Question on Immigration and the Black Market

Readers Question – what on earth is the black market and how does the immigrant have an impact on that?

The black market is a colloquial term that refers to economic activity that is not regulated by the government. It involves economic activity where people don’t declare tax returns or pay VAT e.t.c.

It is more generally referred to as the ‘underground economy’ or ‘hidden economy’. This underground economy may involve illegal activity such as drug dealing or it may involve typical jobs such as paying a builder in cash – this becomes non-legal activity. Note it is a legal requirement to declare income to the inland revenue. But, it can be hard to trace and track down.

Immigrants may find themselves working in the underground economy. These will be jobs that are paid in cash, ignore labour laws, ignore minimum wages and do not declare income for tax purposes. Illegal immigrants, especially, may find that they have no alternative but to work in the underground economy. This is because they are not legally able to work. The problem is that employers are in a position to exploit the illegal labour and frequently wages and conditions may be very poor and in some cases akin to slavery where the workers are tied to the boss who brought them into the country.

Even legal immigrants may find themselves working in the underground economy. First-generation immigrants often find it relatively more difficult to get work because of discrimination, language problems, lack of skills. Therefore, they may end up working in the underground economy.

Underground markets may be more likely when closed communities have demand for particular goods and services.

Estimated Size of the Underground Economy in Different Economies

  • UK 7% of GDP
  • US 8% of GDP
  • Italy 30%
  • Russia 40-50%
  • Sub Saharan Africa 50-60%
  • China 20%
  • Japan, 6%


2 thoughts on “Question on Immigration and the Black Market”

  1. there is a huge employment black market in catering and i am sure all governments know this. Why do they not act to stop this? 20 years ago i worked in London in various restaurants and so many of them empoyed ‘illegals’. I went out with one for some time, lovely person. He was not here because of political problems but because he saw more money and more freedom in England compared to Algeria. However, wages were, and are still, very low in the catering industry and my belief is that this is because the jobs can be filled by ‘illegals’. The governments appear to like this status quo. Why?

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