Beyond the Formal/Informal Employment Dualism: The Prevalence and Geographies of ‘Quasi-Formal’ Employment in the European Union

European Urban and Regional Studies, Vol. 16, No. 2, pp. 147-159, 2009

14 Pages Posted: 14 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Date Written: 2009

Abstract

This article reveals that formal labour markets in the European Union are not always quite as pure, wholesome and legitimate as might be supposed. Until now, it has been commonly assumed that the formal economy is separate and discrete from the informal economy. To contribute to the emerging literature showing that this is not always the case and that the formal economy can be permeated by informal practices, a so far little discussed employment arrangement is here brought to the fore in which formal employers pay their formal employees two wages, one declared and the other an undeclared (‘envelope’) wage. Reporting a 2007 survey composed of 26,659 face-to-face interviews in the 27 EU member states, the finding is that some 5 percent of all formal employees receive such undeclared wages from their formal employers which amount on average to two fifths of their wage packet. However, this employment practice is not evenly distributed across the EU. Such quasi-formal employment is markedly more prevalent in Central and Eastern Europe (CEE), where the undeclared wage is more likely to be paid for regular employment hours, while in Continental Europe and Nordic countries undeclared wages are less common and are received mostly for overtime or extra work conducted. Given the prevalence in the EU of this hybrid employment practice which is neither purely formal nor informal, the article concludes by calling for greater recognition of how formal and informal employment are sometimes intimately interlocked and entwined rather than separate and discrete spheres.

Keywords: binary thought, dual economy, envelope wages, European Union, undeclared work

JEL Classification: H26, J46, K42, O17

Suggested Citation

Williams, Colin, Beyond the Formal/Informal Employment Dualism: The Prevalence and Geographies of ‘Quasi-Formal’ Employment in the European Union (2009). European Urban and Regional Studies, Vol. 16, No. 2, pp. 147-159, 2009, Available at SSRN: https://ssrn.com/abstract=2702904

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

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