Staying underground: informal work, small firms, and employment regulation in the United Kingdom

Why does a universal labor law, the National Minimum Wage (NMW) in the United Kingdom, have little effect on firms operating in the informal economy? In explaining this particular empirical puzzle, the authors go beyond dominant accounts of the informal economythe neo-liberal and the marginalization thesesto develop analysis based on the negotiation of consent within the labor process. Evidence from employers and employees in 17 firms is presented. The informal sector developed social relations of work that operated independently of the NMW, a key aspect being a tacit negotiation of order even under conditions apparently unhelpful to such practices. Informality was deeply embedded in relations of work that continued to reproduce themselves.