c kesteloot - informal spaces

Informal Spaces: The Geography ofInformal Economic Activities in Brussels

CHRISTIAN KESTELOOT AND HENK MEERT

IntroductionAlthough there has been a profusion of studies on informal economic activities in cities inindustrialized countries, mirroring the growth of the phenomenon itself, few firmconclusions have yet been reached in relation to the spatial patterning of these activities.Only a few attempts are available, but they are mainly focused on regional variations andcross-national comparisons of levels of informal activity rather than on the spatial logic ofinformal activities (see Button, 1984; Van Geuns et al., 1987; Williams and Windebank,1994 for regional variations; Pahl, 1989; Barthelemy et al., 1990 for internationalcomparisons). Mingione (1991: 178–9) rightly argues that the variation in theinformalization of economic relations is situated at the local scale and that this is anextremely complex geography to understand. This paper is an attempt to clarify someelements of the spatial logic of informal economic activities, by unravelling the relationsbetween different categories of the informal economy and their spatial distribution in awell defined empirical social and economic geographical setting, i.e. Brussels. A questionlike this cannot be investigated without a prior discussion about framings and typologiesof informal economic activities, which all boil down to the raison d’etre of these activitiesin a broader economic and social context. Usually, these questions are considered fromthe point of view of households seeking to secure access to the necessary resources fortheir social reproduction or from the point of view of firms trying to maintain theirexistence in a competitive market environment. But such an analysis would be veryunsatisfactory if the historical dimension were not taken into account. If the informaleconomy is felt to have increased in the western world since the crisis of the 1970s, merestructural relations between the search for resources by households or the search forprofits by firms on the one hand, and the existence of informal economic activities on theother, would offer only a very partial explanation.

Considering research that takes this historical dimension into account, one candistinguish a micro-economic perspective that emphasizes factors which explain theparticipation of an economic agent in the informal economy. From the macro-economicviewpoint, the emphasis is on the interrelationships between economic recession and theinformal economy or, alternatively, on the absorption of the informal economy (andparticularly its non-remunerated components) by the logic of capitalism, that is, theexpansion of commodity production (Renooy, 1990). The first approach reminds us totake the differences between the economic actors into account. Households in search ofresources in a present-day western socio-economic context deal with combinations ofmoney income and domestic activities (Pahl, 1985; Mingione, 1991: 139–45) and their

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involvement in the informal economy cannot be equated with firms in search of lowerlabour costs or higher productivity. The second approach yields a classification ofinformal economic activities from a historical viewpoint (where different time scales haveto be considered) which distinguishes different socio-economic reasons for thedevelopment of informal activities in changing historical contexts (Lapple et al.,1986). Obviously, if history plays a role, space will as well. Indeed, processes whichdevelop in a specific historical period usually display a spatial patterning reflecting thespaces which were produced at that time — and the sequence of different periods givesrise to a historical layering of space which has been coined the ‘geological metaphor’ (seeWarde, 1985).

In this paper, we develop such a historical analysis of informal economic activities inBrussels in order to understand their spatial logic. The micro and macro perspectives arecombined in order to deal with categories of informal activities that are homogenous interms of their spatial logic and thus explore their geography. In the first part we reviewseveral classifications of informal economic activities and assess them in terms of theircongruence with the distinctions of economic actors and spatial logic on an abstracttheoretical level. The second part will elaborate on the ‘raisons d’etre’ of three largecategories of informal economic activities in relation to urban development and on theproduction environments of these activities in Brussels where our empirical data wasobtained.1

A classification of activities in the informal economyThe concept of informal economy covers a residual category of economic activities.These are activities which, whether remunerated directly or indirectly, are not officiallyincluded in any national accounts for purposes of taxation, social security contributionsetc., a fact which makes positive definition and classification especially difficult andprobably explains why the great majority of studies of the informal economy begin bydiscussing definitions of the concept. We shall confine ourselves to the broad definitiongiven above, but deepen the understanding of the phenomenon with a search for atypology that enables us to organize our analysis. It will become apparent, however, thatsome activities, such as charity work, are not included here, while others, such as fiscaland social fraud and other criminal activities, are only touched on implicitly. There is alsofrequently a consensus on the part of writers not to include this last type of activity withina more restricted definition of the informal economy on the grounds that it does not haveany counterpart in the formal economy (see, e.g., Sassen, 1991b).

One frequently used classification is that of Gershuny (1979). This distinguishesthree categories of informal economic activity. The first is domestic work, whichembraces all unremunerated activities that benefit the members of the household.‘Prosumption’ refers to the same category and emphasizes the close proximity ofproduction and consumption resulting from these activities (it points to the consumptionof durable goods like fridges or washing machines which are in fact means of productionfor domestic tasks). The term has been attributed to Toffler (1981) whose argument isvery similar to Gershuny on the function and changing pattern of domestic work. Thesecond category of informal activities refers to the unremunerated production of goodsand services for the local community or neighbourhood, often on a reciprocal basis.

1 These data result from research on survival strategies in two poor neighbourhoods of Brussels, which waspart of a Research Program in Social Sciences financed by the Belgian Federal Office for Scientific,Technical and Cultural Affairs. This article is a completely revised and updated version of a paperpresented at the international conference ‘Cities, Enterprises and Society at the Eve of the XXIst Century’,Lille, 16–18 March 1994.

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The geography of informal economic activities in Brussels 233

Finally, Gershuny distinguishes activities which are remunerated, but in such a way as toevade the regulations applicable to formal economic activities, whether because of theirillegal nature or from a desire to be immune from taxation or regulation by the state.These he refers to as the ‘underground’ economy. It is often only this last category whichis denoted by the term ‘informal economy’. These remunerated informal activities are, inturn, classified into three types. The first of these market-oriented operations consists ofdependant informal activities, which take place as part of formal activities but are notincluded in any official records. This is the typical form of illegal work, carried out withinofficially recognized enterprises. It is in opposition to independent informal activities,where the activity is carried out on an individual basis and the product is sold to the userwithout intermediaries. Finally, there are semi-independent activities, which fallsomewhere between these two extremes. These are activities carried on outside formalenterprises but whose output is directed to those enterprises (subcontracted non-licensedor illegal work).

