enterprise-based concept of the ‘informal sector’) and second, informal jobs (i.e., the jobs-based concept of ‘informal employment’). As defined by the 15th International Conference of Labour Statisticians in 1993, the ‘informal sector’ (i.e., informal enterprises) is defined as private unincorporated enterprises that are undeclared or small with regards the numbers of those employed. An unincorporated enterprise is a production unit, not composed as a detached legal entity independently of the person in ownership, and for which no whole set of accounts is maintained. An enterprise is unregistered, when it is not recorded under certain forms of national legislation (e.g., tax or social security laws, professional groups' regulatory acts). Trade licences or business permits being issued does not qualify as registration. Meanwhile, an enterprise is small when its size of employment falls below a particular threshold (e.g. five employees) decided in accordance with national circumstances (Hussmans, 2004; ILO 2011, 2012). Given that this definition of the ‘informal sector’ (A+B) does not include those in informal jobs in formal enterprises (C), the 17th ICLS in 2003, adopted an alternative jobs-based definition of ‘informal employment’ (A+C) to capture such workers. This defines the employment relationship (i.e., a job) as ‘informal employment’ (A+C) when it lacks basic social or legal protection or employment benefits and may be found in the formal sector, informal sector or households. Persons in informal employment include the following types: (a) own-account workers and employers employed in their own informal enterprises; (b) members of informal producers’ cooperatives (not established as legal entities); (c) own-account workers producing goods exclusively for own final use by their household (if considered employed, given that the production comprises an important contribution to the total household consumption and is included in the national definition of employment); (d) contributing family workers in formal or informal enterprises; and (e) employees holding informal jobs in formal enterprises, informal enterprises, or as paid domestic workers employed by households.
access to official resources and markets, is the proof that they have the potential to further develop their activities (ibid). As the supposedly inevitable and natural shift towards the declared economy occurs, through goods and services increasingly being produced and delivered via declared channels, the ‘traditional’ undeclared work disappears (Williams and Round, 2007). The formal, therefore, is considered as a reflection of ‘progress’, ‘development’ and ‘advancement’ (Lewis, 1959), thus establishing a hierarchical sequencing of declared and undeclared work (Williams and Round, 2007). Both the residue view and its wholly negative portrayal of the undeclared economy have, however, resulted in widespread criticism of this perspective. The 1970s saw increasing informality around the world, destroying expectations of the sector’s reduction. Therefore, the theorisation that informality is marginal and dispersed across the economic landscape was disproven, as a number of studies (both in developed and developing economies) show that the undeclared economy is not a temporary feature (Chen et al., 2004; Debrah, 2007; Potts, 2008; Williams and Round, 2009). As Chen et al. (2004:22) state: ‘It is not just a traditional or residual phenomenon but also a feature of modern capitalist development, associated with both growth and global integration. For this reason, the [undeclared] economy needs to be seen not as marginal or peripheral sector but also a basic component, the base, if you will, of the total economy’. Not only has there been acknowledgment of the phenomenon’s persistence, but its growth has also been shown in many regions (Buehn and Schneider, 2012; ILO, 2011; Jütting and Laiglesia, 2009; Schneider, 2011; Sassen, 2009; Standing, 2011). Furthermore, it is argued that it is not just confined to particular areas such as the global south or the margins of big cities (Sassen, 2009). Instead, it is an integral part of many economies across the globe. Chen et al., (2004), amongst others, therefore argue that the residue theory needs to be reconsidered, because not only has informality grown with modernisation, it has also emerged in various forms, as well as in unexpected locations. Sassen (2009) provides examples of artists, designers and architects in arguing its use as an escape of the
time was reduced and individuals were more engaged throughout the whole questionnaire. Table 4.4: Domestic tasks REPAIRS ROUTINE HOUSEWORK MAKING AND REPAIRING GOODS CARING ACTIVITIES Painting Cleaning Clothes making or corrections Hairdressing Wallpapering Shopping Shoe repair Manicure Tiling Washing and ironing Household textile making or corrections Massage Replacing a broken window Cooking Furniture making or repair Baby-sitting Maintaining or installing domestic electric appliances Dish washing Repair or making of household appliances Tutoring The installation of windows and doors Car servicing Plumbing IT related repairs Heater or boiler installation Electrical mounting
Furthermore, 77 per cent of participants think that trust amongst citizens is lower now and 81 per cent that citizens help each other less now than during socialist times. When discussing undeclared work, 65 per cent of participants state that it has increased, 4 per cent think that it has decreased and 11 per cent that it is fairly similar. A further 20 per cent believe that the quantity of undeclared work has stayed the same but the type has changed. Two explanations arise from this, with many people arguing that those participating in undeclared activities today, do so out of necessity and to get by. Firstly, the perception of undeclared work in socialist time, as conveyed by those who think that it differs in nature to today’s manifestation, is that of gaining additional income to improve their standard of living. In this sense it takes the form of moonlighting, rather than having a main contribution to the budget. Ivana, a retired individual, believes it is the type of undeclared work that has changed, stated the following: “Contrary to socialist times where undeclared work was done for some extra cash for holidays and nice things, today it is necessary for survival. No one would work undeclared, unless they were ‘forced’ to do so.” Such a portrayal of the undeclared economy paints a picture of honest workers trying to make a living and was favoured by many of those falling within this 20 per cent A sense of community and positive society, but economic hardship and lack of government help was often described. Second, and although in the minority, another theme was recognised when describing the differences between the two eras. This took the form of a view that considers today’s society as one lacking responsibility. Individuals pertaining to this view, described undeclared work on the same level as criminal work, with Zlatko, a individual, explained the situation as follows: “We should start with ourselves before judging others. Some people blame politicians and corruption, excusing their own dodgy activities [….] Those people should be ashamed of themselves” Therefore, it is shown that although some participants are optimistic about
Table 6.2- Suggested policies for Croatia Improving Formal Institutions Improving Informal Institutions -Improving procedural justice: increasing transparency -Campaign: linking taxes to goods and services -Improving administrative capabilities, training for public officials and standardisation of procedures -Campaign: advantages of declared and disadvantages of undeclared work -Coordinating departments and actions related to undeclared work -Broader use of media: drawing on elites and role models - Broader economic and social developments -Education -Improving dialogue with citizens
is clear from the findings, that if only the utilitarian or the anthropological/sociological perspective was employed, only one part of the decision-making process would be understood, and therefore, depth of understanding would be lost. Furthermore, as can be seen in the discussion of the framework in section 6.2, this thesis shows a need to address the complexities associated with social exchange relationships, and as such, move beyond dyadic relations, embed the influence of social norms, as well as recognise the cyclical nature of exchange processes. This thesis also makes a contribution by providing much needed new empirical research on the undeclared economy in Croatia. This enables a better understanding of the nature and extent of undeclared work within its context, therefore facilitating a tailored policy design. The contribution of policy implications is two-fold. In one respect, the thesis makes practical contributions by drawing on the findings and discussion, to create empirically grounded policy recommendations. On the other hand, it also helps to contextualise the different possibilities, showing the need to prioritise and focus policy options, rather than merely using a combination of the different approaches. The policies are tailored to the current situation in Croatia, but there are also implications for countries in a similar situation. The design of the measures is therefore useful for many countries neighbouring Croatia that suffer from a weak relationship between the state and its citizens, as well as normalisation of undeclared activities.
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