Persistently non-compliant employment practice in the informal economy: permissive visibility in a multiple regulator setting

Ian Clark, Alan Collins, James Hunter, Richard Pickford, Jack Barratt and Huw Fearnall-Williams

Cambridge Journal of Economics, 2023, vol. 47, issue 3, 611-632

Abstract: The growing significance of non-compliant employment practice in the British economy has motivated scrutiny of the effectiveness of current regulation. In some markets, charges of labour exploitation, underpayment of the national minimum wage and associated ‘wage theft’ from workers are rife where business operations are characterised by academics, regulators and stakeholders as exuding ‘permissive visibility’. The current landscape of enforcement and regulation of informal business and employment practices features complex structural and operational issues for regulators subject to tight resource constraints. These enable permissiveness and offer scope for strategic regulatory tolerance of some violation types, possibly to raise compliance rates for other types of violations. Drawing on extensive empirical evidence and qualitative data sources in one market sector (hand car washes), this study investigates some key hypotheses focussing on compliance and responses by businesses and regulators to the extant regulatory regime. These inform a pragmatic institutional analysis considering the merits of some movement towards a single enforcement body instead of the existing arrangements featuring multiple regulatory institutions.

Keywords: Informal economy; Non-compliant employment practice; Regulation; Wage underpayment and wage theft; Labour exploitation; Permissive visibility (search for similar items in EconPapers)
Date: 2023
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