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The Informal Economy in the Bijlmer

The Informal Economy in the Bijlmer

One can see them standing next to the parking lot on the Bijlmerdreef, letting their car keys rotate around the index finger with a light swing of their wrist. Others slowly cruise around the corners near the Bijlmerplein, closely observing the pedestrians on the sidewalk. They are so-called ‘Snorders’ – illegal taxi drivers – waiting for customers. Accessible to even visitors, they represent the most visual part of a whole underground economy in the Bijlmer, a neighborhood in the South-East of Amsterdam. Various non-registered businesses, from catering services to hair and nail studio are run from people’s homes. While their existence is considered counterproductive by some, such businesses are regarded as essential to the residents’ livelihood by others. In any case, fuelled by economic incentives and steered through the community dynamics, the informal economy in the Bijlmer is almost inevitable.

A twenty-minute metro ride from the center of Amsterdam, the Bijlmer is home to a population of approximately 45,000 inhabitants. Besides efforts to make the neighborhood more attractive through smaller buildings, it is still well-recognizable with characteristic large-scale housing blocks. More important than the architecture, however, is the population composition: 39% are Surinamese, 9% Antilleans, 2% Turkish, 2% Moroccan, 32% from other backgrounds, and only 15% are native Dutch. On the train to the Bijlmer, this becomes apparent through the increasing richness of the passengers’ ethnic backgrounds. As one walks through the streets, African clothing shops and Surinamese restaurants are as common to see as Papiamento and English are to hear. Many Bijlmer residents do not speak Dutch and thus have considerable difficulties finding their way to the labor market. Unemployment rates are high, as are the rates of people with low income or dependent on social welfare. The percentage of single people is also significant with rates as high as 66% in the last several years. According to Shurill Heera, who has lived in the Bijlmer since he was 5 years old, the latter greatly influence the decision of whether or not to engage in the informal sector. “If one lives here by himself, without being responsible for a household or family,” he says, “one simply has nothing to lose. Single men are willing to take much more risk and so the step to the informal sector is easy.” 

Household Production on Community Level

Just as the ethnic composition of the Bijlmer seems unique to Amsterdam, so does its economy; much more business than usual is handled off the records. The owner of the Kahwaja Bazar, a shop in Bijlmer, for instance, repaired another shop owner’s price-tag gun. When bargaining about the repair’s cost, the two agreed on a certain amount of money and a 5 Euro calling card for African destinations. Reminiscent of markets in developing nations, such trade diverges significantly from the deeply structured, bureaucratic Western business model. Similar to this under-the-table transaction in a registered store, various economic activities take place unofficially in people’s homes. This concept of household production is nothing new to a traditionally European economy. When a child washes his/her parents’ car, a certain value for which a registered car wash would charge is created. Since this household production is unregistered, it could be considered part of an informal economy. Should the child get paid in return for the cleaning, the situation is even closer to what is currently found in the Bijlmer. Another example of an informal economy in Western communities is the common practice of babysitters, paid for watching their neighbors’ children. None of the funds transferred in these cases are officially registered, taxed or otherwise regulated. Therefore, the main difference in the case of the Bijlmer is the fact that the informal economy involves whole ethnic groups and communities rather than next door neighbors. Accordingly, the size of the informal economy as well as the diversity of goods and services offered is vastly greater.  

It Simply Happens to You

As easy as a teenager gets involved in babysitting, a young resident of the Bijlmer would participate in the informal economy. According to Shurill Heera, growing up there means “it simply happens to you.” He describes his own experiences as a high school student, witnessing the sale of goods on the street, which for him was as normal as in regular stores. He clearly remembers his own desire to buy a radio, which was cheaper on the black market. He thus bought his first radio on the street, just like his friends did. One thing led to another and he eventually started selling goods himself. Mr. Heera believes that about 80% of the people in the Bijlmer find their way into the informal economy in a similar fashion; their everyday life activities inevitably intersect with unregistered business, yielding an easy switch off the books. 

Due to the fact that these unregistered businesses are strictly speaking illegal, one might consider participation in the underground sector wrong. Common criticisms and objections characterize underground economies as exploiting the welfare state or the economy in general, and claim underground economies unfairly increase competition with registered enterprises. On the contrary, an argument can be made that the informal economy provides services to consumers and income to producers which otherwise would not have been available. Even within the Bijlmer, residents and business-owners have differing views on the fairness and legitimacy of the underground economy.

Sy-A-Foek, owner of a Chinese-Surinamese restaurant in the Bijlmer, expressed concern regarding the competition he faces from illegal caterers. He said that “they even were so bold to sell food from their cars in front of my restaurant.” This problem was only solved when cameras were installed to combat problems related to drugs. Nevertheless, he still finds it difficult to compete with parties working from their homes. According to him “a lot of these people are also on welfare, giving them a double source of income.” This impression was reiterated by Mr. Kahwaja, a shop owner for over 15 years. He stated that “here in the Bijlmer, every house sells something.” His main concern was that people in the informal sector sold on credit, drawing large numbers of customers away from his business. Bharat Lachmansingh, who owns shops in both Amsterdam and Rotterdam, regards the main problem as the lower cost associated with home production. Those working in the informal sector often pay no additional rent or overhead, no taxes, and they do not have to comply with current legislature. Law requires Mr. Lachmansingh, for instance, to place safety labels in Dutch. “This is of course something someone in the informal sector will not have to worry about,” he said. 

