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Impact of Covid-19 on UK’s informal economy

Predicting the presence and location of informal workplaces in the context of the Covid-19 pandemic

A research team led by Nottingham Trent University is examining the impact of the Covid-19 pandemic on the operation of the informal unregulated economy in the UK and the presence of modern slavery within it.

The research is carried out in collaboration with the UK Office of Labour Market Enforcement, the Department for Business, Energy & Industrial Strategy (BEIS), Gangmasters Labour Abuse Authority (GLAA) and the Responsible Car Wash Scheme.

Despite awareness of issues relating to the informal economy, there are no official estimates of the scale of informal sectors. Businesses using unregulated employment practices are estimated to annually generate 12% of Britain’s gross domestic product. They sustain estimated two and a half million workers, a number equal to 9% of the formal private sector workforce. Some of these use coercive strategies focused around aspects of modern slavery. The local Covid-19 lockdown in Leicester, followed by those in other cities, has highlighted that these practices remain coercive and unsafe for workers. The local lockdowns also identified the limitations of current enforcement practices.

The project is building on the research team’s previous work on estimating the scale, likely locations and exploitation risks posed by the informal car wash sector across England and Wales. In this project, researchers aim to develop neighbourhood level estimates of the scale of the informal unregulated economy in relation to nail bars and garment manufacture, identified as two sectors where workers are at significant risk of unlawful labour exploitation.

The researchers draw upon information from online media, in conjunction with virtual drives through individual neighbourhoods, to track down the presence of informal businesses. Using official data sources and statistical modelling, they are then able to identify the distinguishing characteristics of those neighbourhoods containing hand car washes, nail bars or garment manufacturers.

This enables them to predict, at a neighbourhood level, where informal businesses are more likely to be located and understand the factors that shape their presence - and how this can inform strategic enforcement and the targeting of interventions. An interactive online tool and neighbourhood level map developed by the research could help enforcement agencies to move from reactive, intelligence-led interventions, towards proactive geographically informed strategies. The team will work closely with enforcement agencies to support them in utilising this tool in practice.

Using Apple and Google Mobility data, complemented by data from the Clewer Safe Car Wash App, which enables consumers to inform the Modern Slavery Helpline about potential cases of exploitation, the research team will also explore how Covid-19 has impacted on these businesses and understand how they operate in plain sight.

Using the partnership with enforcement agencies, the research team will use site visits to informal businesses to explore the impact of the Covid-19 pandemic on both employers and workers - and the extent to which it has facilitated or disrupted pathways into modern slavery.

The aim of the project is developing a more informed picture of the scale, location and nature of informal workplaces in the UK that can inform policy and enforcement responses to exploitative practices widely present across this sector.

This project was commissioned under the Modern Slavery PEC call for research on the impact of Covid-19 pandemic on modern slavery.

Research team: Professor Ian Clark, Dr James Hunter, Rich Pickford, Jack Barratt, Nidhi Sharma, Nottingham Business School, Nottingham Trent University.