This economic trend is part of a color division and focuses on informal activities.
The economy studies the most efficient methods to satisfy material human needs, using scarce goods. In that sense, there are different currents that aim at economic development coupled with the benefit of some sectors. Along these lines, a theory called gray economy.
This current responds to the economic activities that are legal but are hidden from the State for various reasons, such as tax evasion or administrative controls (domestic work and street vending).
Latin America and informal work: a rising risk
The gray economy, focused on informality
According to the International Labor Organization (ILO)the main cause of the gray economy is the inability of States to generate employment within the formal economy. Likewise, he points out that the following factors promote informality:
- political corruption
- the poor infrastructure
- lack of trust and security in the government
- lack of access to markets
- the lack of financing for self-employed workers
- the weakness of labor administrations and, in particular, of labor inspection
- excessive regulation and bureaucracy
The gray economy is a problem for different reasons. On the one hand, it is usually carried out in developing countriesand is covered by a young population who have no possibility of professional training nor can they work with a decent economy.
As if this were not enough, informal employment it is difficult to identifybecause it is located in spaces, whose data and information are not officially registered.
The consequences are also devastating if it spreads. Low productivity leads to low salaries, the State registers less and less income and there is a lack of medical care that leads to a population with more diseases..
In that sense, the way to combat the gray economy is through formalization of employmenta transition that requires compliance with various regulations to be followed by companies.
Source: Ambito
