The prevalence of envelope wages in the Baltic Sea region

Purpose - The purpose of this paper is to evaluate in the Baltic Sea region the prevalence of an illegitimate wage arrangement whereby formal employers pay their formal employees both an official declared wage as well as a supplementary undeclared (envelope) wage. Design/methodology/approach - A 2007 Eurobarometer survey is reported that evaluates envelope wage practices in 27 European Union (EU) member states. This paper focuses upon the 4,031 face-to-face interviews conducted in four countries from the Baltic Sea region that are now member states of the EU, namely Estonia, Latvia, Lithuania and Poland. Findings - Some one in eight formal employees in these four countries from the Baltic Sea region received an undeclared "envelope" wage from their formal employer during the past 12 months which on average amounted to 45 per cent of their gross wage packet. Although this practice is concentrated in smaller businesses, the construction industry, and amongst younger people, manual workers and lower income groups in these four countries, it is by no means confined to specific pockets of the economic landscape. Rather, it exists throughout these countries in all business types and employee groups. Research limitations/implications - The existence and commonality of envelope wages reveals the need to transcend the dichotomous depiction of formal and informal jobs as always separate and discrete and to recognise how they can be inextricably interwoven. Practical implications - This paper outlines a range of potential policy measures for tack-ling envelope wages and calls for their piloting and evaluation. Originality/value - The first cross-national evaluation of the incidence and nature of envelope wages in the Baltic Sea region and what needs to be done to tackle this practice

Helping people to help themselves : policy lessons from a study of deprived urban neighbourhoods in Southampton

The aim of this paper is draw out some policy lessons from a study of self-help activity amongst 200 households in deprived urban neighbourhoods of Southampton. Commencing with a critique of the popular prejudice that promoting self-help should be opposed in case it leads to a demise of formal welfare provision, the paper then interrogates the empirical evidence to understand and explain the nature and extent of such work in deprived neighbourhoods. Finding that self-help is a crucial component of household coping practices, but that no-earner households are unable to benefit from this work to the same extent as employed households, the paper proposes both bottom-up and top-down solutions to tackle the barriers to participation in self-help amongst unemployed households. In particular, it calls for a modification to Working Families Tax Credit and the creation of Community Enterprise so as to recognise and value much of the self-help activity that currently takes place but remains unrecognised and unvalued

A Critical Evaluation of the Policy Options Towards the Undeclared Economy

To evaluate critically the policy options available for tackling the undeclared economy, this paper commences by evaluating the implications of four hypothetical policy choices, namely doing nothing, de-regulating the declared economy, eradicating the undeclared economy, or moving undeclared work into the declared economy. Finding that a combination of all these is required, a typology of policy measures for tackling the declared economy is then outlined. Drawing inspiration from the literature on eliciting behavior change in organizations, this identifies that the shift from direct controls (deterrents and incentives) to indirect controls (which engender a commitment to individual self-governance) can be scaled up to the societallevel to elicit behavior change in relation to undeclared work. To shift towards the pursuit of individual self-governance as a means of achieving collective self-governance, a multi-pronged approach is called for which seeks to change both the codified laws and regulations of formal institutions and the norms, values and beliefs that constitute the informal institutions of a society in order to create symmetry between them. The paper concludes by discussing the various ways of combining and sequencing direct and indirect controls in a manner that foregrounds the centrality of individual self-governance to the achievement of collective self-governance

Tackling enterprises operating in the informal sector in developing and transition economies: a critical evaluation of the neo-liberal policy approach

Over the past decade or so, there has been widespread recognition that a large and growing proportion of the global workforce is employed in informal sector enterprises. To explain this, neo-liberals contend that enterprises operate in the informal sector due to high taxes, public sector corruption and too much state interference in the free market and that the remedy is therefore to reduce taxes, public sector corruption and the regulatory burden via minimal state intervention. To evaluate critically this neo-liberal policy approach, this paper explores whether cross-national variations in the share of the workforce in informal sector enterprises are associated with cross-national variations in the level of tax rates, corruption and state interference. To do this, International Labour Organisation data on the share of the workforce in informal sector enterprises in 43 developing and transition economies is compared with cross-national variations in tax rates, corruption and levels of state intervention using World Bank development indicators. The finding is that there is little or no evidence to support the neo-liberal policy approach that decreasing tax rates, public sector corruption and the regulatory burden via minimal state intervention, reduces the share of the workforce in informal sector enterprises. Instead, higher tax rates and levels of regulation and state intervention are found to be associated with lower (not higher) levels of employment in informal sector enterprise. The paper concludes by discussing the theoretical and policy implications

Cross-national variations in the scale of informal employment: An exploratory analysis of 41 less developed economies

