In 2015, the ILO adopted the Recommendation on the Transition from the Informal to the Formal Economy (No. 204), in which the term “informal economy” refers to all economic activities of workers and economic entities that are not or only insufficiently covered by formal agreements, legally or in practice (section 2(a)). A recent ILO/OECD study defines “informal employment” as working arrangements that are not subject de facto or de jure to national labour law, income tax or the right to social protection or certain other employment benefits (notice period, severance pay, paid annual or sick leave, etc.). (ILO/OECD, Addressing Vulnerability in the Informal Economy, Development Centre Studies, OECD Publishing, Paris, 2019, doi.org/10.1787/939b7bcd-en, p.26.) The report also shows that many informal workers are “self-employed” workers (45%), although another significant part may be associated with the more regular status of workers (36%). A large group (16%) is family workers. The formation of an informal contract has five main elements: the issue of informal employment is above all a major challenge for economies and labour markets around the world. It is reported that more than 60% of the world`s labour force works in the “informal economy” (ILO press release, 30 April 2018, www.ilo.org). This global problem requires urgent attention, both outside and within Europe. First, let`s look at the concept of “informal employment.” The idea of “informality” has evolved over time.

In its resolution on decent work and the informal economy, adopted by the ILO in 2002, the term “informal economy” was preferred to the term “informal sector”. The workers and undertakings concerned do not belong to a specific sector of the economy. On the contrary, informal work appears and extends to many different sectors. In this sense, it is preferable to consider informal employment as a workplace-based concept that is “defined in relation to the employment relationship and the guarantees associated with the worker`s work”. (ILO, Women and Men in the Informal Economy: A Statistical Table, Third Edition, 2018, p.7). It also means that there may be work with informal characteristics in the formal sector or in the context of a formal enterprise. An informal business contract is an agreement between two parties that intends a formal contract without the seal of a government agency or witness. In other words, it is a mutually agreed decision between two parties that has not been formally documented by an organization or witness. Opportunistic behaviour is obviously associated with informal employment. For this reason, the literature focuses on the approaches of economic actors, but also on the approaches of social actors. The rational approach of the economic actor explains participation in the informal economy as a reward (the benefits of informal work are weighed against the costs or risks of being caught or punished). This analysis is complemented by an approach of the social actor that relates to tax morality and motivation to pay taxes.

This may be related to various personal and contextual circumstances (C.C. Williams and A. Kayaoglu. 2016. Tackling the underground economy in the European Union: an approach for social actors. UTMS Journal of Economics 7(2): pp.135/133-147). For an informal contract to be legally binding, it must include mutual consent, offer and acceptance, and consideration. It is not based on formalities, but on the observation of people making promises and intentions. From a political point of view, strategies such as strengthening labour inspections and enforcement strategies, as well as improving information, are certainly desirable.

However, the design of labour law is also a problem and it is necessary to ensure that labour law regulations can be applied in situations where the rules would not otherwise correspond to the new realities. This is clearly evident in the gig economy, where classic labour law concepts, such as the concept of employee, are being challenged. Labour law must therefore be adapted and it is doubtful whether a uniform approach will work. Some situations of informal work can be lucrative. B for example, persons with skills who hire as consultants on a contractual basis at a high hourly rate, work remotely or enter the client`s business irregularly. These people decide when and where they want to work, and have often taken weeks or months off to take vacations or work on entrepreneurial projects. .