Our approach should move away from the affirmative’s discursive romanticization towards a nuanced understanding of how the formal and informal economies both entail similar inequities

For some decades, the informal economy was predominantly depicted as composed of negative attributes whilst the formal economy was portrayed more positively as the path to ‘‘progress’’, ‘‘advancement’’ and ‘‘modernization’’. In recent years, this hierarchical ordering has been inverted by a variety of scholars who have begun to portray the informal economy more positively as a route to progress. For them, the conventional normative portrayal of economic ‘‘development’’ and ‘‘progress’’ as a process of formalization has been countered with an alternative reading of progress and development as a process of informalization. Reporting a survey conducted in the Ukraine during 2005/2006, this paper has begun the process of evaluating critically this emergent more positive reading of the informal economy. This case study has revealed the relatively shallow permeation of formalization and that the informal economy is strong, extensive and a core integral component of the Ukraine economy. It also displays how although studies of Western economies discuss the complementarity of the formal and informal economies in terms of the volume of informal work, with affluent populations depicted as conducting more than deprived populations, in the Ukraine this complementarity takes a rather different form. Disadvantaged populations such as those living in deprived areas, lower-income households and those excluded from formal employment are more likely to conduct such work out of necessity in the absence of alternatives and to engage in more routine and less rewarding forms of such work. More affluent populations, meanwhile, are more likely to undertake such work out of choice, and to engage in more rewarding endeavor in this realm. The result is that uneven development in the Ukraine is not characterized by a distinction between formalized and informalized households. Instead, it is characterized by a distinction between households embedded in the formal economy who conduct more rewarding forms of informal work out of choice and households excluded from the formal economy who engage in more informal work but out of necessity and of a less rewarding variety. Put another way, affluent populations in the Ukraine have greater choice and opportunities regarding the forms of work they use and labour they supply, whilst the livelihood practices of deprived populations seem more a product of constraints and lack of choice rather than a matter of choice. This raises some key questions. Should economic policy continue to concentrate on the development of the formal economy in such post-socialist societies, especially given how few households rely on such a form of work as a coping practice? Or should some attempt be made to also facilitate the development of the informal economy, especially amongst deprived populations, in order to enhance the living standards of these populations? In other words, should all of the policy eggs be put into the basket of the formal sector or should attempts be made to also harness the ability of people to use the informal sector as a livelihood practice? Until now, such questions have not been high on policy agendas. Based on the dual economy thesis which assumes that there is a natural and immutable shift towards the formal economy, few have questioned whether giving primacy to the formal economy is the appropriate policy response. In this paper, however, we have started to display that informal economic practices are not some marginal sphere but instead, are alive and well in this post-socialist society. Indeed, informal economic practices might even be seen as the ‘‘mainstream’’ economy given how the majority of the population depends on them for their livelihood. However, just as the formal labour market is composed of multifarious forms of work, some of which have relatively negative impacts on economic development and social cohesion, and some relatively more positive impacts, and some of which are conducted out of choice and others necessity, this paper has tentatively revealed that the same appears to apply to the informal economy. It might well be the case therefore that it is far too simplistic to adopt simplistic binary hierarchical depictions that represent the formal economy as ‘‘good’’ and informal economy as ‘‘bad’’, or vice versa. Instead, a finer-grained understanding and more nuanced approach towards understanding the informal (and formal) economy is required that recognizes its plurality of forms and their varying consequences for economic development and social cohesion. If this paper encourages a move in this direction and beyond the over-simplified generalities that have too often plagued discussions of this form of work and resulted in pro- and antiinformal economy stances that advocate either purely formalization or wholly informalization as the way forward, then it will have fulfilled its objective.