Immigration and the Underground Economy in New Receiving South European Countries: Manifold Negative...

International Review of Sociology—Revue Internationale de Sociologie, Vol. 13, No. 1, 2003

ISSN 0390-6701 print/1489-9273 online/03/010117-27 © 2003 University of Rome ‘La Sapienza’DOI: 10.1080/0390670032000087023

Immigration and the Underground Economy in New Receiving South European Countries: Manifold Negative Effects, Manifold Deep-rooted Causes

EMILIO REYNERI

University of Milan–Bicocca

An in-depth study led us to show that the underground economy had a quitecrucial role in shaping contemporary migratory movements towards southernEuropean countries. An overwhelming majority of migrants were working inan underground economy, at least for a while, although only a few as ‘ethnicbusinessmen’, but they did not constitute the cause of this phenomenon whichis endogenous. On the contrary, we are going to stress four main negativeeffects upon migratory flows, and migrants’ insertion caused by a lastingunderground economy largely spread in receiving countries. Nevertheless,first, three features of contemporary migration are to be pointed out, becausemost migrants are different both from the 1960s and 1970s ‘temporary andtargeted migrants’, and from refugees who are often overemphasized in thepublic imagination.

1. The New Immigrants: Mostly Unauthorized, but having Various Personal Characteristics and Migratory Projects

As it is quite obvious, from the starting stage of a migratory movement, mostmigrants living in southern European countries are single young adults, bothmales and females, although family reunification has been quickly increasingsince the late 1990s. The overwhelming majority of them entered without aresidence permit for working reasons, which they were able to obtain onlysubsequently, thanks to frequent regularization schemes. Taking into accountall the applications filed for a regularization (over 900,000 in Italy, nearly400,000 in Spain including the quota system, which served as a de factoregularization, about 75,000 in Portugal, over 320,000 in Greece), we canestimate how many migrants lived in one of these foreign countries, withoutany documents for a specific period of time: three out of four people in Italy,more than half in Spain, 25–30% in Portugal, one out of ten people in Greece.The above-mentioned figures are not exact, since many migrants may haveavailed themselves of more than one regularization, and there are no dataregarding their return. They anyhow offer a good idea of the entity of thephenomenon.

In all the countries of southern Europe, it is forbidden for citizens from a

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non-EU country without a residence permit for working reasons

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to get aregistered job (either as an employee or as a self-employed worker). In orderto legally enter the country, migrant workers should hold a permit in advance.On the contrary, people with different, usually short-term, visas (as a student,for health or tourist purposes, or on a visit to relatives) are not entitled to work.Thus, there are four typical and possible paths followed by a non-EU migrantworker when arriving without documents to live in Greece, Italy, Portugal orSpain:

(a) they illegally cross the land border (hidden in trains, buses or trucks) orenter by sea (boat people);

(b) they enter with a short-term permit and subsequently overstay without anyauthorization after its expiration;

(c) they apparently enter with an authorization by using false documents,purchased in their country of origin;

(d) they arrive as asylum seekers, but do not leave the host country if theapplication is denied.

The first way was used mainly by migrants who entered Italy and particu-larly Greece, less by those who entered Spain and Portugal. The second andthe third ways were hugely adopted to enter whichever country. SouthernEuropean frontiers are crossed by many millions of tourists every year, thatis why controls on the ‘tourist status’ at the many entry points becomedifficult. The Greek case, however, is very odd, as Albanians may pay for avisa at a Greek consulate, a document that is not forged, but not fullyauthentic, so that it can pass a cursory inspection, but not a stricter one.Relatively few migrants entered southern European countries by the lastpath; but Greece, the only country where inflows of asylum seekers were quiteimportant.

The first and third ways differ according to whether migrants move on anindividual/family basis, or if a smuggling organization sets up their clandestineentry. In every receiving country, and in the only case of Chinese, the role ofthese organizations does not end after their entry, because they continue tooversee Chinese immigrants’ work, in order to exact payment for the largesums they charged for the ‘trip’ from China. In Greece a similar situationconcerns Kurds, too.

By the mid-1990s, controls on land and sea frontiers were intensified in allcountries. Thus, also thanks to the implementation of readmission agreementssigned with the main countries of origin, the number of clandestine migrantsnot allowed in the target state at the border increased substantially. Thenumber of migrants deported because of an unauthorized stay also increased,although systematic raids were not carried out in any country. In Italy, wherefor years only a few orders of deportations were actually enforced by the police,the situation changed drastically in the summer of 1998. Since then, accordingto a new immigration act, unauthorized migrants may be confined in deten-tion centers, and immediately thereafter deported to their own countries, asit has been in force in all other European countries for a long time.

The results, however, were very poor everywhere, but in Spain, where newunauthorized entries have slowed down substantially since 1992, so that the 1996regularization could be devoted only to migrants who had received a previous

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Immigration and the Underground Economy

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authorized status. Thus, in the late 1990s, Spain showed itself as being thesouthern European country where the insertion of foreigners was the lowest:people from Eastern European and Third World countries were less than 1% ofthe national population, whereas the proportion can be estimated equal to 1.5%in Portugal, over 2.5% in Italy and up to 7–8% in Greece. Nevertheless, in Spaina more liberal immigration act, passed in January 2000, has caused a large inflowof unauthorized immigrants looking for a new regularization.

The above scenario, which is the obvious outcome of a strict migratory policyadopted by southern European countries, is usually mentioned to support theidea that contemporary migrations are not driven by labor needs stemmingfrom the receiving countries, as it occurred in the 1960s and 1970s; but merelydetermined by an excessive growth of the population, economic crises and/orpolitical disturbances in the Third World countries and Eastern Europe.However, this is not our case. At a macro level, evidence shows that it is not thepoorest countries that generate the largest outflows of migrants (Rowlands,1998). In fact, there is an inverted U-shaped correlation between the level ofdevelopment of a country, and the likelihood of its residents emigrating. It istherefore more likely that the largest migratory currents come from countrieswith an intermediate level of development, which are at a disadvantage, butnot completely poverty-stricken. Similarly at a micro level, those who emigrateare not the poorest people in the said countries, but rather those who are at arelative disadvantage, and possess material and cultural resources allowingthem to face costs and hardships they have to face by migrating.