Gershuny’s three categories are in fact the result of applying two criteria: whetherproduction is remunerated or unremunerated, and whether it is reported and regulated bythe state or not (Sharpe, 1988). This allows the informal economy to be seen as part of alarger system of productive activity generally (Figure 1). The formal economy can thus bedefined as all activities carried on in a regulated way whose output is socially recognizedand therefore remunerated either by the market (traded goods and services) or by the state(non-profit services). The remuneration criterion implies that the work is sociallyrecognized. In the case of a remunerated informal activity, working time invested earnsincome that gives access to other outputs of socially recognized work. In this sense, itbecomes a part of the range of economic activities that are regulated by the market and bypolitical and social institutions.2 Domestic work and the community economy, on theother hand, have no direct bearing on the monetary economic sphere. According toSharpe, community or neighbourhood economic activities are regulated by the state, inthe sense that they take place within a legal framework (i.e. they are not illegal or extra-legal).3 Nevertheless, as we will stress later in this paper, even in the western context the

2 Sharpe introduces ambiguities by equating the market criterion with remuneration. In his text he states thatwork is exchanged for wages which are determined by market forces. On the one hand, self-employmentwould be excluded with a strict use of this definition (but it is included in his further developments as thecontext makes clear that his real definition is value of work determined by market forces). On the otherhand, the non-profit sector becomes a hybrid category, because even if the wages are more or lessdetermined by market forces, the output of these activities is not distributed according to market criteria. Infact, since the development of the welfare state, most wages are not purely determined by market forcesany more (see, e.g., Boyer, 1979). Thus, in his typology, only remuneration would be the right criterion andinstitutions which play a role in the regulation of wages besides market forces should be considered (seealso footnote 4).

3 This sounds like a poor argument compared to the general criteria since these activities are not reported andthey cannot participate in any state financing because they are unremunerated. However, one could arguethat they are regulated in the sense that these activities are commanded by exchange rules, in most casesthrough reciprocity.

Figure 1 Classification of economic activities following Gershuny and Sharpe

Work Regulated Unregulated

Remunerated Formal economy Illegal work• independent• semi-independent• dependent

Unremunerated Community or neighbourhood economy Domestic work


234 Christian Kesteloot and Henk Meert

indirect influence of these activities on the monetary sphere is growing. Thus, the fourcategories developed by Sharpe cannot be seen as well separated spheres without anymutual influences.

In taking work as the basis for discerning different types of economic activities, thiskind of typology makes an abstraction of the social institutions in which this work istaking place. Domestic work and most of the community or neighbourhood economy arecarried on by and for households, without the intervention of market forces or stateregulations that decide on the type of work undertaken and its countervalue in case ofexchange of its products. Their use value is central, not their exchange value. Illegal workis carried on by actors who do not behave as households but as firms, in the sense that theproducts are for the market and therefore bear exchange value. This distinction betweenhouseholds and firms is not in contradiction with the former typologies, but it is anessential one when looking at the spatial dimensions of the informal economy. Obviously,households and firms do not have the same spatial behaviour (a fact which is reflected inthe division between social and economic geography). However, just as the four types ofeconomic activities in Table 1 produce mutual influences, interactions betweenhouseholds and firms exist, and this opens up the possibility of analysing the threeforms of informal economic activities from both the household point of view4 and thefirms’ point of view. However, since households are more central to two out of the threeforms of economic activities, the former point of view is privileged in this case.

An elegant way to conduct such an analysis would be to look at the economicintegration of the households. Economic integration can be equated with access to thesocio-economic resources necessary for a decent living and for the reproduction of thehouseholds. In the present day western world, the large majority of these resources are notproduced directly by the households, but by producers engaged in the economic system.Access to these resources is not direct, but dependent on the integration of the householdswithin this economic system. This problem of access to resources has been theorized byPolanyi and is encapsulated in his concept of modes of economic integration (1944).Based on his economic-anthropological work, the concept distinguishes threefundamental ways to obtain resources produced in common: reciprocity, redistributionand market exchange (see also Harvey, 1973; Mingione, 1991). Polanyi also distinguishesautarky, which points to the fact that the households can directly produce some resourcesthemselves. Usually, autarky is not included in the modes of economic integrationbecause it does not entail integration with other actors. Nevertheless, it makes sense inour further analysis.

Indeed, domestic work appears as a form of partial autarky. Community andneighbourhood economic activities match very well with Polanyi’s reciprocity, since thelatter refers to the access to resources through mutual exchange. It implies a capacity toproduce some resources for each participant and a social network with symmetric linksbetween each member and the rest of the network. Everything which is brought into theexchange system by someone is given back by the other members, usually in the form ofdifferent goods and services, and not at the same time. These features of the exchangeprocess involve mutual trust between the members of the network and lasting ties of eachmember to that network. This type of relation to a network is referred to by the termaffiliation. Hence, the most evident networks are the extended family, ethnic communitiesand sometimes neighbourhood networks.

All remunerated activities, be they in the formal economy or in illegal work, broadlycorrespond to market exchange and use money as the exchange tool. Simplified, one cansay that individuals and households must develop a social utility, meaning that they must

4 Obviously, interactions between members within the household are crucial in understanding theirparticipation both in formal and informal economic activities (see, e.g., Morris, 1994) but since we focus onthe spatial dimension of these activities, the households as such appear as relevant units of analysis.



produce goods or services that are needed by others and are therefore marketable. Thisgives them an income, which allows them to buy the goods and services they need butcannot produce for themselves. Most households put their labour force on the market.Their wage is the price they get when they succeed in selling it. Others are self-employedand sell goods and services.

