Informality in action: A relational look at informal work

Defining informal work

Informal work consists of work that, in distinction from other similar work, is not regulated or not linked to standard social insurance systems. Such employment thus falls “beyond the reach or grasp” of labor protections (Zatz, 2008). Those protections can include any or all of government regulation, collective bargaining, and social security coverage. “Beyond the reach” applies when these standard-setting institutions do not cover the relevant categories of workers; for instance, in most countries, this holds for domestic workers and the self-employed. “Beyond the grasp” signifies that regulations set by the institutions in question technically extend to these workers, but are not, or are only partially, enforced; this is a common situation for employees in small subcontractor firms and small service businesses. The state is centrally implicated in the very definition of informal employment, given that it legislates and administers regulations, and in most cases, systems of social security and collective bargaining as well. Consequently, the state is a focal terrain of struggle between capital and labor regarding the reach and grasp of state institutions. Yet, informal workers exercise agency toward widely varying goals; though informal employment is often the option of last resort, some workers may prefer working informally, whether to avoid social security payments and taxes, to access greater flexibility, to secure earnings while conforming to gender norms, or to pursue a family trade.

Working informally is not equivalent to working in the informal sector, that is, in an informal business. Informality as applied to an enterprise refers to an “off the books” business that does not register with the government or pay taxes. Since informal enterprises are invisible to the state, they most definitely fall beyond the reach or grasp of regulations and social insurance systems, so workers in the informal sector are invariably informally employed. But many employed in formal enterprises are also informally employed, falling beyond the grasp of laws that may nominally cover them. For example, Enrique De La Garza (2012) estimates that half of informal workers in Mexico work in the formal sector.

The concept of informal work is different from, but related to, that of precarious work (Kalleberg, 2018; Mosoetsa et al., 2016; Vosko, 2006). Precarious labor is work that is insecure relative to the historical Standard Employment Relationship (SER) that characterized jobs in the core of a given economy (Lee and Lee, 2017); for informal work, the reference point is the basic requirements of law that apply to most employment. Nonetheless, both precarious and informal works are arrayed along spectrums—there are degrees of precarity and informality—and arguably, one spectrum shades into the other. In addition to this cross-sectional continuity, there is longitudinal fluidity; persons in informal work often cycle between different statuses—informal work, precarious formal work, unemployment, being out of the labor market altogether. Large-scale shifts along these spectrums, or changing trends in longitudinal work trajectory, signal shifts in interests, power, and strategy by the state, elements of capital, and workers individually and collectively.

Varieties of informal employment relations: a first look at the cases in this issue

The articles in this special issue present case studies of informal workers in the complexity of their “natural environments,” illustrating the ways that informal employment relations vary. The workers in these six case studies experience different degrees of formality—a point dramatically highlighted by some of the Argentinean youths in María Eugenia Longo’s study, who work half their hours on the books, half off. Some work within formal enterprises, like Sohoon Yi and Jennifer Jihye Chun’s South Korean day laborers who are “subcontracting” to formal contractors or Amy Cohen and Elise Hjalmarsson’s Canadian farm laborers. For others, the employer’s enterprise is also informal, as with the Chinese and Indian domestic workers examined (respectively) by Yige Dong and Sakshi Khurana. As we examine in more detail below, the state plays a varied role: the Canadian state rigorously regulates the migration status of agricultural guest workers, but without adequately overseeing their labor standards; in Argentina, the state, in the name of workforce development, actually creates special employment statuses that lack most labor protections. Moreover, the state and capital are not the only actors constraining workers’ choices; in Khurana’s analysis, patriarchal traditions grounded in Hindu and Muslim cultures are enforced by family members and neighbors.

In the cases in this issue, the informal employment relation gets played out in proximity with other relations to work. Dong’s Chinese women workers are choosing between staying in textile manufacturing jobs that are formal but increasingly precarious, or shifting into domestic work that is informal but in some cases highly remunerative. In the Black South African townships studied by Marcel Paret, the big divide is between those who are employed, whether formally or informally, and those stuck in the ranks of the long-term unemployed. Cohen and Hjalmarsson’s agricultural workers, though they work in formal workplaces, are foreclosed from formal employment by their migration status.