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Costs anddifficulties have only seemingly diminished, thanks to easier communicationsand cheaper transport, because almost all of the countries of destination havedistinctly narrowed their willingness to receive new immigrants by concen-trating on their border controls.

The stereotype of poor people ‘escaping to survive’ does not correspond tothe individual characteristics of the vast majority of the nearly 2,000,000 immi-grants who have entered southern Europe without proper documents over thelast 15–18 years, although there are meaningful differences both by country oforigin and of destination. Sizeable inflows of refugees concerned Greece andItaly, although in a much lesser degree and only temporarily. Thus, the escapeto survive did exist, but most new migrants were simply escaping from thedownfall of their growing expectations caused by the globalization of theWestern everyday life models, as evidence of their educational and employ-ment characteristics is given.

In two southern European countries, the vast majority of immigrants(people from PALOP former colonies in Portugal and Albanians in Greece)fit into the stereotype of the old European immigration: poor peasants andout-of-work farm-laborers, uneducated people, coming from rural societies.However, even in those countries a considerable proportion of immigrantsshows quite different education and class origin. Furthermore, the breakdownof the immigrant population in Spain, and above all in Italy, the countryreceiving nearly two-thirds of those entering southern Europe in the last fewyears, underlines the fact that the majority of migrants come from urban areasof the undeveloped countries (even far ones deprived of any traditionalconnection with the receiving country), are educated young women and men,were not long-term job seekers before migrating, and, finally, their families arenot at all the poorest in their own countries.


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Either status inconsistency or relative deprivation characterize many newmigrants. In a field study carried out in a big Italian city (Milan), migrants whoapplied for the 1996 regularization were broken down, rather evenly, into fourgroups: the ‘underprivileged’, with low social status and poor education; the‘underachievers’, with poor education, but middle–high class origin; the‘upwardly mobile’, with a high education, but low social status; and the ‘privi-leged’ with high education as well as a middle–high class origin. An importantimpact on their inclination to emigrate was given by their aim of a new highersocial position, or in order to avoid the risk of downward mobility. If we takeinto account the average education reached in the sending countries, we canstate that the actual migration is, to a large extent, nourished by

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youths.We should therefore ask ourselves upon which basis the numerous educated

and/or middle-class young migrants could accept as well as look for jobsrefused by local youths, even less educated. In order to understand how thosemigrants are ready to enter unqualified, dirty and dangerous jobs, we usuallyassume a gap between their social and occupational identity, together with aparallel gap between their identity in the receiving and in the sending country.According to this hypothesis, migrants regard their jobs in merely instrumentalterms: a way of earning as much as possible in the shortest given time. Thismodel is based on what in the 1970s was considered the dominant migratoryproject: that is, the ‘temporary and targeted migration’. But at present, thescenario has become more complex, and, together with instrumental orienta-tions to migration, we find different adaptations, deeply characterized by anexpressive meaning.

A comparative study taking into consideration the various typologies ofmigratory projects,

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set by several national research traditions, has allowed usto depict several common factors. The element of ‘escape’ (from war orpoverty) appears dominant only in Portugal and for refugees, whose inflow,however, was steadily sizeable in Greece only. With reference to Albanians who‘invaded’ Italy and Greece, the main cause is better seen as the disintegrationof an entire repressive society: they were seeking a new society, freer and moreopen, as well as jobs granting them a survival. Moreover, the very high turnoverof Albanians is more reminiscent of movements from outlying areas towardsmetropolitan centers. This is also the case of many North-African youths,particularly in Italy: both the poorly educated ones, who ‘rotate between thetwo banks’ following seasonal work opportunities, and the highly educatedones, who are attracted by a ‘downtown mirage’, just as the local suburb youth.

More generally, cultural motives often go along with economic ones: fromaiming at the kind of freedom granted by being far from family restrictions ortraditional societies, up to the wish of reaching a Western lifestyle, with itsconsumer and entertainment-oriented values. But even those emigrating onlyfor economic reasons were driven less by the need of making money, than bythe wish of improving their quality of life as well as that of the members of theirfamilies who had remained behind. Thus, for the new migratory movementstowards south European countries, an important role is played by economic,social and cultural factors of attraction, as transmitted to them by the variouschannels of communication, from the usual migratory chains, to the increas-ingly accessible mass media. The image, real or distorted, that migrants acquireof their future countries of destination, plays a pivotal role in their decision toemigrate.



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That point becomes even more important when considering the powerfulself-selection effect imposed by the numerous obstacles, destination countrieshave erected against their entry. In order to overcome them, migrants musthold considerable economic and personal resources, and be prepared toundergo high risks, both at the time of their unauthorized entry, and after-wards.

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High risks have another important implication: they require commen-surate benefits, otherwise none would run them. In other words, those whoemigrate

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know (or suppose to know) that the (economic, cultural andexistential) benefits they will find in the country of destination are worthwhileall the sacrifices they are going to face. The image of the country of destinationheld by migrants before emigrating is, thus, an important factor to be con-sidered if we want to understand contemporary migratory movements.

2. More Replacement and Complementarity than Competition in the Receiving Labor Markets, Except for Self-employment

High unemployment rates in southern European countries

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are also used tosupport the hypothesis that new migratory inflows are merely caused by a ‘pusheffect’ from undeveloped countries. However, a macro approach to unemploy-ment, neglecting to take into account all personal characteristics and house-hold statuses of the jobless, is misleading. We cannot infer that all native joblessare looking for heavy, poorly paid and low status jobs, work usually performedby migrant workers. Most of them are educated youths who have high pro-fessional and social aspirations, and are capable of waiting for a long timebefore attaining highly qualified and rewarding jobs. Some are merely youthsor women living in a household, the head of which has a permanent job andcan support him/her while waiting for a ‘good’ job. Finally, the situation ofthe labor market can be very different from region to region, because internalmigrations have not taken place for many years. So, in spite of a high totalunemployment rate at a national level, a lack of labor can occur both in someregions and for low-level jobs.

