As part of the growing RSA Enterprise programme, we will shortly be starting a new piece of work looking at the ‘informal economy’. In short, the aim of this project will be to explore the different incentives, support structures and welfare reforms needed to encourage and enable people to make the transition from the informal to the formal economy, and to develop a set of policy options that would allow for effective ‘formalisation’ models and initiatives to be put in place.
In some parts of the UK, up to 31 per cent of start-ups are completely off the books and the number of workers participating in the informal economy is steadily growing. Up to 20 per cent of UK workers have taken part in informal work and the informal economy now accounts for up to 12.3 per cent of GDP. This is despite on-going government efforts to spark and sustain ‘formalisation’ through various initiatives and punitive measures.
The rationale for looking into this area in more detail is partly due to financial necessities – the nation can ill-afford to lose out on vital tax revenues in straitened times – but it is also because of a growing concern that informal working patterns are having significant side-effects on the people and places involved. It is bad for economic regeneration (the majority of informal entrepreneurs are based in deprived communities); it prevents people from using their talent to full effect (for example, by drawing upon government support to expand their business operations); and prevents the nearly 2 million vulnerable workers who operate within it from securing minimum wage rights, sick leave benefits and health and safety protection.
Against this backdrop, the ‘Untapped Enterprise’ project will seek to identify the most effective and promising models for helping people navigate their way to formal working practices, and will look at the necessary changes that need to be made across government for these to be put in place. To do this, we will be using a mixture of desk-based research, interviews with key stakeholders (policymakers, service practitioners and those who have recently experienced work in the informal economy) and potentially an online survey.
If you would like to assist with this project, particularly in terms of helping us to contact informal entrepreneurs, please feel free to get in touch via email.