Redistribution enters into the picture through the weaknesses of market exchange.Since autonomous producers decide what they will bring to the market, and the law ofsupply and demand determines what they are paid, bad decisions are indicated by loss ofincome and by a reduced access to the resources produced by others. Thus marketexchange does not pull households together in a comprehensive and solidary economicsystem, but brings every economic actor into competition with all others and deniesaccess to resources to those who are not efficient enough. Therefore, market exchange asthe dominant mode of economic integration cannot exist without combination with thetwo others, which are actually keeping society together (Mingione, 1991).5 At theaggregate level, redistribution is in the western welfare states the main factor holdingmarket societies together. Indeed, inequalities generated through market exchange arepartially compensated for by state redistribution. From the household’s point of view,redistribution means that everybody contributes to a common stock of resources, whichare then redistributed according to agreed rules. Hence, redistribution implies centralcollecting and hierarchical organization. The slow but steady development of welfarefrom the end of the nineteenth century resulted in a massive redistribution systemcontrolled by the state and mainly supplied by taxes and social security contributions. Inthis view, political rights correspond to the power to participate directly or indirectly indecisions about the redistribution flow and citizenship is the condition for participating inthe system.6 However, because of the actual rules of redistribution, especially in thesocial security system, taking part in redistribution remains largely determined by takingpart in the labour market. The way the state and other social institutions like trade unionsintervene in wage levels, employment security, working conditions and total labour costare all parts of this redistribution system. Consequently, fiscal and social fraud, which areinherent in much of the illegal work in Gershuny’s or Sharpe’s classifications, fit directlyin the redistribution sphere, precisely because market forces are involved.

Production environments in the informal economy: the BrusselscaseThe modes of economic integration (paradoxically including autarky) provide us withpowerful tools to understand informal economic activities as a set of interrelationsbetween households and other economic actors in order to gain access to their livingresources. Each mode of economic integration, or a particular mix of them, is related todifferent types of informal economic activities, which in turn refer to specific historicalsocio-economic contexts in which these activities develop and therefore involve specificareas in the city. Within a framework of postwar economic development, studies of therelation between the formal and informal economies have revealed an increase ininformal activity, not necessarily accompanied by a compensating decline in formalactivities. This fact apparently contradicts the Marxist conception of the long-term

5 This makes Sharpe’s failure to take the non-profit sector and regulatory institutions into account morerelevant (see footnote 2). It also implies that a typology in which market exchange is strictly distinguishedfrom the other modes of economic integration is oversimplifying reality. However, as long as this point iskept in mind, it remains a fruitful analytical tool.

6 In reference to the Marshallian conception of citizenship (1950), the condition includes both social andpolitical citizenship and implies necessarily civil citizenship.



expansion of capitalism, which includes among others the commodification of domesticwork. An initial hypothesis for this increase of informal activities, put forward byGershuny (1983), emphasizes the characteristics and changing pattern of post-industrialsociety and concludes that the expansion of informal activities in the domestic sector(autarky related to market expansion in our typology), is a necessary consequence of this.While this analysis is formulated from a perspective of growth and progress, theeconomic crisis of the 1970s has lent support to an interpretation of the informal economyas a buffer sector to mitigate the effects of recession (Pahl, 1984). Two parallelhypotheses arise from this. These attribute the increase in informal activities to the use ofsuch strategies by households, on the one hand, to counteract the decline in theirpurchasing power, and by firms, on the other, to offset falling profitability. The latterarticulate strategies in the market sphere and the redistribution sphere, the former in thereciprocity and the redistribution sphere. Since these three sources of increase in informalactivities have different historical relations with economic development — in short the‘Golden Sixties’, the crisis of the 1970s and the emergence of a new growth strategy sincethe second half of the 1980s — they participate in three different spatial configurations ofproduction and consumption.

The domestic sector and suburban developmentThe growth of the domestic sector is usually related to the growth of purchasing powerand free time, leading in turn to changes in patterns of consumption. This involves theacquisition of durable means of consumption which are then used as means of productionin domestic work. The result is an increase in the productivity of domestic work. Thismechanization allows traditional household tasks to be completed faster while at the sametime allowing goods and services, which had previously been purchased in themarketplace, to be produced in a domestic setting. Gershuny discusses these tendencies inthe context of post-industrial society.

They reflect a transposition of the principles of fordism into the realm ofconsumption — a process analysed by the French regulation school (Aglietta, 1976),but already described by Mandel (1972). The mass production that grew up after thesecond world war could only lead to economic growth if demand grew at the same rate.Effective demand is increased by rising wages, which in turn are offset by gains inproductivity to avoid any erosion of profit margins. If this mechanism is at the very heartof fordist regulation, it is not applicable to all areas of production. Only production, whichis able to benefit from productivity gains through the use of existing technology, willmake a contribution to growth. Services do not come into this category because in the1960s and 1970s the new technologies in electronics and communications were not yetavailable as a source of long-term productivity gains. The growth of mass consumptioncan no longer be based on increasing and accelerating consumption of standard goods.The use of these goods is restricted to satisfying day-to-day needs and does not varygreatly with increases in purchasing power.

Such an expansion would, in fact, require a significant and steady increase inpopulation. This is why postwar growth is linked to durable consumer goods, with the caron the one hand, and housing on the other, as the key items. These items are the basis of awhole new pattern of consumption, which is organized around the time-budget ofhouseholds and led to the suburbanization of housing and to the need for individualmotorized mobility. Housing becomes the pivot of an expanding consumption ofconsumer durables. Both access to ownership and adaptation of the dwellings to the newconsumption pattern pushes the households into large suburban single-family dwellings.In turn, such a location creates the need for automobility. Such a level of consumptionforces many middle-class households to earn two incomes. Travelling time and workingtime eat into the time available for domestic work and justify the further use of domesticmeans of production. Thus, increased income, expansive housing space consumption,



suburban location and automobility created a spiral of demand for the durable consumergoods of the ‘Golden Sixties’. In a second phase, the reduction in working hours and theincreasing productivity of domestic work freed time and gave rise to a new market forleisure goods. While durable goods that are described as domestic means of productionhave the purpose of diminishing domestic working time, leisure goods tend on thecontrary to increase the autarky of the households. They open up the possibility ofproducing goods and services that are otherwise purchased on the market and thusconstitute the first source of increase in informal activities. Gershuny stresses theinterrelationship between the productivity of work within the formal economy anddomestic work by arguing that replacing services with purchases of consumer durablesbenefits households because the productivity of these services is not keeping pace withthe overall increase in productivity. Our concern is, rather, with the regulating effect ofthe expanding domestic domain brought about by durable consumer goods. If there is anincrease in informal work in the domestic sector, leading apparently to more autarky, it isdirectly related to the expansion of capitalism, and therefore the formal economy, intonew areas of production which precisely sustained the economic growth of the ‘GoldenSixties’. The expansion of domestic work coined by Gershuny corresponds, therefore, tomarket-led autarky.

