Informality in the construction sector in developing countries

Studies dating from the mid 1990s describe a rapid expansion of ‘informal’ construction activity in many parts of the developing world. This has been accompanied by increasing diversity in the interpretation of the concept, leading to considerable confusion. Through a wide review of the literature an attempt is made to bring some clarity to the debate. It is argued that the essence of informality is the absence of regulation. As construction activity is subject to a wide variety of regulations, different interpretations of informality in the construction industry are inevitable. Four aspects of regulation are highlighted: regulation of enterprises, of the terms and conditions of employment, of the process of construction and of the product. This suggests four areas of informality: the informal sector of enterprises, informal labour, the informal construction system and informal building/settlements. The four areas are frequently interrelated. But there are no hard and fast dividing lines between formal and informal, rather a gradation.