Alerting Vulnerability of ‘Casual’ Workers in Europe’s Informal Employment Sector

‘Casual’ workers, who often operate without formal contracts or social protections, remain highly vulnerable across Europe despite the region’s lower overall informal employment rates compared to the global average. Informal employment, defined as work without legal protection or social security, continues to be widespread globally. According to 2023 estimates by the International Labour Organisation (ILO), 58% of the global workforce is engaged in informal employment, with the figure dropping to 50% when excluding agricultural workers.

In Europe and Central Asia, informal employment accounted for 1 in 5 workers until recently. Although EU countries generally have lower rates of informal employment compared to other regions, a significant portion of the workforce in Europe is still involved in the informal economy or working under zero-hours contracts.

The ILO’s 2023 data reveals that Hungary and Poland lead EU countries in informal employment, with rates of 17.8% and 9.8%, respectively. In contrast, many EU member states have significantly lower rates, with Malta recording the lowest at 0.7%, followed by Slovenia at 1%, and both Belgium and Bulgaria at 1.3%. However, when including Free Trade Association (EFTA) members, EU candidate countries, and potential candidates, the scenario changes dramatically. Georgia and Moldova have alarmingly high informal employment rates of 56% and 52%, respectively.

Turkey also stands out with a 27.3% informal employment rate, largely due to its high level of agricultural employment, which accounts for 15% of the workforce—much higher than the European average of around 4%. Professor Aziz Çelik from Kocaeli University points out that informal work is particularly rampant in Turkey’s agricultural sector, where 81% of jobs are informal. He also notes that informal employment is more common among women, with rates of 32% compared to 23% for men. Despite a decline in agricultural employment and a subsequent drop in informal employment rates from over 50% in 2004 to lower levels today, institutional and legal challenges, such as frequent tax and insurance amnesties and inadequate inspections, have allowed unregistered work to persist.

Informal employment is also notably high among EU candidate and potential candidate countries and surprisingly prevalent in the UK, where it exceeds rates in several other European nations. Among Europe’s top five economies, the UK leads with a 6.5% informal employment rate, followed by Italy at 3.8% and France at 3.6%. Spain and Germany have lower rates, at 2.6% and 2.5%, respectively.

According to Professor Mihails Hazans from the University of Latvia, the disparity in informal employment rates across Europe is influenced by social norms, traditions, legislation, and the sectoral composition of employment. For example, in Poland, the high prevalence of small enterprises that often rely on informal labor contributes to the country’s elevated rates. Hazans also highlights that sectors like hospitality and construction, where informal labor is more easily integrated, tend to have higher levels of informal employment.

In the UK, the absence of a legal requirement for written contracts and the rise of the gig economy, which often lacks formal agreements and protections, contribute to higher rates of informal employment. Hazans’ research based on the European Social Survey dataset reveals that the UK’s informal employment rate was 8.5% in 2018, rising to 13.3% between mid-2021 and 2022, before declining to 8.9% in 2023. Similar trends were observed in Ireland, where the rate was 12.6% in 2018, significantly higher than the 1.8% reported by the ILO, and in Portugal, with Hazans’ estimate at 9.3% compared to the ILO’s 4.6%. Conversely, Hazans found lower informal employment rates in Hungary and Poland than those reported by the ILO.

In these shadow economies, the lack of social and legal protection leaves workers particularly vulnerable, increasing their risk of household poverty as the degree of informality within a household rises.

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