In southern European countries, an unemployment pattern prevails thatpenalizes women, young people living with their parents and the educated;while protecting prime-aged men, heads of households and the poorlyeducated.

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Furthermore, while everywhere the risk of being unemployeddecreases as the educational level increases, the relative advantage of educatedyouths is far lower in Italy, Greece and Spain than in other European countries,although the proportion of educated youths is smaller. It does not matterwhether the reason is either a subjective rigidity by the educated labor, or abackward economic system where unqualified labor supply is still important.In either case, this pattern reveals a serious mismatch between labor demandand supply, which can have a pull effect on migrant workers, because, in spiteof large-scale unemployment, the number of poorly educated youths out ofwork is not significant. In Greece as well as in Spain, and in Italy, well-educatedyouths are the bulk of unemployed people. Portugal is an exception, as theunemployment rate among educated people is even lower than the already lowrate of poorly educated people. This could explain why in that countrymigrants fill qualified jobs, too.

Finally, as per the household status, everywhere heads of households are lessvulnerable to unemployment than youths. However, the gap between these two


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statuses is much larger in Spain, Greece and particularly in Italy, where theunemployment rate of heads of households is the lowest, whereas that of sonsor daughters living with their parents is the highest when considering allEuropean countries. Young people seeking their first job, who account for thelargest proportion of the unemployed, are very often living under their family’sroof, with their fathers holding gainful employment, or at least receiving apension. Conversely, heads of households are only a small minority among jobseekers, except in Portugal, where, anyhow, unemployed people are relativelyfew. Therefore, even in southern European countries, where the jobless arevery poorly covered by welfare provisions, only a few of them are really forcedto look for any job whatsoever, because most of them are educated youths whocan afford to wait for suitable jobs protected by the shelter of their families.

In most southern European countries a geographical balkanization is addedto the labor market segmentation by gender, age, educational attainment andhousehold status. Italy is the most evident case. While in southern regions,unemployment rate is around 25%, some center-northeastern areas are nearlyfully employed, especially regarding blue-collar jobs. Cross-regional differ-ences in unemployment rates are important in Spain and Portugal, too.However, internal migration has been very low for many years. The mainreasons unfold from the fast growth of private and social consumption detect-able in highly unemployed regions, too, and the shortage of flats to rent infully employed ones. The number of non-EU migrants is highest in thoseregions where the unemployment rate is lowest.

This leads us to the conclusion that a demand for migrant workers does existin southern European countries, although the overall unemployment rate ishigh. The employment structure provides further evidence. The main recenttrends by economic sector in Greece, Italy, Portugal and Spain can be sum-marized as follows:

• the creation of jobs is related only to the service sector, both modern andeven more traditional activities (among them, tourism and private personalservices are very important);

• employment in the construction field is stagnant (but quickly increasing inPortugal and Greece);

• employment in the farming sector is decreasing, but still important;• employment in manufacturing is also decreasing, however, in the area of

selected small firms the demand for blue-collar workers is still rising.

Another well-known feature of the employment structure is the high propor-tion of small businesses and self-employed jobs, so that in southern Europeancountries most jobs are to be found in small firms, many of which are run ona family basis. And the demand for precarious jobs is increasing even more. Itis less known, instead, that in Greece, Italy, Spain and Portugal the employ-ment structure is biased towards low-level occupations. As a matter of fact,proportionally, there are far less highly qualified and high social status jobs(executives, professionals, technicians) than in the center-northern Europeancountries: 24–27% against 36%. The opposite becomes true in case of semi- orunskilled jobs: 25–27% in Italy and Portugal, 33–34% in Spain and Greece,when compared with little more than 21% in other European countries.Finally, the greater number of micro-firms and self-employed workers explains



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a higher proportion of craft workers (17–21% against 15%), able to combinetechnical skills with hard manual labor.

Therefore, in the countries of southern Europe employment opportunitiesare still largely biased towards low-skill and poor social status jobs, in small andunstructured firms. This partially explains the apparent contradiction stressedabove: the smaller competitive advantage of educated youths, despite therelatively scarce diffusion of higher education. It also explains why employersare led to seek labor abroad despite great availability of educated young joblessworkers at home.

Nearly all migrants are employed in low-level tasks such as: housekeeping,in the agricultural, construction, manufacturing, and services sectors, or asstreet sellers. In all south European countries, housekeeping is by far the mostcommon occupation open to migrants, and in particular, it is almost the onlyeasily assigned to women, although several men are also employed as house-hold servants. Three factors account for a far greater demand for house-keeping, as compared with the much wealthier north European societies. First,having a housemaid is still a status symbol for the south European middle-classhouseholds; second, social service provisions for childcare and for the elderlyare generally scant; third, a traditional gender division of housework withinhouseholds still persists. Thus, the rising participation rates of local middle-aged women in the labor market largely depend on a migrant worker beingavailable for domestic work. On the other hand, the local labor supply isincreasingly scarce for that kind of task, in particular for the ‘full-time live-in’jobs, which not only imply very long working hours, but are also reminiscentof a recent past, where they were socially disqualifying.

Migrant housekeepers are concentrated in larger cities; they generally startout as full-time maids, living in their employer’s home. This is a very restrictivesituation (up to 12-hour workdays, without any form of privacy), but a place tosleep is an important trade-off for women who migrate alone, as many do.Afterwards, a lot of them try to improve their occupational status in one of thefollowing four ways: getting a job in a hotel or restaurant, becoming a ‘part-time live-out’ maid, getting a job in the cleaning sector, and finally, changingto a better paid, although equally burdensome type of housework, i.e. caringfor children or the elderly. In those cases, earnings become higher, but so dothe costs (accommodation, meals), the chances of being registered at the laboroffice remain inconsistent and, even if their jobs are set on a regular basis, theworking contract is seldom permanent.