© Emerald Group Publishing Limited Purpose – The purpose of this paper is to evaluate critically the competing explanations for the crossnational variations in the scale of informal employment which variously correlate higher levels of informal employment with economic under-development (“modernization” theory), corruption, higher taxes and state interference (“neo-liberal” theory) and inadequate state intervention to protect workers from poverty (“structuralist” theory). Design/methodology/approach – To do this, data on the prevalence of informal employment collected by the International Labour Organisation using a common survey method across 41 less developed economies are analysed and compared using bivariate regressions with World Bank development indicators. Findings – Some 34.4 per cent of the non-agricultural workforce is in informal employment across these 41 countries, with the share in informal employment ranging from 83.6 per cent in India to 6.1 per cent in Serbia. Evaluating critically the competing explanations, a call is made for a synthesis of the modernisation and structuralist theoretical perspectives in a new “neo-modernisation” theory that tentatively associates higher levels of informal employment with economic under-development, smaller government and inadequate state intervention to protect workers from poverty. Research limitations/implications – Based on 41 cases, a multivariate regression analysis was not possible to determine how important each characteristic is to the final outcome whilst controlling for the other characteristics. Practical implications – This paper tentatively displays that wider economic and social policies, such as social protection, are significantly correlated with the level of informal employment. Originality/value – This is the first paper to use a direct survey to analyse and explain cross-national variations in informal employment in less developed economies

De-linking entrepreneurship from profit-motivated capitalism: some lessons from an English locality

The aim of this paper is to contribute to the entrepreneurship literature that has sought to deconstruct the normative view of the entrepreneur as a heroic icon of profit-motivated capitalism by developing a typology of the multifarious lived practices of entrepreneurship ranging from wholly social to wholly profit-motivated forms of entrepreneurship cross-cut by wholly informal to wholly formal forms of entrepreneurial endeavour. This is then applied by reporting evidence from a small-scale survey of the multiple forms of entrepreneurship in the English locality of Bassetlaw. The finding is that just 12% of the entrepreneurs surveyed in this locality are engaged purely in profit-driven entrepreneurship in the legitimate economy. The outcome is a call to more widely apply this typology that depicts the multiple forms of entrepreneurship in order to open up entrepreneurship to re-signification as demonstrative of the possibility of futures beyond legitimate profit-driven capitalism

Explaining Cross-National Variations in the Informalisation of Employment: Some lessons from Central and Eastern Europe

The aim of this paper is to better understand cross-national variations in the informalisation of employment by evaluating critically three contrasting explanations which variously represent informal employment as more prevalent in: poorer under-developed economies (modernisation thesis); societies with high taxes, corruption and state interference in the free market (neo-liberal thesis) and societies with inadequate levels of state intervention to protect workers (political economy thesis). To evaluate these rival explanations, the relationship between the variable informalisation of employment in 10 Central and East European countries, measured using data from a 2007 Eurobarometer cross-national survey involving 5769 face-to-face interviews, and their broader work and welfare regimes are analysed. The finding is that wealthier, less corrupt and more equal societies and those possessing higher levels of taxation, social protection and effective redistribution via social transfers are significantly more likely to have lower levels of informalisation. No evidence is thus found to support the neo-liberal tenets that the informalisation of employment results from high taxes and too much state interference in the free market but evidence is found to positively confirm the modernisation and political economy theses as explanations for the cross-national variations in the informalisation of employment. The paper concludes by discussing the tentative theoretical and policy implications of these findings and calling for further evaluation of their wider validity both longitudinally and across other global regions

Tackling informal employment in developing and transition economies: A critical evaluation of the neo-liberal approach

Copyright © 2015 Inderscience Enterprises Ltd. This paper evaluates critically the argument of neo-liberals that informal employment is a result of high taxes, public sector corruption and too much state interference in the free market and that the consequent solution is to reduce taxes, public sector corruption and the regulatory burden via minimal state intervention. Comparing International Labour Organization data on the cross-national variations in the prevalence of informal employment with the variables levels of tax rates, corruption and state intervention across 41 developing and transition economies, little support is found for the neo-liberal approach. Instead, lower (not higher) levels of informal employment are found to be associated with higher levels of regulation and state intervention, resulting in a call for more, rather than less, regulation and state intervention to protect workers in developing and transition economies. The theoretical and policy implications are discussed

Public Policy Approaches Towards the Undeclared Economy in European Countries: A Critical Overview

Th e aim of this paper is to evaluate critically the extent to which the conventional eradication approach towards undeclared work has been transcended and replaced by an approach which seeks to shift undeclared work into the declared economy. Reporting the results of a 2010 survey of 104 senior stakeholders from government departments, trade unions and employer organisations in 31 European countries, and 24 follow-up in-depth interviews, the fi nding is that although there is a move towards adopting policy measures that shift undeclared work into the declared economy, a deterrence approach that simply seeks to eliminate undeclared work remains the principal approach in most nations and the approach viewed as the most effective way of tackling undeclared work. Given this intransigence on the part of European national governments, the paper concludes by setting out a future research agenda to bridge this gap