Suburban location and increasing housing space consumption are essential in theexpansion of the domestic sector. In the international context, Belgium appears as a verysuccessful application of fordist economic growth (although mass consumption openedmarkets for multinational rather than Belgian companies). Brussels shows, therefore, anAmerican-like spatial structure, with a large middle-class suburban belt in which thepattern of consumption leading to market-led autarky is concentrated. Several factorsexplain the dominance of this socio-spatial pattern of Brussels. The first is the earlyentrance of the national economy into fordist accumulation. As early as 1944, a socialpact between employers and trade unions, fostered by the government, established thegeneralized social security system and the principle of regular wage raises in accordancewith productivity gains. The huge postwar construction activity — predominantly self-building and self-promotion — was sustained by the rising real wages, by employmentsecurity and income security founded on the social pact and by the expansion of the creditsystem. The second factor is the ideology of access to home ownership through self-promotion and self-building established by the Christian Democrat policies since the endof the nineteenth century, as a means to stress Christian family values rather than thecollective interests of the workers and to keep the workers away from the cities andsocialism. This ideology and the dominance of the Christian Democrats in Belgianpolitics underpinned the postwar policy of individual housing construction coupled toaccess to home ownership. Thus 600,000 new owner-occupied homes have been built inBelgium with a state subsidy since 1950 (slightly more than a third of all new homes).The state also provides subvention schemes for the construction of estate infrastructure,which financed part of the collective costs of suburbanization and cheap mortgages forlarge households. The building activity following these state interventions resulted inintense suburbanization, but very dispersed through the diffusion of car-ownership. As amatter of fact, the promotion of suburbanization as a key element of Keynesian economicpolicy also discharged the state from financing a thorough social housing policy ormassive urban renewal schemes, which explains both the absence of working-classhousing estates in the suburban belt and the overall inner-city decline. Thirdly, theabsence of any physical planning designed to contain the urban sprawl made cheapconstruction land available on the periphery of the cities and along the main roads in thecountryside. Finally, contrary to neighbouring countries, there hasn’t been any significantdemographic pressure on the housing market since the second world war, nor anysignificant intervention of the state in housing prices or allocation. The trend towardssuburbanization has led to a socially and spatially organized habitat that has given a



strong stimulus to the consumption spiral leading to market-led autarky. In the whole ofBelgium owner-occupiers increased from 39% in 1947 to 69% in 1991 and the size of thedwellings markedly expanded (the average number of rooms per dwelling increased from3.9 in 1947 to 5.2 in 1991). Census information does not enable us to measure domesticinformal activities directly but Figure 2, which shows the possession of a car amongst theBrussels households, is instructive in showing the extent of suburbanization and therelated market-led autarky. The extent of home ownership is comparable.

Although one would need other indicators to illustrate this, gentrification is arelatively weak process in Brussels (Van Criekingen, 1996) in comparison to many othercities (where the presence of middle and upper classes can be due to a relatively highproportion of them remaining in the city, as in southern Europe, or to an actual return inother cases).7 In Sassen’s words (1991a), gentrification is a substitution of cheap labour

Figure 2 Households possessing a car in the Brussels Capital Region, 1991 (source: NIS, 1991)

7 In the Brussels context, one should not confuse gentrification (which is primarily linked to a city centre)with the growing appearance of high-income households, directly or indirectly attached to the growing



for capital. The corresponding definition in our typology is a substitution of marketexchange (from the consumers point of view) for market-led autarky. The middle andupper classes are replacing their consumer durables and public investment in suburbaninfrastructure with which they exercise their own informal domestic work (or that of theirdomestic staff) with direct purchases of goods and services produced at low cost by apoorly paid workforce in the inner city (which is, for this reason, often totally or partlyinformal). The weakness of the process in the Brussels case confirms the dominance ofthe suburban way of life and of market-led autarky for the middle class in the city.Besides the strength of suburbanization, the weakness of gentrification in Brussels isexplained by the relatively small size of the city. To a certain extent, there is no need toreturn to the city in order to gain access to cheap, informal services and thus achieve anincreased or more flexible time-budget (for instance home delivery services in Brusselseasily cover the whole urban area and the central city can be reached in less than 40minutes from everywhere on the suburban fringe). Interestingly enough, the frail signs ofgentrification are manifested by foreigners rather than by Belgians, who, as we saw,partake of a longstanding suburban mentality.

Economic recession and survival strategies in the inner cityThe second source of increase in informal economic activity is related to the economiccrisis and the consequent structural unemployment. The essence of this thesis is thatinformal activities by households spring up in times of hardship to mitigate the loss ofpurchasing power or financial insecurity (Pahl, 1984; Mingione, 1983; 1991), that is,informal activities are strategies to enable savings to be made or income to be generatedoutside the official sphere. This is exactly what was to be expected as a result of the crisisfrom the second half of the 1970s onward. A simple time-budget approach immediatelyreveals the relationship between the greater availability of free time in a situation ofunemployment and the investment of this time in informal activities to offset a fall inincome. Informal work is thus seen as a socio-economic stopgap in times of hardship totake advantage of extra time which has been made available by the formal economy.However, this thesis has rapidly been watered down on the basis of evidence, in somecases to the point of reaching an opposite conclusion. In fact, as Pahl has shown (1988)informal activities demand not only time but also means of production, specializedknowledge, systems of information and exchange and a location where production cantake place. Activities such as gardening and DIY, which were generally considered asbeing part of the leisure and domestic activities mentioned earlier, can be adapted as partof a survival strategy, but mainly by persons who have a garden and have invested in theconsumer durable goods required for these activities. No empirical study has everconclusively demonstrated a link between an increase in unemployment and an increasein informal activities. Studies do, however, highlight the fact that these strategies are onlyavailable to the middle classes and that a job is often a fundamental prerequisite fordomestic activities to be developed. The term ‘survival strategy’ would thus appear notaltogether well chosen if applied to this tendency and its role as a stopgap would appear tobe very small compared with the polarization between the unemployed and the middleclasses which springs from it (see Pahl, 1984; Gershuny, 1985; Lapple et al., 1986).