The cases from the six countries point to the enormous impact of differences in context. It matters greatly whether the overwhelming majority of work is informal (as in India), or the majority is formal (as in South Korea), or if formality differs significantly by sector (as in China), or if a large bloc of the workforce is simply not employed (as in South Africa). The state’s mixture of intervention and neglect also matters greatly, as we noted with regard to the cases of guest workers in Canada and young workers in Argentina. We make further comparative observations as we trace out the varying roles of the different actors in informal work below.

A quick note on the methodologies employed by the researchers authoring these articles; as we have signaled, these are case studies. The authors have deployed various combinations of interviewing, ethnography, and participant observation to sketch out rich, textured pictures of how the actors interact and relate to each other. These qualitative methods are well-suited to tracing out social relations through actions and stated motivations and strategies.

Theorizing informality

The most active theoretical debates around informality center on informal enterprise rather than informal employment. However, they can fruitfully be reframed in terms of employment, and in the process reconceptualized in more relational fashion. The leading explanations for the persistence and, in many cases, growth of informality are dubbed dualist, survivalist, legalist, and structuralist (Bivens and Gammage, 2005); a more recently formulated analysis could be labeled “disembedded” (Breman, 2013). Consider each in turn.

According to a dualist perspective, informality is a vanishing vestige of earlier, “pre-modern” forms of economic organization. Framing this in a more active and relational way, informal employment constitutes a residual set of pre-modern relations between workers, entrepreneurs, and consumers. The implication is that the dominant process will be one of modernization, replacing these obsolete relations.

Survivalist views hold that informality is driven by desperate excess labor supply that exceeds the economy’s ability to create formal jobs. The relation that gets centered here is between workers and “the market.” But conceptualizing “the market” as an impersonal actor mystifies the actual actors that jointly structure the functioning of the market (above all, capital and the state). Survivalism results when capital and the state devalue some groups of workers, leaving them informal work as the most viable option.

For legalist theorists, such as Hernando de Soto (De Soto, 1989), informality is driven by ever-increasing, costly regulation of formal jobs that impels entrepreneurs to resort to informality. Here, the hypothesized central relation is between the over-reaching state and a set of workers and entrepreneurs who rationally seek to evade this over-reach.

Structuralists posit that capital has restructured in ways that integrate, and depend on, informality along with formal employment and enterprise, so that formal and informal activities are intertwined through subcontracting, segmentation, or other mechanisms. Here, capital is the central actor, rewriting its relations with workers with the acquiescence or collusion of the state.

Jan Breman (2013) has suggested that rather than seeking special explanations for informal employment, we should remind ourselves that what we call “informal” employment, unprotected by labor standards or social insurance, has been the default for capitalism for most of its history and in most of the world. Although part of the working class of the wealthy countries, and in some cases, a small slice of the workforce in lower income countries as well, was able to shield itself from this default state for a time, now it appears that “the West is following the Rest” (Breman, 2013: 130) in pushing a growing share of its workforce into precarious and informal states. Following Polanyi (1944), this process could be called disembedding, the freeing of capital from state and societal controls on its ability to exploit workers. We utilize this term because in countries outside of the West, the context is such that the state leaves an unregulated environment for capital-labor relations to operate. Hence, production relations are not embedded in the state, creating “regimes of informality” that govern capital-labor relations, quite differently than in the “West” (Breman, 2014).

What can we make of this competing set of explanations? Two of them are largely discredited. The articles in this special issue add to a large and growing body of evidence that informality is not disappearing and in many settings is growing, and thrives in many thoroughly “modern” economic settings, refuting the dualist perspective. As for legalism, though some work informally to avoid taxes or other restrictions, on the whole prevalence of informality is not correlated with the onerousness of regulation, and deregulation does not lead to reduced informal employment.