The use of migrant labor in seasonal harvesting increased dramatically overtime until it became a fundamental feature of Mediterranean-type agriculture,and migrants replaced national workers. The exception being Portugal, morebecause of a social rather than an economic reason: the agricultural economyis still on a family basis, and local gypsies provide a large labor supply to theharvest. The opposite happens in Greece, where migrants are estimated tosupply almost half of the total dependent employment in agriculture. Further-more, migrants are also increasingly working in greenhouses, cattle raising andeven in intensive animal farming (beef cattle and pigs), operating in the richlarge plain of northern Italy. Some are commuters: they come for the harvestand return back to their home countries as soon as it is over. Others follow thedifferent harvesting seasons from one region to another. Still others alternateagricultural work with street selling, jobs in either construction or low-level


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services. In south Italy as well as in Spain and Greece they are usually recruitedaccording to the old-fashioned ‘hands market’ by hiring bosses, often migrantsthemselves, who take them to the workplace and rent them to the landowners.They are usually paid by the piece (per box of grapes, tomatoes, etc.) and farbelow trade-union rates. Migrants often work up to 12 hours a day, and arelodged in barracks without running water or electricity.

Construction is the main sector of employment of male migrants in Greeceand Portugal, employing many migrants as well in Italy and Spain. In Greeceunauthorized migrants are estimated to constitute nearly half of the totalemployment in the sector. Most of them are Albanians. Many migrant workersare hired on a day-to-day basis through the street corner labor market. A lotof the labor demand comes from households for house maintenance andrepairs. In contrast, in Portugal migrants, even the unauthorized ones, areworking mainly on large sites and on public works, although they are recruitedby informal subcontractors, many of whom are migrants themselves, whogenerally exploit migrant workers, compelling them to overwork, and some-times not even paying them their due wages. They are at the lowest levels of adestructured work process based on subcontracting.

In Italy a sizeable and growing proportion of migrants are employed inmanufacturing. The areas most concerned are the central and northeasternindustrial districts, among the wealthiest in Europe, whose labor market isclose to full employment. The sectors most concerned are plastics, ceramics,metalworking, stonecutting, tanneries, garments and cement factories. Firmsemploying migrant workers are usually small or medium-sized, whereas family-based firms employ few migrants, and big firms almost none. Migrants aremainly employed in jobs that have the toughest conditions with respect tophysical effort, endurance, overtime work and night shifts, as well as risks ofaccidents. But this does not at all mean that they are working in backward andmarginal firms, as unskilled and laborious jobs are still available even in smallmiddle-tech firms. The main issue for firms employing migrants is stability,because they need people that are willing to put up with poor working con-ditions over a long period, avoiding the quick turnover of young local workers.Some migrants are also starting to work in jobs that require physical strengthas well as skill. Even these jobs cannot be filled locally, since the less educatedyouths who accept them, frequently lack the personal qualities necessary tolearn the required skills. Most of the migrants hired by manufacturing firmshave regular contracts, but at the lowest rates of pay.

On the contrary, the presence of migrants in manufacturing is scarce inPortugal as well as in Greece. It is a little larger in Spain, but not increasing,and it includes as many women as men. The main sector, in fact, is representedby textile and garment industries: small clandestine sweatshops employingSpanish and migrant women (mostly from Morocco), who receive the samerates (low, because of a restricted productivity and harsh competition),although the latter get the worst jobs. Some migrants subcontract work to bedone at home on a clandestine basis. Some employers are migrants themselves,and employ people from the same areas of origin. As it is difficult for laborinspectors to even locate these sweatshops, irregular employment is still impor-tant. In contrast, it is increasingly difficult for migrants to find work in otherindustrial sectors, because in recent years the move towards a formal economyhas been quite consistent, so that nowadays it is very risky for registered



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companies to employ migrants on an irregular basis. Jobs in manufacturing,thus, became very attractive to local workers, and there is a tremendouscompetition for them.

In all southern European countries migrants hold a wide range of jobs inthe least skilled services: dishwashers, waiters, cooks; gas-pump operators;guardians and concierges; night watchmen; painters; blue-collar workers inrepair and cleaning firms; porters and transport workers; home deliverypersonnel and so on. The common features of these jobs are low skill require-ments, a need for physical effort or greater endurance, long or inconvenientworking hours, scarce opportunities of professional advancement togetherwith a low social status. Even when employment becomes regular, laborcontracts are usually precarious, and wages very low. Employment in tourist-related activities further increases the number of ‘bad jobs’, increasinglyneeded to meet the needs of modern Western societies, even of the southEuropean ones, not yet high-income societies.

According to an extensive literature concerning the USA as well as center-northern Europe, a fast increasing number of immigrants is working as self-employed so that the proportion of self-employment has become higheramong migrant workers than among native ones. This phenomenon was foundto be connected not only to old and well-settled migratory inflows, but also tostill marginalized immigrant groups who recently entered the country. Never-theless, this is not the case of south European new receiving countries. Exceptfor the Brazilians in Portugal, the proportion of self-employment amongmigrants is quite low, especially when considering the very high proportion oflocal self-employment.

Greece is the extreme case: in comparison with the highest proportion of self-employed people in Europe (over 45%), the number of self-employed migrantsis negligible. On the contrary, the employment of migrants in an undergroundeconomy has been carried out together with an important shift from unpaidfamily labor to wage labor. Various economic activities previously accomplishedby family labor are now fulfilled by hired wage workers. The availability of cheapmigrant labor has facilitated the transfer of this kind of work to the paid sector.The substitution of migrant workers for family ones has occurred most spec-tacularly in agriculture (Cavounidis, 1998). The large supply of migrant laborprone to work at rates below the minimum daily wage made the hiring of wagelabor possible at a time, when family labor was increasingly difficult to draw on,since Greek youths shun agriculture and aspire to urban jobs. The substitutionof migrant wage labor for family labor has occurred in non-agricultural familyenterprises as well, particularly in small enterprises in the building and manu-facturing sectors. Thanks to the irregular hiring of unauthorized migrant wageearners, the proportion of employees on total employment increased andcapitalistic work relationships became more widespread.