But this does not necessarily mean that low-income households will react passively tofinancial hardship or that they fail to take advantage of the interrelations between theformal and the informal economy. In terms of modes of economic integration, one couldinterpret survival strategies as reactions against a diminished access to resources through

presence of the European Community and other public international institutions. In fact, most of thesehouseholds live outside the city centre, some of them in the neighbourhoods surrounding the EuropeanHeadquarters while a much bigger group even lives in the affluent Southeast outskirts of the Brusselsperiphery (for further details see Kesteloot and Van der Haegen, 1997).



market exchange. Therefore, there is firstly a significant tendency to reduce expenditureby purchasing smaller quantities or by substituting cheaper goods. And this tendency isaccompanied by others: the life of consumer durables is extended and there is also anincrease in the recycling, repair and sale of second hand items.8 All these activities arederived from economizing strategies and reduce the involvement of the concernedhouseholds in the formal economy. Obviously, market-led autarky becomes lesspracticable for such households, which are, moreover, mainly located in the inner city(see further). Indeed, a loss in purchasing power also involves a transfer from individualconsumption to collective consumption. This shows a tendency opposite to the oneidentified by Gershuny, since what it amounts to is a (re)formalization of domesticactivity. Examples of this are cheap launderettes and, more recently, shops supplyingtelephone services in poor neighbourhoods. The use of taxis, too, has traditionally beenrelatively high among poor people. The public sector has been compelled to follow thistrend in offering meals on wheels, neighbourhood catering services or public ‘warmingcentres’ (chauffoirs) in winter.

Nevertheless, the general trend is a reduction of accessibility to market exchange andthis will lead the households concerned to redistribution. In the Belgian case, the socialsecurity system was perfected in 1974 — just before the crisis — by the introduction of aguaranteed minimum income to all Belgian citizens and thus, in conjunction with thesocial security system (unemployment benefits, sickness benefits, pensions and childallowances) the redistribution sphere would suffice as a safety net for economicintegration. However, since the input in this redistribution system is mainly dependent onlabour, it shrunk in relative terms while the demand for resources dramatically increased.Therefore more and more people cannot draw all the necessary resources from stateredistribution and they are, at least partly, pushed into the third sphere of economicintegration, i.e. reciprocity. However, this does not exclude the possibility that householdsunder the same economic pressure would try to obtain more resources in the marketsphere by self-employment, which in order to be successful, usually involves some formof informal activity (e.g. unremunerated labour of family members, longer working hours,fiscal fraud etc.). Even more, the dependence on monetary income can never be totallycompensated for by reciprocity, so that redistribution and/or market exchange remainnecessary spheres of integration.

This complex interplay between market exchange, redistribution and reciprocityvaries quite significantly in urban space. Generally speaking, the households that arecompelled to enter into such an interplay are concentrated in the inner city. In facteconomic growth and suburbanization in the ‘Golden Sixties’ not only created a void inthe inner-city housing market, but also in the labour market. During this period, there wasa general drift of the Belgian population towards middle-class status with the expansionof the tertiary sector and a general improvement in education levels. Unskilled, poorlypaid jobs have become less and less desirable. The void is being filled by unskilled, cheapforeign workers. These ‘guestworkers’, who finally stayed for good, not only filled thegap in the labour market, but also the empty housing in the inner-city neighbourhoods.This coincidence of suburban development and the influx of immigrant workers explainsthe deep socio-economic, demographic and ethnic divergences between inner-cityworking-class areas in the nineteenth century and the postwar suburban areas in Brussels.

Recession and urban transformation since the second half of the 1980s, combinedwith a wave of property speculation resulting in house prices more than doubling, haveonly given further stimulus to this spatial polarization of the city; survival strategies areboth more necessary and more concentrated in these inner-city areas (Kesteloot, 1995).Figure 3 shows six different socio-economic indicators describing the accumulation of

8 See Merenne-Schoumacker (1987) for the only available study of second-hand shops in Belgium (Liege).



Figure3

DeprivedareasintheBrusselsCapitalR

egion,1991

(sources:NIS,1991;FiscalStatistics,1994)



deprivation in the inner city. The selection of these indicators is the result of an extensivestatistical analysis of 1991 census data (Kesteloot et al., 1996). Closer inspection of theseindicators also shows that they fit very well into three modes of economic integration.The amount of one-person households and of households with a telephone connection caneasily be linked with social networks and thus with reciprocity. The presence of Turksand Moroccans is related with incomplete citizenship and consequently with redistribu-tion, as non-European citizens have no political rights in Belgium. Finally, the amount ofunemployment, the number of manual workers and the average income reflect poorintegration in the market exchange sphere. Except for the share of one-person households,which shows relatively low values in the western part of the city (due to the high share oflarge Turkish and Moroccan households), the residential areas where social isolation, lackof citizenship and precarious market participation are concentrated are those where thepopulation is most in need of survival strategies. Particularly striking is the markeddiscontinuity between the inner-city neighbourhoods forming a western crescent aroundthe central business district and the rest of the city.

An extensive survey of survival strategies in two of these neighbourhoods9 revealedtwo important dimensions explaining spatial variation in the setting up of informaleconomic activities as a response to economic stress at the household level: the historicalbuilt-up environment in which former socio-economic processes are imbedded; and thedegree of social mix in these neighbourhoods (Kesteloot et al., 1997; Meert et al., 1997;Meert, 1998).

To clarify the role of these two interrelated dimensions, we first have to brieflydescribe the two neighbourhoods concerned: Kuregem and Schaarbeek/Sint-Joost.Kuregem is situated Southwest of the Brussels central area, and is enclosed by differenttransport axes like the Brussels-Charleroi canal, the inner ringroad, and the railwayinfrastructure near to the South Station. The neighbourhood of Schaarbeek/Sint-Joost issituated Northeast of the central area, and is delimited by the inner ringroad, the NorthStation and the railway tracks on its western and eastern borders. Both neighbourhoods,situated along the central industrial axis of Brussels, are characterized by a very highpopulation density and show all elements of the poor nineteenth-century working-classarea to which they belong. In some parts the immigrants reach nearly 80% of thepopulation. Both have the same income level (BEF 150,000 annual taxable income perperson in 1993 — or about Euro 3,750 — which is 45% of the city’s average). The builtenvironment consists of a confusing muddle of cramped living quarters, middle-classdwellings (often divided into apartments), workshops, businesses, shops, warehouses andback yards. Such an environment provides an ideal milieu for the pursuit of informalactivities outside the home, just as the dense network of social relationships encourages aneighbourhood economy to develop.

