What is an informal sector?What are the merits and demerits of informal sector?
Answers
Answer:
The informal economy, informal sector of the economy, or grey economy is the part of an economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countries, it is often stigmatized as troublesome and unmanageable.
The difference between merits and demerits is that merits are the strengths of anything be it a policy,law, agreement, action. They show what benefits it has and how it can be gainfully used. Demerits on the other hand are the weaknesses of anything.
The informal economy, informal sector of the economy, or grey economy is the part of an economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countries, it is often stigmatized as troublesome and unmanageable.
Advantages of Informal Sector employment:
Some employers pay well because company owners do not have many tax obligations. Employee effort is directed towards achieving profit rather than satisfying irrelevant routines.
There can be a close and direct relationship with the employer, therefore making it easy to get permission when in need of time off.
You are saved the hassle of paying Pay As You Earn tax.
There’s no red tape when it comes to dealing with personnel issues which are expressly handled either by the employer him/herself, or a senior manager.
Sometimes employment is done on the spot with little emphasis on attending lengthy job interviews and countless aptitude tests.
Sometimes one is employed because of one’s personal relationship with the employer rather than on merit.
Disadvantages of Informal Sector employment:
Little or no job security.
Unprotected by labour laws.
Odd working hours.
No pension, insurance or health insurance scheme.
Summary dismissals.
-Difficult to make any savings due to low wages.
-A brief illness or injury or injury can mean no financial means to survive.