In Italy, where the proportion of self-employment is over 28%, among thosemigrants holding a residence permit for working reasons, the proportion ofthose entitled to self-employment is very low and has decreased in the last fewyears, from 6 to 4%. A large majority of them applied for the 1991 regulariza-tion, the only one allowing applicants to be self-employed. Until 1999, it wasvery difficult for migrants holding a work permit as employees to get a permitthat granted them self-employment. Moreover, many migrants entitled to beself-employed are actually working as members of a cooperative. In large


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Italian cities, few self-employed migrants can be found in sectors such as theretail trade, restaurants, artistic or intellectual professions and artisans. InSpain, the proportion of self-employment is higher than in Italy, butdecreasing both in terms of work permits, and in the number of migrants whoapplied for the regularization schemes: from one in three in 1985, to one inseven in 1991. They are mainly Latin Americans and Asians, who work asretailers and street vendors, just like in Italy.

In Italy the number of immigrant entrepreneurs has increased in the lastfew years along with the settlement process of migratory inflows. The trend isimportant, although figures are still limited. The most concerned migrants areChinese, followed by Egyptians, Tunisians and Moroccans. Chinese, as usual,organize their businesses (restaurants and garment sweatshops) on the basisof an intensive use of family and ethnic labor, as well as capital. Amongregistered Chinese entrepreneurs the proportion of women is important, butit confirms again the family organization of their own businesses. Thus, theirentrepreneurial pattern looks very much like a typical ‘ethnic business’.However, we must remark that in regions of central Italy, like Tuscany andEmilia, Chinese garment production is structured as the local one was at anearly stage of its development. Chinese entrepreneurs, in fact, are reproducingthe Italian ‘industrial districts’ in cases in which Italian family-based firms werenot able to continue because local youth are no longer willing to bear hardmanual work. The replacement effect is evident, as Chinese garment sweat-shops often work as subcontractors of Italian companies with the control onmerchandising. In large cities the number of ethnic restaurants is fastincreasing: they are managed mainly by Chinese, but also by Egyptians andother migrants. Egyptian, Moroccan and Tunisian entrepreneurs are to befound also in construction, the cleaning sector and the retail trade. Customersare always Italians, but in the case of the retail trade, for different reasonsIslamic butchers and phone shops are for migrants only.

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A recent paper (Magatti and Quassoli, 2000) explains why in Italy, thedeveloped economy with the highest proportion of domestic self-employment,ethnic entrepreneurial activities are so scarcely spread, at least at the moment.First, not only the immigrant phenomenon has occurred over a short time-span, but also arriving immigrants continue to be distributed among a widerange of countries of origin. This means that we have a large number ofrelatively small ethnic groups distributed over a wide territory, made up mainlyby single young adults. Thus, on the one hand, the market for ethnic goods isscarce, and ethnic communities which could include immigrants in socialnetworks are lacking, a useful point from which to depart in business activities;on the other hand, most immigrants have short-term migratory projects, andare not interested in devoting themselves to business activities. Second, at leastuntil 2000, it was very difficult to get a residence permit to work as a self-employed worker, even for migrants holding a permit to work as employees.Furthermore, entrepreneurial activities are subject to strict social and institu-tional rules. Trade-related activities offer an interesting example. They arehighly regulated by a conspicuous set of state/local laws and rules, so that evenimmigrants holding a proper residence permit must face serious difficulties infulfilling all requirements needed to be registered as retailers.

Finally, we moreover have to consider the importance of self-employment ina society as the Italian one. For decades, self-employment has been a strategy



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of the middle and lower-middle classes in order to gain access to otherwiseunattainable income and status levels. In a country where the lack of largeeconomic organizations reduces opportunities for those with a medium tohigh education to enter occupational careers, having one’s own businessrepresents both socially and economically a very attractive opportunity. Froman immigrant’s perspective, two main consequences are to be ascribed. First,the deeply rooted and widespread phenomenon of self-employment and smallbusinesses within the native population has to some extent filled many of thespaces available on the market, making it more difficult for an immigrant tostart his own business. Second, the relatively high social prestige granted toself-employment means that there is a widespread concept of migrants asemployees rather than self-employed workers. While immigration may beconsidered a source of labor where otherwise a shortage would be established,it is far more difficult for Italian public opinion to accept the notion thatimmigrants may start their own businesses, just as Italians do.

On the contrary, in Italy unauthorized immigrants found in selling in thestreets, an easy way to make money, even if they do not hold proper documents.Street selling was an old-fashioned form of underground self-employment thatlocal labor abandoned years ago, its recovery was set by a large availability ofmigrant labor prone to any activity whatsoever. Migrant street selling was animportant phenomenon in Italy at the beginning of mass inflows: in the 1980s,peddlers were estimated at 15% of workers from undeveloped countries,although peddlers are very visible as well as mobile and they are likely to havebeen ‘counted’ more than once. The situation changed after the 1990 regu-larization, which allowed many migrants to move to the northern-centralregions, and find a job as wage earners in other activities. But a sizeableproportion of migrants continued street selling. Migrants’ incorporation intothis sector was much less common in Greece, Spain and even less in Portugal.The reason may reside in the difference of local labor supply for this activity:in Spain and Greece migrants found many nationals vending on the street asin weekly markets, and could not manage to enter the sector en masse. InPortugal gypsies monopolize the sector, and prevented new entrants. Further-more, in Spain there is a greater police control.

The relative decrease of peddlers in Italy was coupled with more ‘targeted’sites: tourist resorts and beaches in summertime, big cities in winter. Manymigrants, who during the rest of the year work as wage earners in other sectors,become peddlers in summer, whereas some peddlers spend the winter in theirhome country. Peddlers are mostly Moroccans and Senegalese, but recentlyChinese vendors have appeared in the streets. Although few peddlers sellcounterfeit goods and, anyhow, they are not thought to cheat consumers, lawsare infringed, as they rarely hold a selling permit. Therefore, they are exposedto sanctions: starting from a fine, up to the confiscation of their goods.Moreover, migrants not holding a residence permit can be issued a deporta-tion order. Thus, migrants are allowed to sell in the streets by virtue either ofscarce enforcement, or within the tolerance of the police, who intervene onlywhen serious illicit acts are committed (drug dealing, robberies, harassment)or when shopkeepers protest because the sidewalks are too crowded.

