Discussion Leaders: Hon. Marlon Penn, MHA, British Virgin islands Deputy Allister Langlois, Minister of Social Security, Guernsey
The meeting heard that the Informal Economy (IE) is not governed by rules and affects both underdeveloped and developed countries. It was noted that countries with a high unemployment rate are more likely to have a larger informal economy. The IE encompasses gambling, prostitution, illicit drugs and unregulated trading. Members agreed that there is no single solution to the problem, if it is indeed a problem. From an individual’s perspective,
where there is no work but a pressing need to provide, depriving individuals of the opportunity to make a living the best way they can could lead to even greater burdens on government if they turn to crime. The session recognized the
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need for human compassion and an understanding of the underlying causes of the IE. Governments must decide whether this is actually a problem. If it is, they should try to integrate the IE into the formal sector through education and training, appropriate taxation regimes and availability of credit to small businesses. However, the context is important and “one size does not fit all”.
Legal and illegal Hon. Marlon Penn, MHA, of the British Virgin Islands (B.V.I.) introduced the challenging topic of the informal economy and its impact on economic diversity in small States upon which there is little information or statistics.
Discussion on the informal economy therefore stems from local knowledge and anecdotal evidence. According to Kristina Flodman
Becker in her fact-finding study, the term “informal economy” refers to “all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements”. To assess the impact of the informal economy on diversification, one must compare it with legal activities. In B.V.I., Mr Penn reported that
the main legal economic activity surrounded the financial services, tourism and construction industries. Informal economic activity was known to exist around the tourism and construction industries, where staff