Same storm – different boats: the impact of COVID-19 on Europe’s shadow economy

As the COVID-19 crisis struck Europe in early 2020, so too did the implications of the Great Lockdown. Despite the stark outlook, though, many felt secure in the knowledge that they could rely on their governments, employers and the service providers around them to ensure a semblance of normality. Furlough schemes allowed many businesses to avoid lay-offs and continue paying their employees. Social safety nets ensured access to healthcare. And many could sit comfortably in their homes, confident that their groceries or restaurant orders would be delivered contact-free.

“We’re all in the same boat,” was a common refrain in the early stages of the pandemic – meant to engender a sense of solidarity. The virus did not care whether you were a politician or a plumber, a farmer or a pharmacist.

As data was collected, however, it became clear that a large share of Europe’s population could not count on receiving the same degree of support. Some groups were suffering more than others.

A more accurate analogy began to emerge – that we were all in the same storm, but certainly not in the same boat.

The last months have shown the vital role played by migrants working on the frontlines of the crisis – for example in the healthcare, agricultural and sanitation sectors – but what about those engaged in the informal economy? What vulnerabilities have they disproportionately faced during the pandemic, and what must be done to ensure that they are also recipients of protection?

Migrant workers, particularly undocumented migrants, are overrepresented in sectors such as deliveries and hospitality, two sectors which in different ways have been heavily affected by the pandemic and lockdown policies. Demand for deliveries, particularly of groceries, but other non-food retail products also, skyrocketed during the first wave in Europe, as non-essential shops were closed, and people shielding from the virus were forced to buy groceries online. Whilst a surge in demand could be seen as a benefit for delivery workers, many drivers are outsourced to third parties, where they are classed as self-employed, meaning in many cases workers who would have otherwise been shielding had no choice but to continue to work despite the risks.

The hospitality sector became arguably the biggest political football as we entered the second wave of the pandemic across Europe, and the focus of many anti-lockdown protests. Although some cafes and restaurants were able to remain open by offering takeaway and delivery services, bars were amongst the first businesses to close. These establishments often rely on informal labour, meaning staff were unable to access furlough schemes, and workers were forced to choose between their health and their livelihoods.

Europe’s reliance on migrant labour is nothing new. Migrants have been living and working in the European Union since before there was a European Union. Migrant workers have built so much of the Europe we know today, often literally, and they have built communities and lives alongside. From fish and chips to doner kebabs, from Matongé to Maryhill, Europe would not be Europe without migration – and European institutions are slowly but surely waking up to this reality. In a recent Friends of Europe debate, European Commissioner for Home Affairs Ylva Johansson was unequivocal in her rhetoric: “Migration will always be there, and we need migration.” Unfortunately, rhetoric too often comes easier than policy.

This publication explores the ways in which underrepresented groups – often those of migrant background – have come to prop up cities through the so-called ‘shadow economy’ of informal work. It looks in particular at the impact of the COVID-19 crisis, outlines case studies of government actions to recognise and respond to inequalities, and sets out recommendations for better acknowledging and dealing with the significant work done ‘off the books’ in Europe.