The panel during the second session of the Small Branches Conference from left to right: Discussion leader Hon. Marlon Penn, MHA, British Virgin Islands; Chairperson Hon. Sharon Halford, MLA, Falkland Islands; Deputy Allistair Langlois, Guernsey; and rapporteur Ms Anne Harris, Jersey.
worked on a part time, but undeclared basis. This might involve waitresses, cooks, or builders. Undocumented illegal activity
might include gambling, for example the unlawful sale of lottery tickets from neighbouring countries. There was also known to be prostitution, and the sale and use of illicit drugs. While there is no empirical data on these areas, local intelligence suggests that their impact on the economy is minimal. B.V.I. arrived at this conclusion because those involved tended to be at the lower end of the economic ladder, with low wages, who would ordinarily not be liable to taxation anyway as they fall below the taxation threshold. In terms of gambling and in
particular the sale of lottery tickets, the group of people who stand to benefit is very small in size. Looking ahead, Mr Penn felt that
future policy making had to take into account the impact of the informal economy given that the above fact finding study makes it clear that the informal economy is unlikely to disappear even as a country develops.
An unknown quantity Deputy Allister Langlois, Guernsey’s Minister of Social Security, gave the view that the informal economy is as relevant to developed countries with full employment as it is to under developed economies, but the challenges are different. While
Guernsey has a successful economy and full employment, there are nevertheless activities which fall within the International Labour Organization (ILO) definition of a system of trade or economic exchange outside of the regulated economy. This would include the system of barter, or street trading for example. Such activity would not be recorded for tax purposes or within the data which informs the level of gross domestic product (GDP). The informal economy makes
up 50 per cent or more of GDP in developing countries, but even in England or France it is thought to make up 15 to 20 per cent of GDP – it is simply not known for sure. It is
understood to make up the gap in incomes. The ILO and Organization
for Economic Co-operation and Development (OECD) agree on the negatives which arise from the informal economy – absence of social protection, absence of tax contribution, errors in economic measurement, to name a few. There is also a negative impact on the development of policy owing to poor information. The informal economy emphasises the social divide – it tends to affect the poor, the unskilled, women and children. Bureaucratic regulation hinders the development of companies, and can prevent informal