The Undeclared Sector, Self-Employment and Public Policy

Abstract

Purpose

Viewing undeclared work as low-paid exploitative organised employment conducted under sweatshop conditions, public policy has widely treated this illegitimate sphere as a hindrance to development and actively pursued its deterrence using stringent regulations and punitive measures to change the cost-benefit ratio for those considering participation in such endeavour. In this paper, however, the intention is to evaluate critically this portrait of the nature of undeclared work and resultant public policy approach.

Design

To evaluate this representation of undeclared work and consequent public policy approach, empirical evidence is reported from 861 face-to-face interviews in English localities.

Findings

The finding is that the majority of undeclared work is undertaken on a self-employed basis by people who have identified an opportunity to provide a good or service and are taking a calculated risk in order to fulfil others needs.

Research limitations

Future research will need to further investigate this relationship between self-employment and the undeclared sector.

Practical implications

Identifying that the undeclared sphere is predominantly composed of self-employed endeavour, a call is made for greater emphasis in public policy on developing initiatives to legitimise this illegitimate self-employment, rather than simply deterring such work.

Value

By re-reading the nature of undeclared work as primarily composed of self-employed activity, it highlights the need for public policy to stop treating undeclared work purely as something to be deterred and for more emphasis to be put on developing enabling initiatives to help such workers formalise their business ventures.

Keywords: Informal sector, entrepreneurship, household work practices, livelihoods, economic development, England

JEL Classification: H26, J46, J48, K34, K42, O17, P2, P3