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Introduction
The informal labourer can be considered as illegal for the simple fact that he works in a not by the authorities registered employment. As politics has little alternatives to this type of occupation to offer, it is obliged to tolerate and legalise informal work at least in parts to get the problem under control (see >>> politics and administration > Order of public space and legitimation of parts of the informal sector)
So only these persons are considered as illegal by the municipalities who elude from state order. This occurs for reasons of better earning possibilities at not-approved locations or because of rejected licences for favourable places. Beyond this, there are further and in particular severer forms of illegality to the point of criminality.
Product piracy
Typical for economically less developed countries is the large production and ubiquitous sales of piracy products, predominantly entertainment media as music, movies and videogames as well as software. This market was made possible by the growing affordability of reproduction hardware as CD/DVD-burners and the fast-paced expansion of the internet. High profits can be achieved with relatively little investment capital. This leads to very high total revenues and with this to a complex linkage with administrative institutions through corruption to protect the markets and secure the distribution. Additionally the aspect of smuggling gets involved, because a lot of the piracy products are imported from neighbouring countries or Asia through complex clandestine networks, before attaining the final consumer.
This topic puts polemically into question which benefit and which real interest governments of threshold country have to take action against this market, which amounts a not insignificant percentage of the economic performance, gives people work without public spending and in the case of professional software even opens up new earning opportunities to the citizens.
Trade with stolen goods
Another criminal form inside the informal sector is the trade with stolen goods. There are regularly armed raids on trucks on the arterial roads of the big Brazilian metropolises where entire truckloads were ransacked and then enter the informal market. But the significance of stolen goods amongst the commercialised products is above all presented in exaggerated way. Indeed there are no secure statistics about the percentage of stolen goods of the total informally commercialised ware, but measured by the total ware volume turned over by the street hawkers they can not play an important role. The main centres of ware purchase of street hawkers are the central market in Madureira and the shops next to the central station (see >>> interactive map > ware purchase).
Linkage between formal and informal commerce
The most significant factor of informality are not the street hawkers, who only represent the lowest level of the informal economy system hierarchy. It is the smooth transition between formal and informal commerce.
As politics and administration is not able to resolve the problems for the legal business caused by the informal commerce in a satisfactory way, the formal and informal trade makes arrangements among each other (see also >>> politics and administration). To set off the revenue losses, some of the shops in districts with a high street hawker density implemented additional “informal employees”, who sell the identical products in the streets with cheaper prices for principally poorer clients. In this case, the shop functions as storage and gives the businessman the opportunity to evade taxes on these sales.
“Underhand dealings” have a certain tradition in Brazil as the formal commerce was often obliged to adapt flexibly to changing structural conditions. In the mid 90ties, for example, the Brazilian economy was struck by a hyperinflation of up to 1000%. The then governing bodies tried to stabilize the prices by freezing them. To avoid the losings caused by these actions, it was a common practice in many shops that many products disappeared from the shelves and were only purchasable on request and for hard currency.
Informality in the industrial sector
The industrial sector gets more and more an indispensable component of the informal sectors total construct. These are on one hand small firms, mainly in the clothing branch and in food production, from which two thirds work informally, according to statements of the Brazilian statistics Institute (IBGE). In the clothing sector, for example, many of these firms emerged as result of shifting the production abroad from Brazil into low-wage countries. After losing employment, many of the well skilled seamstresses organized themselves and foundedmany small informal (and not controllable) enterprises, like in the city of Novo Friburgo, which supply the local markets.
But even big factories often produce additionally for the informal parallel economy. These can be enterprises which produce brand wear under licence for international concerns, but also local wear. In some of these firms illegally extra shifts are performed, to supply the informal market. Through machine efficiency and evading taxes high profits are achieved. Indices for that are the masses of industrialized products identical to genuine ware, which can be bought for notably cheaper prices.
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