Chapter 04 · People & supply chainsHuman Rights & Social Sustainability
Informal economy
Definition
The informal economy comprises work and enterprises not fully covered by formal legal, tax, social protection or labour arrangements.
References
This reference provides supporting context for how “Informal economy” is defined and used.
Overview
What it means in practice
Informal economy should be read as a human-rights and social-sustainability term. Its meaning depends on affected people, power relationships, local context, evidence and remedy.
In practice, users should state the boundary, actor, evidence and decision context. That keeps informal economy specific enough for review without turning it into a generic assurance claim.
Why it matters
Informal economy matters because social language can affect rights, voice, safety and remedy. Clear wording helps keep attention on people affected rather than only on corporate processes.
Common misconception
A common error is to treat Informal economy as a community or workforce relations label only. The stronger approach is to state who is affected, what right or interest is at stake, and what evidence or remedy exists.
Review questions
Who is responsible, and who is affected? What evidence supports the term? What limitation, authority or remedy would change how a reader interprets it?
How it is used
In professional practice, “Informal economy” helps employers, buyers, suppliers, governments, workers and affected communities describe or assess the informal economy comprises work and enterprises not fully covered by formal legal, tax, social protection or labour arrangements. It is commonly encountered in workplace policy, sourcing, human-rights due diligence, community engagement and supply-chain management.
A credible application identifies the affected population, supply-chain boundary, local context, timeframe and evidence from rights-holders.