Employment in the informal economy: implications of the COVID-19 pandemic

Purpose Although the coronavirus (COVID-19) pandemic appears to disproportionately affect those in informal employment, they often receive less government support than the formally employed. This paper considers definitions of the informal economy and informal employment, explores the rationale for participating in the informal economy and reflects on some effects of the pandemic on these workers. Design/methodology/approach The paper presents a narrative literature review with analysis of the selected academic and policy literature. Findings There are considerable short- and long-term implications of the pandemic for informal employment and the informal economy. This occurs against the background of unresolved tensions arising from informal workers' desire for more employment security and employers' striving for continued labour flexibility while transferring costs to government and workers. The COVID-19 pandemic might accelerate current trends and force new solutions to better protect basic work security while helping organisations to remain competitive. Government policies supporting work safety, income security, moves to formalisation of employment and fairness for informal employees are particularly important. Research limitations/implications As statistical and qualitative evidence is currently limited, it is too early to identify the full effects of COVID-19 on employment in the informal economy. Practical implications The results suggest that governments need to carefully consider explicit support for those in informal employment to create fair, resilient and ethical structures for workers, businesses, economies and wider societies. Social implications The paper identifies some of the social implications of COVID-19 for the informal sector. Originality/value The analysis offers initial insights into the impacts of a major health, economic and social shock on informal working.