Unreported Employment definition

Unreported employment, often known as moonlighting, cash-in-hand or ‘under the table’ employment, is employment that the state doesn’t know about, meaning it can’t tax the employment or ensure its compliance with labour laws, health and safety regulations and industry procedures. This is seen as an advantage to the employer, who has to pay the employee less money overall, and the employee, who won’t lose money to taxation.

There are other non-financial incentives for unreported employment, such as avoiding criminal background checks, eliminating paperwork and evading insurance requirements.

Although unreported employment can exist in many industries, it is particularly common in domestic work, self-employed trades such as plumbing and gardening, construction work and casual employment.

Exploitation is commonly cited as a by-product of unreported employment; workers benefit from the lack of taxation but they lose out on the protection that official employment provides, as well as minimum wage laws, which may encourage exploitation. In some cases workers are trafficked from abroad or forced to work in unreported employment, a form of slavery.

In economic terms, unreported employment forms part of a state’s informal sector – known as the black market – which operates outside of the state and does not contribute to a country’s GNP.

The size of unreported unemployment, and the informal sector as a whole, is a common theme in journalism and academic debate. In 2009, the OECD concluded that half the world’s workers – at the time around 1.8 billion people – were employed in the informal sector.