That leaves survivalist, structuralist, and disembedded explanations. These are to some extent three different windows onto the same process. Survivalist views look at the situation from workers’ perspective, structuralist from capital’s perspective, and disembedded from a more “omniscient,” societal perspective (although the disembedded view also incorporates some particular assumptions about the choices available to capital). All three of these approaches offer analytical leverage to make sense of the actions of the key actors in informal employment.

For the remainder of this introduction, we shine the spotlight on those actors. We first scrutinize the roles of capital and the state, and then consider workers as actors, before closing with some brief concluding remarks.

The state and capitalists: looking at informalization through interactions

Some of the cases in this issue, and many beyond these pages, gain saliency when analyzed from the structuralist framework, which highlights how capital and the state emerge as central actors in leading, encouraging, and organizing informality. Other cases require that we draw from scholars whose work sits at the intersection of cultural economic anthropology (Chayanov, 1966; Sahlins, 1972) and Marxian analysis (Breman, 2014), which provides what we are calling a “disembedded” framework. Finally, while the structuralist and disembedded theoretical frameworks prove useful when analyzing the actors and interactions involved with labor informalization processes and reactions, logics from the survivalist framework are also operating, and co-existing alongside theoretical logics from one of the other two.

In this volume, the cases on informal work in South Korea, India, and Argentina all present examples of capital taking the lead in creating informal work. However, capital is operating in distinctive contexts, which shape the mechanisms operating to push/pull work toward the informal.

South Korea and India represent two extremes in terms of context. South Korea is a fairly advanced economy that is highly regulated with a mostly formal labor market, built on an exported-oriented industrial structure dominated by a few large conglomerates (chaebols), with extensive informal labor markets consisting mainly of precarious workers in irregular employment and small firms, and low union density of (around 11%). In contrast, India is a developing country with one of the highest rates of informal work in the world and relatively low unionization rates, especially in construction and textiles (the industries under investigation in this volume). In both countries, it is capital’s time-tested ability to reorganize production through subcontracting practices that drives informalization in the construction industry. However, the context yields variation. In India, exclusion created through social institutions of gender and religion, becomes leverage for capital in the pursuit of exploitation of workers through informalization of work. In the Korean case, construction is overwhelmingly male, religion does not impose major strictures, and though divisions by migration status are salient, builders’ strategies rest primarily on subcontracting itself.

The Argentina context, in terms of the degree of formalization and regulation of the labor market, is aptly situated in the middle of the spectrum. In this case, Longo captures the complexity of how capital drives informalization by utilizing processes and rules to hire workers both formally and informally, and by creating informal work within the context of formal work. A reading of these three case studies together captures how capital can drive informalization, and how across different contexts the mechanisms and processes vary.

However, when we examine the state as an actor rather than as the context in which other actors are operating, it provides additional insights. Among the cases in this volume, we see in Argentina (Longo) and Canada (Cohen and Hjalmarsson) that the state is not just important in terms of the context in which work is informalized, but is also an important actor when it comes to the informalization of work. Longo’s analysis of informal employment among youth in Argentina shows how emerging state policies shape the labor market in ways that create “gray zones” and establish new semi-employment types including trial contracts, youth contracts, and internships; all of which represent new forms of regulated but less-protected informal work. She describes this as the “paradox of informality under an active state.” That is, the state is active in some ways that create formality and regularity of work, and active in other ways that open up gray areas where informality can flourish. In the Canadian case (Cohen and Hjalmarsson), the state, through its Temporary Foreign Worker Program (TFWP) encourages the use of immigrant labor in specific industries and in a way that creates a highly regulated but less-protected, informal form of employment. In both cases, the state actively, through regulation and rules, creates these types of informal work, but simultaneously steps back when it comes to enforcement and monitoring.

