West Neighbourhood House began the Informal Economy project when their financial workers and Income Tax Clinic volunteers reported that increasing numbers of low-income adults were working for cash “under the table” or were deemed (illegally) by their employers to be “self-employed”. Research shows that this is a growing part of the labour market, particularly for young adults – even those with a university education.
The House created a multi-stakeholder project to explore potential public policies and local actions to mitigate the impacts of the underground economy on:
- low-income workers and self-employed people,
- on employers and local businesses,
- on consumers and customers, and
- the tax system and our social infrastructure.
This included understanding the incentives for low-income people to engage in informal work and/or the disincentives for them to work in the “above-ground” economy. The project defined “informal workers” as workers who gain income through transactions that are undocumented, unreported, untaxed, occasionally illegal and/or unsafe.
The community interviewers met with over 100 employers and workers in local informal economy activities such as restaurants and bars, arts and entertainment, home renovations, etc. The project found different motivations amongst workers, consumers and employers in the informal economy as well as different levels of understanding about the long-term financial risks for the workers (e.g. not contributing to and therefore missing out on the Canada Pension Plan).
The second phase of the Informal Economy Project is now underway and will explore possible win-win solutions or improvements for workers, consumers, businesses and governments who are affected by the informal economy.
The final report for the first phase of the project is here: Tracking the Informal Economy Phase One →