A large number of wholesale dealers and middlemen supply peddlers, whoare self-financed or supported by relatives and friends. Many of them, oftenmigrants experienced in trade, operate legally, but others are specialized in


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clandestine manufacture, as well as in illegal vending of counterfeit goods.Most goods sold by peddlers are made in Italy by ‘underground’ factories andclandestine sweatshops. Employers, as well as most of the people working inthese firms are Italians. The opportunity to avail oneself of a widespreadirregular distribution network has provided a stimulus, for instance, to Naples’underground economy, which formerly manufactured goods for local sellers.Therefore, migrant street sellers not only contributed to reviving a traditionalItalian activity, but also helped an important section of the domestic under-ground economy to grow.

In Greece, migrant street sellers (mainly Egyptians) are concentrated in acentral area of Athens, side by side with Greeks doing the same job. Smuggledgoods are among the merchandise offered. That is how, both informaleconomic and deviant activities are organized. Certain street corners becomespecial gathering points for migrants, who wait there for those who want tohire them for a daily job, particularly in construction. At the same time, itbecomes easier to come into contact with illegal networks. In Spain migrantpeddlers (mainly South Americans and Moroccans) are scattered in all theregions, but those without a selling permit often work under their fellowcountrymen, because of strict controls by the police.

If both the situation of the receiving labor markets and the migrant workers’inclusion in them are those mentioned above, we can easily bring to an endthat migrants are in competition only with marginal sections of the domesticlabor force (young dropouts, uneducated women, elderly people, gypsies inPortugal and Greece) when they are not effectively sustained by welfare pro-visions, in narrow occupational areas (construction in Greece, manufacturingin Spain), and/or in the less developed areas inside the countries. Counter-factual evidence confirms this conclusion: conflicts between migrants and thelocal population only seldom concern labor market problems (but in Spain)and even in countries where media are strongly stigmatizing migrants, thecompetition for jobs is the last item that they refer to.

There is scarce, if any, competition because both in the formal and evenmore so in the underground economy, most activities carried out by migrantsare below the level accepted by domestic workers, even in high unemploymentand low-income countries such as the southern European countries whencompared with central-northern Europe. We can agree with the commonopinion that

‘

The migrants take jobs the locals refuse. It’s simply a matter of substitu-tion

.’ Therefore, a trend towards an ethnic segmentation of the labor marketis growing, because within the limited range of jobs available to migrants froma large number of countries, each ethnic group is pivoting towards a particularsector or activity. So far, the main reasons are twofold: the recruitment systemin which networking is essential to finding employment, and a ‘positivediscrimination’ as there are cases in which employers prefer migrants becausethey are cheaper, more vulnerable and more docile. In the future, negativediscrimination will reinforce this process, which, moreover, is self-nourishing.Long-term risks not only for the functioning of the labor market, but also fora larger society are evident as well as short-term benefits.

In Spain and Italy the concentration of migrant workers in some jobs assuresthe viability of some sections of both the economy and society, which wouldotherwise be in critical conditions.

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This is the case of many small farmers andbuilding contractors, who survive by employing migrants. In addition, broad

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sectors of the urban population satisfy their needs for domestic help by hiringimmigrant workers as maids, caretakers and nurses for elderly care. But thecases of complementarity are even more evident in Greece, where unauthor-ized immigrants account for a very large proportion of those employed incrucial sectors such as agriculture, tourism, construction and personal serv-ices.

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Only thanks to their work those sectors remain productive, but migrantsare a ‘blessing’ also for Greek citizens, who both can easily have recourse tocheap services of unauthorized migrants for repairing their houses, house-keeping and caring for children, older and sick people, and can thereforeupgrade to a service sector as well as more qualified jobs.

Finally, the situation in Portugal

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is more complex and, at a first sight, quiteparadoxical. There is no problem regarding highly qualified migrants (mainlyfrom Brazil and Europe), as they fill a skill shortage at the top of the occupa-tional ladder, which is caused by a backward educational system, and a recentgrowth in demand for some highly qualified activities. In contrast, there wouldnot be any shortage to be filled by poorly educated and unskilled migrantsfrom the PALOP, because a large supply of Portuguese labor had left thecountry to perform in Germany just the same kinds of activities migrants areperforming in Portugal. In both cases they are blue-collar workers in construc-tion, although the degree of informality in working con-ditions is different.Portuguese workers abroad generally have a labor contract with a Portuguesesubcontracting firm, which is regular by Portuguese standards, but, of course,much below the German standards.

On the contrary, migrant workers in Portugal are generally employedwithout any labor contract, so their wage rates and working conditions areconsiderably below local standards. We can say that in both cases there is socialdumping against local workers, but Portuguese workers are earning muchmore money abroad than what they could earn if and when employed with aregular contract at home. Therefore, all things considered, competition doesnot exist; we can rather speak of a process of labor replacement at an inter-national level, in which Portugal serves as a clearinghouse. All subjects appearto receive an advantage, except the German workers. However, in the long run,this process is likely to cause a downgrading of wages and working conditionsboth in Portuguese and German construction labor markets. Observers fearwhat might occur when the construction boom ends in Berlin and Germany,as well as in Portugal. Many Portuguese emigrants will come back, as most ofthem maintain close links with their home country, and they will compete witha large supply of migrant workers in a labor market where informal regulationhas become the established norm.

3. Migrants’ Insertion in Well-rooted and Flourishing Underground Economies

We consider an informal or underground economy as ‘all incoming earningactivities not regulated by the state in social environments where similaractivities are regulated’ (Portes, 1994). It includes all paid working activities,leading to the production of legal goods and services, excluded from theprotection of laws and administrative rules covering commercial licensing,labor contracts, taxation and social security systems.

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In south Europeancountries, state regulation of economic activities is particularly strict, so that


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people working only in the underground economy, either as employees or self-employed, hold unregistered and undeclared jobs, i.e. they are irregularworkers.