Is it Really that Bad?

While shop owners seem to feel threatened by the informal economy’s unfair competition, most people do not work illegally full-time. Instead, they engage in extra business after hours in order to secure additional, but often necessary income. Willy Esajas, chairwoman of the organization Surinaamse Vrouwen Bijlmermeer (Surinamese Women Bijlmermeer), mentioned that “there are custodians working for two hours before and after the regular workday.” Having a whole day in between, they often “work on the side by cooking for someone else or making clothes, for instance.” Shurill Heera gave the example of a man who works on pay-roll as a plasterer during the week and works as a handyman illegally on the weekend. Similar to these scenarios, most individuals engage in the informal sector only part-time. 

Both Willy Esajas and Shurill Heera agree that the informal sector fulfils a need for which the formal sector cannot provide. Esajas pointed to the snorders as a prime example. As she explained, “the mobility within the Bijlmer poses a problem as there are no trams and only a few busses and metros.” Regular taxis are too expensive for most people—so illegal taxis grew to fill this need. In addition to this issue regarding public transport, the legal market does not supply sufficient catering services to match the demand. Ronald van Rangen, a restaurant owner, explained that he “had worked from his home for seven years.” Unable to find premises in accordance with the Stadsdeel’s zoning plans, “many people continue to cater from their homes in a similar fashion.”  

In spite of the frequent disapproval of underground business amongst legal shop owners, none of them has ever informed the police when well aware that illegal practices were going on. Their reasons for not doing so ranged from the doubt for the police’s ability to change current circumstances to fear of reprisal. Additionally, a feeling of solidarity with those working in the informal sector was also mentioned. However, Mr. Heera had a different explanation for it. “Even the registered shopkeepers often do something on the side, such as extra work over the weekend, or giving false information to the Belastingdienst (Tax collectors office).” Consequently, they would jeopardize their own business, if the authorities were to get involved. In this way, the informal economy’ pervasiveness and prominence in close ethnic communities maintains silence over the mentioned disagreement.  

What Can Be Done?

Considering this blurry line between the formal and the informal sector, the question of whether and how to address the issue of the underground economy is interesting. Frank Diender, a police officer in Bijlmer, states that the police don’t usually act against unregistered businesses. Unless they receive a formal complaint from one of the neighbors who might be disturbed by the noise or the smell that the house entrepreneurship occasionally produces, the police do not have an active policy. The reason that they are trying to suppress snorders is because of their suspected connections with other illegal activities such as drugs or prostitution. The police suspect criminals use snorder taxis for transportation of drugs, firearms, and even money. Mr. Khawaja, a local shop-owner, agrees: “every time the police search the snorders they find something.” However, many Bijlmer residents claim that although snorders might be used for transportation of drugs, they are usually unaware of it. 

Randy Stena, Representative of the Stadsdeelraad (City District Council) South-East, acknowledges the problem of the informal economy, but states that the Stadsdeel does not have an active policy to deal with it. “The Stadsdeel is facing a difficult political choice,” he explained. On the one hand, it could accept the existence of an informal economy, sustaining something that is in fact illegal. On the other hand, it could take active measures, spending a significant amount of resources and making the lives of Bijlmer residents much harder in the process. When Stena is asked for a solution to deal with the informal economy he says that there are some plans circulating within the Stadsdeelraad, but that they are all in a stage at which it is too early to say anything sensible about them. 

He is enthusiastic about the work of one organization, however—the Ondernemershuis (House of Entrepreneurs,) an EU- and Stadsdeelraad-supported institution. The Ondernemershuis is charged with the task to help the aspiring entrepreneurs start their business and it could also serve as a possible starting point for those who would like to legalize their business. According to Steve Osei Owusu, a counselor at the Ondernemershuis, a large part of their task is to provide courses for people interested in starting a business (for instance on how to develop a business plan) and to assist owners who have already established a business. This is useful in order to combat the difficulties arising out of the high level of bureaucracy, with which informal business owners are not familiar. As the target group of the Ondernemershuis is the Bijlmer’s population, few native Dutch seek the institution’s help. Addressing the informal economy in particular, Owusu explains that the Ondernemershuis encourages people to legalize by “explaining the advantages of running a registered business.” If the V.A.T., for instance, stays under € 1345, the entrepreneur is not required to pay the tax, but it can be invested in the business. Still, he recognizes the many administrative restrictions, such as the obligation to have a state recognized diploma, or the difficulties of finding appropriate business premises due to inflexible zoning plans. Even with all the restrictions, he believes “that many people would like to get out” of the informal sector and start working legally. The Ondernemershuis is a good example of how proactive policy can help particular individuals with the transition and legalization of their business. However, it fails to address the issue of the informal economy as a whole on two counts. First, there is a large discrepancy between the scope of the informal economy and the number of clients the Ondernemershuis can handle. Second, most of the people who engage in the informal economy do so part time as an additional source of income and do not have that much interest in legalizing their business.

