Page 61 - Azerbaijan State University of Economics

Abderrahmane Benouaret: Towards Regulating Freelance Work and the Informal
Economy in Algeria: Will the Self-Employed Contractor Law Suffice?

INTRODUCTION
Many global economies, especially emerging and developing ones, suffer from high
levels of labor and institutions operating outside the formal economy. A study by World
Bank Group titled " The Long Shadow of Informality " reveals that in emerging markets
and emerging nations, the unregulated economy employs 70% of the total workforce in
these countries and represents nearly one-third of the total domestic product (GDP)
(Ohnsorge & Shu, 2022). The occurrence of the informal economy is multi-dimensional,
influenced by social, economic, political, and geographical variables (Gómez-Cruz,
Anzola, & Batz Liñeiro, 2024). In addition to the traditional reasons contributing to the
rise of this phenomenon, such as income inequality—especially after the COVID-19
pandemic and its impact on low-income families (Botero, Castrillón, Hurtado, Franco, &
Vargas, 2024), globalization (Bolarinwa & Simatele, 2024), and automation and
technological advancement (Routh & Sarkar, 2024) new causes of the informal economy
have emerged in recent years, primarily linked to the shift towards the knowledge
economy, the digital economy, and structural changes in the labor market towards
freelance work (McKeown & Leighton, 2016). Moreover, the trend towards digital
entrepreneurs (Hrib, 2018)has led many employers to use social media platforms to search
for employees (Vătămănescu & Mănuț, 2013) and service providers, even in an informal
manner. This has increased the contributions of informal economic activities, particularly
in developing countries that lack the legal frameworks to regulate and legitimize these
activities.

Algeria, like other developing countries, has experienced significant growth in the
informal economy since the 1970s, with the phenomenon reaching its peak in the early
1990s. During this period, the country went through a wave of political and security
instability, which had a profound impact on economic life and worsened the conditions
of the middle class. Many individuals and economic units exploited the state's fragility
and turned to illicit economic practices, such as tax evasion and informal employment.
However, with the restoration of political stability in the early 2000s, the country's
economic situation improved, and informal practices declined. The state imposed tighter
control over economic activities and created jobs for graduates and skilled workers. Just
as the country began to regain control over the informal economy, it was affected by the
new digital and knowledge-based wave in the labor market. Parallel activities to the
formal labor market emerged, primarily consisting of freelance jobs that include a mix of
new and traditional activities that rely on digitization and the knowledge economy. Faced
with this new reality, there arose a need in the country to regulate and formalize these
activities. In response, at the end of 2022, the Algerian government, through the Ministry
of Knowledge Economy, Startups, and Micro-enterprises, issued a new law known as the
Basic Law of the Self-Employed contractor.

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