The cases of China, South Africa, and India call for a different lens on the state as actor. The “disembedded” framework captures dynamics that operate when only a minority of workers are located in a system of employment embedded in the state and based on capitalist production relations characterized by wage-labor and/or a standard employment relationship. In these countries, the majority are engaged in informal work, some of which takes the form of wage-labor, and some which does not, such as agricultural work, self-employment, unemployment, some domestic labor and forms of indentured servitude. Furthermore, in this context, it is often those in standardized employment relations who are responding to labor informalization.

In both China and South Africa, recent historical periods produced a labor aristocracy; that is, a minority of workers incorporated into wage-labor taking some form of standard-employment relations. ¹ In South Africa, unionization rates for Black South Africans fluctuate between 25 percent and 40 percent and unions are heavily concentrated in mining, manufacturing, electricity, and among highly skilled professionals (Arora and Ricci, 2005). In this volume, Paret points out that, despite this unionization rate, most workers operate outside the dominant capitalist production relations paradigm. This is because about one-fifth of the workforce is in informal work (including agricultural and domestic work), and another third of the workforce is unemployed. As such, he turns our attention to the unemployed and their role in shaping the informalization process in South Africa in the context of (re)integration into the global economy under neoliberalism.

Similarly, in China, unionization rates are relatively high (about 37%). However, before 1978, which marks the start of what is known as “opening up and reform,” only about 18 percent of the population were living and working in urban areas and engaged in formal employment (upon which unionization rates are based). After the opening up, especially in later stages, China’s entry into the globalized economy led to increasing proletarianization of formerly rural labor, but the new proletariat did not join standardized, stable employment; instead, they were integrated into the global economy through precarious and informal jobs. Also, existing formal employment, most of which is located in state-owned enterprises, has been increasing precaritization and informalization. In this volume, Dong highlights this latter trend through a case of female workers, revealing that many of the women choose to move into domestic work instead of staying in factory work as it becomes increasingly precarious and informal.

In India, it is also the case that the minority of workers are incorporated into standard employment relations, and many of the shifts in labor are occurring within the informal sector, rather than across the divide. In Khurana’s Indian case study, we get a sense of how women who have been traditionally excluded from paid economic activity manage to find their way into informal work. In this context, the logics of capitalist production relations are not driving the process, rather women use a socio-cultural normative framework to navigate their economic lives. Khurana also looks at how these women become workers in the construction and textile industries and maneuver to improve their working conditions and earnings, again utilizing very different mechanisms than one might see in the context of formal labor-capital relations.

Finally, in all three cases (China, South Africa, and India), there is plenty of evidence indicating an excess labor supply that exceeds what the state or market can or will absorb; thus, vulnerable groups in that reserve army are easier to exploit.

Informal workers’ agency

The survivalist perspective emphasizes that informal workers are located in blind spots of labor protection, since there is insufficient formal employment to be had. Although informal workers suffer from the lack of legal labor protection and social security, many of them exercise their agency to improve their working life and even defy the regime of informality in various ways, as observed in the case studies of this themed issue. In this vein, it is interesting to cast light on how informal workers at the margins of labor markets exercise agency and use “the weapons of the weak” in interaction with capital and the state, rather than remaining passive victims of the regime of informality, and a growing labor movement literature has identified new precarious worker activism (Agarwala, 2013; Lee and Lee, 2017; Swider, 2015; Tilly et al., 2018). This vision contrasts with the classical Marxian perspective on the lumpenproletariat, which views informal labor as a reactionary force on the fringes of the capitalist labor regime.

Drawing from the six articles, we can delve into how informal workers exercise their agency in several ways. First, informal workers wield their agency in both individual and collective forms. Informal workers are most likely to undertake individualized actions for enhancing their working life, in that their lack of formal employment status restrains them from building worker organizations and engaging in collective action, which the statutory framework of labor laws guarantees formal workers. Longo highlights that many Argentine students, confronted with high youth unemployment, voluntarily adapt to informal and half-informal work arrangements, created by employers and the state, during their school-to-work transition. Khurana and Dong, respectively, report that female workers in India and China made strategic choices to seek job shifts to improve their material conditions, including family reproduction, under informal labor regimes conditioned by industrial restructuring and patriarchal community norms. Cohen and Hjalmarsson document that Mexican and Jamaican guest workers employed in the Canadian agricultural sector individually engage in quiet resistance against formal regulations by employers and the state authorities, by working under the table, altering working time sheet, and re-appropriation of farm produce.

