Informalization

Informalization is a sociological term used to describe the increasing importance of informal norms, practices, networks, and arrangements in social life, often alongside or instead of formal rules and procedures. The concept can refer to two related, but not identical, processes: the growth of informal arrangements within formal institutions and the expansion of informal economies and labor practices that operate outside or on the margins of formal regulation.

In the labor market, informalization denotes the rising share of informal employment and non-standard work arrangements, such as own-account work, gig or temporary employment, unpaid family labor, and other forms of employment that lack formal contracts and social protections. Drivers include deregulation, globalization, technological change, outsourcing, and the search for organizational flexibility. Consequences include income volatility, weaker social protection, shifts in bargaining power toward intermediaries and employers, and greater reliance on personal networks and informal risk-sharing.

Within organizations and daily life, informalization can describe the erosion or coexistence of formal rules with informal governance mechanisms: decision-making through informal networks, spontaneous collaboration, flexible work practices, and casual communication styles. Digital platforms can enable new forms of informal coordination while still operating within the bounds of formal legal and policy frameworks.

Measurement and debate center on indicators such as the share of informal employment, social protection coverage, contract status, and the prevalence of informal networks. Some scholars view informalization as a retreat of formal authority or a decline in formal institutions; others see it as a parallel system that coexists with formal rules, sometimes enhancing adaptability but also raising governance and equity concerns. The term remains context-dependent and contested.