Question

Difference between formal and informal employment

Answer 1

Answer:

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Explanation:

Differences Between Formal and Informal Work.

☛ One primary difference between formal work and informal work is that formal work is far more stable than informal work. The reason for this is that companies invest time, training, and education in formal work employees, so that they can gain new skills that will benefit the business. Companies that provide informal work are seeking temporary employees to perform short-term tasks, typically seasonal work, which will end in a few weeks or months.

Another major difference is that formal work typically pays higher wages than informal work. The reason is that formal work tends to require a higher level of education or training than informal work. For example, a computer programmer is a type of formal work that requires a specific set of skills. In contrast, a person hired to haul old computers to a recycling dump is performing informal work that doesn’t require any type of specialized training. As a result, formal workers typically earn higher salaries and wages than informal workers.

Formal and informal work is also different when it comes to taxes. Formal workers are taxed under the existing tax guidelines and receive paychecks that reflect these taxes. Informal workers are not taxed and are responsible for paying their own taxes. As a result, a country that relies mostly on informal work may not receive all the taxes owed under the law, since there may be millions of workers that choose not to report their incomes and pay taxes on that income.