face;
  • Summarizes the results of additional interviews with Street(UK) clients.

The report concludes that:

  • The problems that people in the informal economy face are complex and have no single cause or solution;
  • The informal economy serves many positive functions;
  • It is important to provide sufficient opportunities to support people out of dependency;
  • Mechanisms to help people out of welfare should be smaller and more frequent;
  • Programs for this sector should be motivational.

The report recommends steps in the areas of:

  • Education;
  • Business advice and support;
  • Tax and benefit rules;
  • Role of the voluntary and community sector;
  • Debt management and incentives to save;
  • Cross-governmental working groups.

About this Publication

By Copisarow, R., Barbour, A.
Published