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The vast majority of immigrants in the countries of southern Europe eitherare working or have worked for a while in irregular jobs, just as they are eitherliving or have lived without a residence permit. As it is the case for unauthor-ized stays, migrants’ insertion in an underground economy varies according tothe country and over a period of time. However, the relationship between thetwo statuses is complex everywhere. Holding a residence permit for workingreasons is a necessary condition for the performance of a regular job, but it isnot a sufficient one. Large numbers of migrants continue to work at irregularjobs despite having obtained a residence permit (largely through a regulariza-tion) entitling them to carry out a registered job. Thus, an immigrant workermay find himself not only either authorized as for stay and regular in terms ofwork, or unauthorized as for stay and irregular in terms of work, but alsoauthorized as for stay and irregular in terms of work.

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The absence of a sharp polarization between documented and undocu-mented

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makes the paths of migrants more complicated. In fact, while someimmigrants move from one category to another, others frequently change theirsituation shifting back and forth. These ‘loops’ are usually seen as an ‘adaptiveresponse’ to the serious difficulties involved in obtaining and keeping a resi-dence permit and a registered job, but they can also be viewed as the result ofchoices intended to maximize the value of registered jobs (necessary to applyfor a regularization or to renew a residence permit), as well as that of un-registered ones (providing higher ‘cash’ earnings). Employers, too, find them-selves faced with more than one alternative, because they can employ anauthorized migrant to do unregistered work. Their behavior is strongly con-ditioned by legislative norms, and how strictly the same norms are actuallyenforced.

A perverted ‘positive’ discrimination may concern unauthorized migrants,since the most excluded may be the most ‘useful’ for firms employing irregularlabor. In Italy, because of paradoxical juridical procedures, employers inpractice may risk a lower fine by hiring, without contract of course, unauthor-ized migrants than by failing to register migrants with a residence permit.Moreover, unauthorized migrants are less likely than holders of a permit, tofile formal complaints for better working conditions, and to ask for a check bylabor inspectors. The same happened in Spain, before controls on workingsites were dramatically strengthened. The distinction did not matter in Greece,where until 1999 the vast majority of migrants were not holding a residencepermit, and were forced to work in an underground economy. However, theirGreek employers did not run any risks: since 1993, in order to avoid sanctions,it has been enough for employers to pay social contributions for the undocu-mented workers they have employed. Those contributions, of course, did notentail any rights for migrants who officially did not exist, but financed socialsecurity for domestic workers through a new form of ‘state-sponsored shadoweconomy’.

We managed to roughly estimate the dimensions of those three categoriesin Italy. In 1994, only one out of three migrant workers had a registered job,with the others working either without a labor contract, or without a properself-employment permit. The percentage of those registered reaches 60%, if



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we consider only those with a residence permit for working reasons. Finally,slightly less than half the workers did not have a residence permit allowingthem to work. The proportion of unauthorized migrants among those workingirregularly was 70%, although many probably had a residence permit grantedfor other reasons (family, tourism, etc.). In 1996, just after the third massregularization, the scenario was quite different. ‘Only’ one of two migrants wasworking without a contract. The percentage of registered workers amongmigrants with a residence permit for working reasons was over 70%. Thus,almost one-third of unregistered migrant workers faced no legal impedimentsto get regular jobs. Finally, just one-quarter of those working did not have aresidence permit for working reasons and the proportion of unauthorizedmigrants among unregistered workers dropped to little more than half. Thelast regularization, in 1998–1999, further reduced the proportion of migrantsworking in the underground economy, to about 40% overall. Over 30% ofauthorized migrants who were entitled to get a regular job, however, were stillworking with irregular jobs. Yet the emergence from the undergroundeconomy brought about by the 1996 and 1998–1999 regularization schemeswas in part temporary, although less than it occurred as for the 1991 regulariz-ation.

The huge insertion of migrant workers in the underground economy isoften seen as an indicator of oversupply of migrants in countries with highunemployment, such as south European countries are supposed to have. Thiscould support the scenario of migratory flows as being caused merely by a pusheffect. However, just as both the idea of migrants ‘escaping to survive’ and thatof migrants harshly competing with native jobless are wide of the mark, unau-thorized migrant workers are not at all at the origin of the undergroundeconomy in the southern European countries. In these countries an under-ground economy has long been firmly rooted, so that migrants enteringGreece, Italy, Portugal and Spain found a huge underground economy thatoffered them a wide range of jobs without demanding any document, andconversely only few opportunities of taking regular jobs, even when they wereeligible for taking them.

All sources agree in estimating that the level of the underground economyin Greece, Italy and Portugal is much higher than in all the other Europeancountries. As to Spain the estimates are quite uncertain, but the more recentones show a decrease, so that the Spanish underground economy is nowestimated to be only a bit over the EU average. Cross-national studies usuallyestimate how much of the GNP is not registered by the income tax and socialsecurity bureaux. Although this method overestimates the proportion ofinformal employment with respect to total employment,

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it is reasonable tosuppose that the differences between countries would remain unchanged.Thus, in most northern countries of the EU the black market sector accountsfor probably 5% of declared labor or less, whereas it is reaching 10–20% in thesouthern ones (Williams and Windebank, 1995). In southern Europe morepeople are working in occupations where it is easier to ignore administrativeand legal rules: agriculture, building, small firms in manufacturing andservices, self-employment.

In Italy, according to National Accounts estimates, wage earners not regis-tered on firms’ payrolls and self-employed workers lacking the requiredpermits number at present near 14% of the employed people. The trend,


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however, is slightly decreasing, side by side with the increasing migrants’insertion in the underground economy; while the number of workers holdinga part-time second job is increasing. Southern Italy is one of the areas of thedeveloped countries where irregular work is most important. Nevertheless,irregular employment is important even in some areas of the northern andcentral regions, which leads the way in Europe to terms of high income andlow unemployment.

