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Areas of Expertise

Informal Economy

Informal Economy
© ILO/M. Crozet

Owner of a restaurant - Joselito

Joselito is 35 years old and is the owner of a small restaurant, which is not registered even though he claims so because he pays a tax to the municipality. He employs a family member (his nephew), but during peak times, he hires other seasonal workers to fulfil the needs. 

Working hours are often long and working conditions are poor: in particular, the kitchen of the restaurant is badly lit, not very well equipped and with insufficient ventilation. Because of that, the restaurants at the neighbourhood get more clients.  Sometimes, his workers do not show up as a threat for not offering better contract conditions. Joselito remains competitive only because he sells special local dishes.

Joselito has considered registering, but after spending a day going to different local agencies, he was daunted by the amount of documents to fill out, the costs of registering, and the number of different institutions that he needs to get permits and certifications from, dealing in particular with the food sector. He is also afraid that local authorities can shut down his eating place because of poor working conditions and lack of compliance with sanitary regulations. He also wonders whether he will be able to pay taxes every year as his revenues fluctuate.

Joselito wants to improve the situation of his workers and at the same time his business, but he is worried because of the costs implied by taxes and social security. Indeed, hiring informal workers and family members’ helps him remain competitive. Joselito is also a member of a small business association but does not have time to attend meetings to better understand how he can get support from the association. 

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