Informal workers also engage in various forms of collective action, albeit in rarer instances. In their case study of construction workers unions in South Korea, Yi and Chun demonstrate that day laborers at the bottom of multi-subcontracting chains can be organized and represented by region-based unions, which successfully build and mobilize worker power, whether structural, associational, or symbolic, tied to the specific regional context. Paret illustrates that unemployed and insecurely employed residents in South Africa’s impoverished Black townships devise and launch overt protest tactics to target the state, causing public space disruptions and cultivating moral appeals in the form of community strikes. In addition, the Canadian case study shows that immigrant farm workers covertly exercise group control over work pace. As such, the collective action by informal workers is targeted at employers and/or the state, contesting the structuration of labor informality.

Our case studies display interesting divergences in how informal workers react to the labor informality regime. In some instances, informal workers exercise their agency in an adaptive manner, where they seek better job opportunities or careers within the regime of labor informality. Argentine youth adapt themselves to employer- and state-created informality, taking advantage of the “gray” employment sphere by voluntarily taking informal and half-informal jobs. Indian informal women workers try to reinterpret patriarchal community norms and find independent and better paid job positions within the informal labor regime, while Chinese women counterparts make a strategic choice to transit from formal factory jobs (spinners) to unregulated domestic care service ones (sitters) in the context of the structural reconfiguration of social reproduction. At the other extreme, informal workers at times defy and break the formal rules imposed by the state authorities and employers, thereby producing expanded informalization by consciously creating informal spaces beyond the grasp of official regulations. This de-formalizing behavior by informal workers is witnessed in the covert rule-breaking behaviors of guest workers in Canadian farms, as well as by the overt community strike action, aimed at public disruptions, by precarious residents in South African Black townships. In the middle, construction workers’ unions in South Korea create their own regulatory sphere, re-formalizing work by leveraging the existing law to pressure first-tier specialty contractors in the multi-layer subcontracting regime and securing collective agreements to enforce sectoral labor standards. The technical illegality of informalization of subcontracted labor gives the unions bargaining leverage, although they have been unable to eradicate the entrenched informality of the sector.

Our six case studies, then, show that informal workers wield their agency to build and pursue diverse routes to improved work under the regime of labor informality, including adaptation, re-formalization, and de-formalization. In particular, the de-formalizing approach, witnessed by the informal workers’ rule-breaking and -avoiding behaviors, poses an interesting theoretical insight that informality has a dual context from the perspective of informal workers’ agency, in that it is not only characterized as a survival terrain beyond the reach and grasp of labor protections, but also as a free space where those precarious workers can deny and avoid formal rules and regulations as they seek their survival.

Conclusion

Informal employment regimes bristle with actors pursuing conflicting agendas and making and revising meaning of informality in their own ways. Capitalists informalize work, pushing it farther along a spectrum of informality, or exploit informality where it already exists. States often collude with capital in creating, preserving, or simply tolerating informality—but also constitute a terrain of contestation in which informal workers and the unemployed push for recognition, protection, and support. Informal workers (at times, along with their adjacent formal counterparts) in turn adapt to informalization, fight for re-formalization, or reclaim some measure of control through their own de-formalization strategies. Crisscrossing these class actors are multiple power relations—based on gender or migration status, for example—and cultural conventions. In different countries, regions, sectors, and eras, the resulting ever-shifting web of relations among actors gives informalization its contextual and historical specificity. “Informal” should not be seen as just a modifier of “work,” but as a shorthand for these ensembles of contentious relations and interactions.