Looking for differences between both neighbourhoods reveals a higher share ofprofessionals and a lower share of manual workers in Schaarbeek/Sint-Joost. The areawas developed along the axis linking the royal residential castle (outside the city centre)with the royal palace in the city centre. While most parts of the neighbourhood weredeveloped to house the working class employed in the nearby industrial axis (and in theparallel valley of the Maalbeek), the axis itself and some of the sidestreets displaywealthy architecture, reflecting the high investments of the local bourgeoisie and pettybourgeoisie during the second half of the nineteenth century to live around thisprestigious axis. Today some of these dwellings are still attractive to some of the moreaffluent households. A second relevant contrast with Kuregem is the dominance of Turksamong the foreigners (while they only represent 11% of the foreigners of Kuregem, theyreach 40% in Schaarbeek/Sint-Joost; by contrast, Kuregem counts 42% Moroccans

9 Sixty in-depth-interviews of poor households were carried out between 1993 and 1995.



among the foreigners against 36% in Schaarbeek/Sint-Joost). In Brussels, Turkishhouseholds are more successful in coping with the economic crisis than Moroccans fortwo reasons. First, the Turkish community in Schaarbeek/Sint-Joost has very strong socialnetworks. In contrast with the Moroccan households, Turkish families came to Brussels(and especially the neighbourhood of Schaarbeek/Sint-Joost) by chain migration based onword-of-mouth publicity and generated by the toleration of clandestine immigration in thesecond half of the 1960s and early 1970s. Hence they transplanted their village-basedsocial networks from the region around Emirdag into the Brussels context. In time, thesebecame internally more differentiated with the upward social mobility of some of theirmembers and higher levels of education among the second and third generation. In thisway, households which, if isolated, would lack any means of informal production, canfind these means within their own ethnic network. This gives rise to more reciprocalstrategies — or community and neighbourhood-based economy in the words ofGershuny.10 Secondly, as a result of the interwar secularization by Kemal Ataturk,Turks do not interpret the Koran in a very strict way. Turkish households are thus morewilling to use loans and pay interest for investment in housing and in economic activities.Both assets are combined and thus mutual services in the reciprocity sphere are orientedtowards the achievement of success in the market sphere.

Thus, social mix and strong networks on the one hand, and homogeneity and isolationon the other, generate important differences in the interplay of market exchange,redistribution and reciprocity in both areas. This can be summarized in three points.Firstly, informal survival strategies are more market oriented in Schaarbeek/Sint-Joost.To earn money in one’s own neighbourhood supposes the presence of a demand and acertain volume of money for informal paid services or goods. The lack of social mix inKuregem entails that the inhabitants can only exchange poverty among each other, whilemore wealthy households in Schaarbeek/Sint-Joost can pay other households for informaljobs. Thus in Schaarbeek/Sint-Joost, mainly Turkish immigrants attempt to escapeunemployment or precarious employment by starting their own business, usually in retailor restaurants and snack bars, and initially catering for their own community.11 With theproliferation of these businesses, the goods and services offered are considerably lessexpensive than if they had been produced under normal circumstances. The reasons forthis are specialization in ‘ethnic’ products, bulk demand (related to the large size of thehouseholds) and, of course, an excess supply making it essential to keep production coststo a minimum. There is also a minimal level of investment in business equipment and anacceptance of very low profit margins. Nevertheless, this encourages the development ofpractices belonging to the informal economy, such as very long opening hours, puttingfamily members and children to work, failing to comply with the obligatory weekly restday and the use of illegal workers in areas where contact with the public can be avoided(for example kitchen work in restaurants, sweat shops behind drapers’ shops).

Secondly, economic survival strategies related to redistribution are relatively morefrequent in Kuregem. They relate to the informal economy in the sense that they mainlyappeal to other redistribution systems than the state, which are based more on charity andaid than on principles of insurance and solidarity. For instance, the acquisition of durablegoods, like freezers, furniture and cars, is frequently realized by second-hand materialsredistributed by local charity organizations.

10 One could therefore also describe the neighbourhood as an ethnic enclave, where the concerned groupconcentrates because of the local advantages (Marcuse, 1996). However, the neighbourhood, like all othersin Brussels, remains essentially pluricultural: Turks never reach more than 40–45% of the local population.Moreover, their concentration is not a result of choice for the local advantages, but of the interactionbetween the labour market position and the socio-spatial structure of the housing market.

11 Especially restaurants, but also other businesses succeeded in attracting other population groups on thebasis of the exotic character of their products, thus bringing more money into the neighbourhood and thecommunity (Kesteloot and Mistiaen, 1997).



Thirdly, the exchange of goods and services in the reciprocity sphere has a differentmeaning when comparing the two neighbourhoods. In Schaarbeek/Sint-Joost suchstrategies often support other market-oriented strategies (such as the already mentionedunremunerated labour supply of relatives in shops and restaurants), while reciprocity hasa more goal-oriented character in Kuregem.

Informal economic activities related to survival strategies in the deprived areas ofcities are strongly related to the capacity to develop reciprocity, and therefore it is nosurprise that their geography greatly varies from one small-scale locale to another.Nevertheless, the central location of nearly all deprived areas in Brussels (and the othercities in Belgium), the long history they carry in their built environment and the degree ofsocial mix sharply contrast with the peripheral location, the monofunctional character andthe homogeneity of many postwar high-rise suburban deprived estates in other countries.They all represent assets in resisting the economic crisis that unfortunately (except socialmix to a small extent) cannot be created through policy measures.

Flexibility and informalization in urban light industryLike households, companies have developed strategies vis-a-vis the informal economywhich are implicit in the concept of dependent informal activities in Gershuny’s typology.Although numerous writers have linked this development to an excess of fiscal orregulatory zeal by the state or seen it as an inevitable phenomenon which benefits theformal economy, there are clear links between economic recession and increasingflexibility as a response to it on the one hand and the informalization of production on theother hand (Boer, 1990).

