|
I n MEDCs the majority of people are employed or self-employed and pay
taxes on their earnings. If they attempt to avoid their taxes, the inland
revenue services fine them large sums of money. LEDCs are different to this.
Although they have large numbers of people who are employed in the formal sector
who work fixed hours and pay their taxes to the government, there are also an
increasing number of people who are employed in the informal sector. The
informal sector in LEDCs is made up of jobs that people have found for
themselves. These include jobs as beach vendors, shoe shiners and the businesses
that set up to serve shanty town dwellers.
The jobs have much in common:
- They require little capital to set up
- They require few skills.
- Many of them are done from home.
- They are labour intensive.
- They are small scale.
As urban areas in LEDCs continue to grow, the informal sector will also grow
as there will not be enough jobs in the formal sector. This robs the government
of taxes, but as the money which is earned is generally re-spent the multiplier
effect will apply (see below).
|
