The Informal Economy Isn't Going Away—And That's Not a Problem

Policy discussions about informal work often frame it as a problem to be solved. Get everyone into the formal economy, the thinking goes, and things will work better.

This misses something important.

Why Informal Systems Persist

Informal economic activity isn't a failure of development—it's often a rational response to formal systems that don't work well.

When formal hiring is slow and expensive, informal hiring fills the gap. When formal payment systems have high fees and restrictions, informal alternatives emerge. When formal regulations don't match economic reality, people work around them.

The Real Goals

The actual goals aren't formality for its own sake. They're:

• **Reliability**: Can you count on work being done well?
• **Trust**: Is there accountability when things go wrong?
• **Fair exchange**: Are both parties getting reasonable value?

Formal systems are one way to achieve these goals. But they're not the only way, and in many contexts, they're not the best way.

Building Better Systems

The most effective interventions don't try to replace informal systems wholesale. They build on what works while addressing specific failure points.

This might mean:

• Adding trust mechanisms to existing networks
• Creating payment infrastructure that works with how people actually transact
• Building verification systems that don't require extensive documentation

What This Means for Platforms

Platforms that succeed in emerging markets usually don't try to import Western models directly. They build for the actual context—including the informal systems that already work.

FixOrFlex operates in markets where formal and informal systems coexist. Our approach is to build practical solutions that work with this reality, not against it.