One of the most important aspects of recession, market saturation, results in adownward spiral. Reductions in production costs through cuts in the workforce or inwages lead to a decline in purchasing power and consumption, thus increasingcompetition for a market with fewer outlets. This is quite sufficient to justify anoutsourcing of labour-intensive work over which it is not vital to have direct control andto use subcontractors. Since this solution has been adopted in response to a need to reducelabour costs, it soon gives rise to informal activities. It is therefore entirely natural thatinformal activities will grow up in the very heterogeneous area of enterprise services.Another solution is delocalization to low-wage countries, with the result that thoseenterprises which stay in high-wage countries cannot survive without making use ofinformal labour.

During the 1980s these strategies of informalization, adopted first as a defensivemeasure, have been deployed as an essential element in a new growth mechanism. Frombeing geared toward mass consumption, production has shifted towards a dependence onevery conceivable variation or diversity in the pattern of demand. This change has beenmade possible by the new information and communications technologies, but at the priceof a new flexibility which affects every aspect of the productive process, includingemployment (Swyngedouw and Kesteloot, 1988). What we are seeing, then, is aflexibilization of formal work and the employment of dependent and semi-independentinformal labour. The use of this type of labour does more than merely increase flexibility.The absence of trade unions and the avoidance of indirect wage costs (taxation and socialsecurity) result in lower labour costs. In some cases (such as the clothing industry) use ismade of, and a similar role played by, home-working. According to this argument,economic growth is obtained from a shortening of the production cycle and hence anincrease in the velocity of circulation of capital through the elimination of buffer stocksand waste products. But the corresponding labour strategies boil down to the creation ofan internal third world or local market for cheap labour as an alternative to moving capitalto poor countries with an abundant supply of labour. In Marxist terms, one can discern inevery case a return to absolute surplus value, whether obtained through longer workinghours or the imposition of lower standards of consumption and poorer working



conditions. In terms of modes of economic integration, and thus seen from the point ofview of households involved in such industries, these changes translate into an expansionof the market exchange sphere, because the selling of more labour time will be needed fora lower income, and a parallel shrinking of the redistribution sphere, because througheluding collective wages they limit or lose their social security rights.12 Obviously, theyimply a limited access to resources through these spheres of economic integration.

Informalization in the urban industry can only take place if a number of conditionsare met. The first is, of course, the availability of a source of labour for this kind of work(see Kloosterman et al., 1998 for the relation between immigrants and the informalizationof the bakery sector in the Netherlands). Unlike the survival strategy situation, therequirement is not so much for people with time and initiative, as for people who are notonly capable of submitting to the discipline of work but who also perceive exploitation inan informal context as an opportunity. Such a supply of labour is unlikely to be availableother than against a background of economic recession, a shrinking social securityapparatus and welfare provision which is unable to satisfy demand. Examples of this kindof labour are persons seeking political asylum, foreign illegal residents and an increasingnumber of temporary clandestine workers from the East. In this last case, the reproductioncosts of labour have clearly been borne by the economy and the household sector of thecountry of origin. The presence of these workers in Belgium is temporary and their mainaim is to take home the largest possible amount of western currency or goods. Theirconsumption expenditure in Belgium is therefore kept to a minimum, even if their illegalstatus and their ignorance expose them to excessive degrees of exploitation in travelling,housing and job opportunities. Broadly similar conditions apply to immigrant womenexcept insofar as pressures resulting from their illegal status are replaced by patriarchalones (this is conspicuous in the case of Turkish women in the Brussels cleaning industry).

Informalization also requires that there should be a production infrastructure andoutlets and networks to link the product of the informal work with the formal economyand, finally, that delocalization should not be available as a practical alternative. Severalcauses can be traced for this. Most obvious is that the activity is geographically bound toland as a production factor. This is obviously the case of construction. Another cause isthe intensity of production relations (as in Just-in-Time production), paralleled by flexibledemand (or intensive distribution relations). Finally, the opening of new markets cancreate a trade-off situation between similar advantages as low-wage regions andproximity. These causes can be found in variable combinations in sectors as servicesprovided to establishments that remain in city centres because of the innovating, planning,decision-making or organizing role that they fulfil. Informal work may also occur in theproduction of consumer goods and services for the markets provided by major cities in thecentral regions of the world economy. In the former category, we find services that areheavily dependent on unskilled labour such as cleaning, security, catering, postal servicesetc., where outsourcing is more and more common. The latter type includes construction,clothing (particularly the areas of the market where competition from low-wage countriesis strongest) and the food industry.13 Of course, the same logic applies outside the cities in

12 However, this case also shows the limits of modes of economic integration as a concept to understandeconomic and social life. The modes of economic integration do not include power relations, i.e. they donot tell us about the changing balance of power between capital and labour which explains such a return toabsolute surplus value; they do not explain the power relations behind the setting up of a strongredistribution system like the welfare state, channelling (at least in the Belgian case) nearly half of the GDPand the slow dismantling of it since the 1980s; and they do not tell us about necessary power mechanismswhich maintain symmetric relations within reciprocity networks.

13 There are, as a matter of fact, a few examples of home-working in the food sector in Belgium.Significantly, it concerns Turkish families peeling onions at home for a cannery in Liege (see Manco,1989), or peeling and cutting potatoes for restaurants in Brussels.



agriculture.14 It comes as no surprise that the informal economy in the consumer marketshould be divided according to the polarization of society to form one subgroup in whichluxury goods can be produced at non-speculative prices, and another in which low-costitems are produced for mass consumption by low-income groups who may themselves beinvolved in informal activities.

The development of informalization in the urban economy is often presented as atopic related to urban industry, of which textiles is the best known,15 but there is also aconsiderable amount of subcontracting in tertiary industries, including informal activities.As a matter of fact these activities are dominant in the Brussels economy (85% ofemployment is tertiary). The best known example is office cleaning companies. Some ofthese are owned by large multinationals while others are local, in which case they arelikely to be of ethnic origin. All these companies rely on female workers from theimmigrant neighbourhoods that are adjacent to the city’s business district. They areentirely legal but there are frequent stories in the press of unpaid overtime, illegal salarydeductions, work clothes and implements paid for by workers etc. In order to maintain thelevel of exploitation which they need to achieve to guarantee success as subcontractors,these businesses have to organize a very high staff turnover both internally (by regularlychanging team members working on a particular site they prevent bonds of solidarityfrom forming between workers) and externally (working conditions and wages are such asto deter anyone from staying with the firm for any length of time). They can only developproperly against a background of an over-supplied and poorly organized labour market.There is, therefore, a very clear interrelationship between subcontracting and the spatialproximity of a reserve of suitable manpower, which, in turn, is able to remain in this statethanks to survival strategies developed in the immigrant neighbourhoods.