Besides the government sponsored initiatives, such as the Ondernemershuis, there are also non-governmental entities addressing the issue of the informal economy. Mrs. Esajas, for example, intends to organize a conference this summer to put the issue of snorders in a broader social framework. “Snorders should get out of the current system of picking up people from the streets,” she said. “It is basically illegal, and customers also should start seeing that as a problem.” Another problem is that passengers are also not insured if the snorder gets into an accident. According to Esajas “snorders should try to find cooperation partners,” which could help them organize themselves more formally. The parties she plans to invite to the conference are, among others, the Stadsdeelraad, public transport operators, and taxi-operators. Mrs. Esajas’ cousin will speak at the conference about his recent experience startingtou a taxi-company, and can explain how he overcame bureaucratic barriers. Since snorders will likely not attend in case they can be identified as such, Esajas stresses that “it is a conference for the whole community, ranging from youngsters to elderly people, because it is an issue that affects the whole everybody in the Bijlmer.” Esajas thinks that because the snorders are so widespread they cannot be forced back easily but “the City Council can take a leading role by providing funds for those who are willing to make the transition into the formal sector, for instance.”

Unfortunately, this seems highly unlikely, considering the fact that the City Council has recently spent large sums on the renewal of the Bijlmer’s residences. Since there are more problematic neighborhoods, the City Council will not be very eager to allocate more funds to the Bijlmer. This attitude can also be seen in the Stadsdeelraad and the police, neither of which have specific policies concerning the informal economy. While opponents of the underground sector might find this agenda dissatisfying, it also reflects the fact that negative implication of the sector are not very severe. It is not considered as a problem, because it works through family and community ties. For some it is even a form of survival, or a means to get started in life and gradually move towards a ‘formal’ way of doing business. Shurill Heera definitely sees the informal economy as a means for people to fulfill their needs that enable them to climb the social ladder. “When I was in India,” he recounts, “I met a custodian, who was interested in coming to Amsterdam. He asked me all these questions about life in the Netherlands and whether he would be able to find a job.” Even though encouraging the custodian, Mr. Heera did not expect him to actually undertake the journey. Six months later, however, somebody with a “nice shirt, tidy pants and shiny shoes” approached him, asking how he and his family were doing. “I did not even recognize him,” Heera continues, “but he appeared to be the same man.” He first shared one room with seven other people and worked illegally in a launderette. He worked hard, and now he has a girlfriend and his own place.” For this man, the informal economy was a stepping stone to a better life. 

In conclusion, the informal economy is deeply intertwined with the Bijlmer residents’ lives, and the positive effects are at least equally important as the drawbacks. Unfair competition, eviction of taxes and no insurance for workers are some of the negative aspects. At the same time it is a source of much needed income for Bijlmer’s poorest residents and supplies the population with services, which would otherwise be unattainable. Additionally, the connection to more severe forms of crime such as drug trafficking are found to be less frequent than initially expected. Informal economy will persist as long as the economic incentives remain and the close community ties stay intact. 

References

 

Interviews

Frank Diender, police-officer, buurtregisseur Ganzenhoef. June 19, 2007

Willy Esajas, chairwoman of Surinaamse Vrouwen Bijlmermeer [Surinamese Women Bijlmermeer] June 22, 2007

Sy-A-Foek, owner of Chinese-Surinamese restaurant. June 21, 2007

Shurill Heera, owner of driving-school. June 21, 2007

Mr. Kahwaja, shopowner. June 21, 2007 

Bharat Lachmansingh, shopowner. June 21, 2007

Steve Osei Owusu, counselor of the Ondernemershuis [House of Entrepreneurs] June 22, 2007

Ronald van Rangen, owner of Surinamese restaurant. June 18, 2007

Randy Stena, Representative of the Stadsdeelraad Zuid-Oost [City District Council South-East] June 19, 2007

Sources

Bureau Jeugdzorg, (2004). De Regio Amsterdam Zuid-Oost. Jeugdzorg Advies en Ondersteuning [Bureau for Youth care. The Region Amsterdam South-East. Advice and Support for Youth care]

Gemeente Amsterdam, (2006). Stadsdelen in cijfers 2006. Dienst Onderzoek en Statistiek. [Municipality Amsterdam. City districts in figures 2006. Research and Statistics Service]

Ugelow, P. and Van Eijk, F. (2001) Everything you wanted to know about ethnic entrepreneurship in the Bijlmer, but were afraid to ask. Humanity in Action retrieved from: 

http://www.humanityinaction.org/docs/Ugelow__Van_Eijk,_2001.pdf  

 

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Denmark Denmark 2007

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