This type of spatial symbiosis can easily be shown to exist in other services that arecommonly contracted out, such as security, postal and transport services, janitor servicesor catering. Moreover, a similar indirect link can also be assumed to exist in restaurants ofethnic origin which play the exoticist card in an attempt to attract customers from outside.Most particularly in the case of Turkish restaurants in Brussels, this is done by offeringvery cheap meals only a few minutes’ walk from the offices, with opening hours that lastfrom the end of the morning until late in the evening. In this way they cater in a highlyflexible way to the needs of employees whose working hours are subject to ever greatervariation and for whom it would be considerably more expensive to provide a canteenoffering meals with the same degree of flexibility (Kesteloot and Mistiaen, 1997).

In a city like Brussels, light industries, particularly the clothing industry, have oftenbeen compared with Toyotism (Opstand, 1993). In fact, labour-intensive production andthe strategic need to dominate markets and organize for diversification and variabilitygive greater scope to the entrepreneur-merchant than to the industrial producer. Spatiallythese industries are organized in production/sale districts, which are similar to the districtsand networks described by Benko and Lipietz (1992).16 Figure 4 shows the most strikingexample in Brussels, again in the Kuregem district near the south station (Mistiaen,1994). The area contains three urban industrial district-like activity concentrations. Theoldest one is centred around the slaughterhouse (meat processing, butchery and restaurantequipment, delicatessen wholesale trade etc.). The second one is the clothing industry,specializing in middle and working-class fashion garments with both wholesale outlets

14 In Belgium East-European and Indian clandestine workers and — due to some control — more and moreSouth European legal temporary workers are engaged in fruit picking (the latter combine the income of twoharvests since the Mediterranean fruit season ends when the Belgian one is about to culminate).

15 See Opstand (1993) for a comparison of clothing industries in the Netherlands, France and Belgium.16 This type of urban industrial district has a very long history in Japanese cities and is known as ‘sanchi’. In acertain way, what happens in European cities can be seen as a Japanification of the urban economy.Extremely close interrelationships and subcontracting up to four or five levels, where the last one is home-working, gave a long-standing competitive edge to this Japanese urban industry (Kesteloot, 1990).



and workshops. Although it is a long-standing activity in the area — it was traditionallycontrolled by Jews and even showed some connection with the slaughterhouse throughleather clothing — it was revived in the second half of the 1980s with a thoroughflexibilization of the production and selling activities. This Brussels example of a clothingdistrict, known as the ‘Triangle d’Or’ has nothing exceptional compared with othermetropolitan examples described in the literature, except that its central location providesa particularly good example of competition between immigrants from the ‘GoldenSixties’ in search of a survival strategy, and the new clandestine immigrants from the Eastand to a lesser extent the third world, who are seeking enrichment in relation to theircountry of origin. This last point partly explains the last activity district, which is second-

Figure 4 Urban industrial districts in Kuregem, 1994



hand car trade. A strong impulse for its growth in the area was given by the establishmentof a second-hand car market attracting East-European customers. Gradually otheractivities developed, such as import-export (especially towards the Middle East and NorthAfrica), repair, selective reprocessing and scrapping. African political refugee candidates,sheltered in a nearby former military barrack, are partially informally employed in thegarages and workshops.

InteractionsInformal economic activities do not form a homogeneous category. The expansion ofdomestic tasks is part of a lifestyle that grew up during the ‘Golden Sixties’ and isspatially linked with suburbanization. The community and neighbourhood economy, plussome illegal work, are an essential part of the survival strategies of the low-incomegroups, especially those from ethnic minorities. Unlike domestic work, these activitiestend to develop in inner-city working-class neighbourhoods. A third type of activity takesplace in the field of production, where illegal work forces down wage costs andencourages flexibility and subcontracting as competitive strategies. While these activitiesare capable of being exercised within the overall sphere of the urban economy, theynevertheless tend to concentrate close to the poor neighbourhoods where their supply ofmanpower is to be found.

In the context of Belgian cities, this spatial separation of informal activities within thecity is very clearly defined. Suburbanization, the decline of the inner city, and the influxof immigrant workers have led to a very profound spatial differentiation into which thevarious functions of the informal economy fit neatly.

However, these clear divisions cannot hide the interrelationships between thedifferent types of informal activity. There is interdependence between the survivalstrategies of poor people and illegal work in the urban economy, the former being anecessary condition for a supply of labour to the latter. These survival strategies alsoinclude illegal work by individuals (cleaners, gardeners etc.), mainly in the better-offsuburban neighbourhoods. These interdependencies require the different spatial areaswhere the three types of informal activities are carried on to be accessible to one another.The modest size of Brussels compared to its international character (950,000 inhabitantsin the Brussels Capital Region and 1.7 million inhabitants in the geographical urbanregion) is an advantage in this sense but it is still true that urban redevelopment is a threatto the weakest link in these interrelations, namely the inner-city neighbourhoods wheresurvival strategies are deployed. It would take only a wave of property speculation or aseries of major infrastructure projects arising from interurban competition, for wholeswathes of these working-class neighbourhoods to be put in danger. Any such socio-spatial threat could easily break down the fragile equilibrium of informality. The recentrioting by young people in the working-class neighbourhoods of Brussels (1991, 1994 and1997) and the drift into criminality as a way of life on the part of some of these youngpeople are important signs of the tensions aroused by these urban changes (Kesteloot,1995). On this last point, the key question is how to break down informal activities in anattempt to (re)formalize them without destroying their regulating functions. Formulatedin socio-spatial terms, this is really to raise again the problem of social urban renewal innineteenth-century neighbourhoods. The difficulties experienced in the past serve toremind us of the complexity of the task, even if on a spatial level the problem is perhapsless intractable than social development in the suburbs of some southern European cities.

Christian Kesteloot ([email protected]) and Henk Meert([email protected]), Instituut voor Sociale en Economische Geografie,Katholieke Universiteit Leuven Belgium, de Croylaan 42, B-3001 Belgium.



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