The underground economy in Portugal is a sizeable part of the nationaleconomy: over 20% in the 1990s, not taking into account housekeeping,agricultural activities and public administration. Informal economicarrangements mark everyday life of rural households, and they involve allsocial–economic urban groups, particularly in the country’s major cities.Construction is employing the largest share of informal work (nearly 50%),but the proportion of black workers is important both at the top as at thebottom of the occupational ladder. Furthermore, like in the other southernEuropean countries, the practice of having a second activity is widespread,especially when dealing with agriculture and services.

A shadow economy in Greece runs through the entire social and economicfabric. It has been estimated to include as many as 30–40% of employedpeople. Moonlighting is very common among registered workers as well. Themain sectors are tourism, agriculture, construction and trade, but small firmsin manufacturing are also concerned. Such a shadow economy does not onlyincrease profits, but is linked with the survival of entire sectors of the economy.However, powerful social groups, too, such as lawyers and doctors, are workingoutside any rule. We can say that the Greek economy is split into three sectors:the public sector, the regular private one and the irregular private one, whichis likely the most important. According to an in-depth study done in 1985, oneout of four Spanish workers had no legal cover. They were mostly youngpeople, women and unskilled workers, in agriculture, repair shops, smalltextile factories, retail, tourism and domestic work. However, the estimateswould suggest that the phenomenon is diminishing. On the other hand, Spainis the only country in southern Europe in which a campaign was mountedagainst informal work, involving both public opinion and legal action.

4. A Domestic Underground Economy Promoting an Unauthorized Immigration

Having shown that most migrants are not in fierce competition with localworkers has been the second step in questioning the supposed oppositionbetween immigration and high unemployment, namely that immigration ismerely due to a push effect from the sending countries. The first one focusedon the analysis of the characteristics of migrants and of their migratoryprojects. The third step pointed out that the underground economy is not aconsequence of an oversupply of migrant labor, but a domestic phenomenon,with roots dating a long way back in time. In all southern European countries‘underground jobs’ now held by migrants have long been a part of thedomestic labor market, and were not created ad hoc when immigrants startedarriving. Perhaps the only exception may concern Chinese restaurants,although in some cases they were replacing local low-class restaurants. Even instreet selling, immigrants revived an activity that had an ancient tradition.



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Nevertheless, there is no doubt that newly coming migrants were supplying alarge labor force, either forced or prone to take irregular working activities,making the reproduction of an underground economy easier.

The further step will be taken in order to stress that a labor demand froman underground economy can have an important pull effect, chiefly when theexternal borders of receiving countries are formally closed, and economicmigration can only be unauthorized. This is the first of the negative conse-quences that a large underground economy in southern European countrieshas on contemporary migratory movements.

Many migrants are employed in occupations (retail trade, personal services,construction, transport, tourism, catering) that cannot be transferred to lowerlabor cost countries. Many others, except in Portugal, are agricultural laborers,but a further decrease in local agricultural production in favor of imports fromundeveloped countries, would have wide-ranging negative implications formany households, whose incomes are based on moonlighting in agriculture.As for small manufacturing firms, they are very important on the competitivemarket of southern European countries, above all for Italy. All these branchesare unskilled and poor labor intensive; furthermore, their productivity remainslow. Thus, there is a risk of many jobs being priced out of the market, if workerswere paid at union rates. Although all southern European countries are notalike, the labor cost ladder for regular jobs is generally narrow and minimumunion wages are relatively high. Therefore, the only way to adjust labor costsof those jobs to their productivity is to make them irregular, thus saving onindirect costs (income tax and social security contributions), and sometimeseven on direct wages. This further reduces the appeal of those jobs to thenative labor force, opening the way to immigrant workers, particularly tounauthorized ones, who can find an occupation only in an undergroundeconomy.

This supports the hypothesis of a pull effect from the demand side. Butevidence can be found from the supply side as well. As most migrants are notdesperate people without means of survival, but emigrants trying to improvetheir conditions, they are deeply affected by information on what in theircountries of destination they can find. Geographical proximity and family-based migratory chains aside, what ultimately matters is the image of southernEuropean countries transmitted by migratory chains (and by criminalnetworks organizing clandestine trips, too). Interviews showed that the expec-tations the immigrants had regarding Italy, Portugal or Greece before they lefttheir countries of origin, fit exactly with the stereotype of these countries:countries where it is easy to live and make money even without a residencepermit, making it worth the hardships, expenses and risks to get around borderchecks.

The prevailing opinion among migrants stressed that it was relatively easy tostay in Italy or in Portugal even without a residence permit, because inspectionswere few, and once caught, immigrants were rarely deported. In these coun-tries, the fact of living without any authorized status does not at all compelmigrants to lead a clandestine life. While in Greece, the probability of beingexpelled is very high, that of entering the country again is equally high, so thatin Greece, too, life of undocumented migrants is anything but clandestine.This was also the case for Spain until the mid-1990s; then police controls andexpulsions have increased substantially. The situation has changed also in Italy,


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but only since 1999. Furthermore, although only few migrants knew the differ-ence between regular and irregular jobs, the prevailing view was that work waseasy to get in Italy as well in Portugal, so you could make money even withouta residence permit. Some migrants explicitly mention this state of affairs as anexplanation of why they chose those countries. We have no information frominterviews on Greece, but the large ‘circular’ migration of Albanians confirmshow easily they evaluate opportunities for getting a job in the country, carelessof a residence permit. Moreover, many Albanians as well as other migrantsfrom the Mediterranean Basin agreed in stating that Italy’s undergroundeconomy offered the most job opportunities and the highest earnings.

A large underground economy exercised an important attraction sincesouthern European countries were closed to authorized immigration forworking reasons. Those who do not hold a residence permit for workingreasons are obviously cut off from the regular labor market, and were it notfor the shelter of an irregular economy, they would soon be forced back totheir home country. The ready availability of employment in the undergroundeconomy, where no documents are required, promoted unauthorized immi-gration. Thus, the problem of unauthorized immigration depends more onunderground economy inside south European countries, than on the effectivecontrol of their external borders.

5. An Underground Economy Preventing Immigrants from Steadily Settling

As most immigrants can find working opportunities only in an undergroundeconomy, they are prevented from getting a permanent authorized status and,thus, from taking a steady settlement in the receiving society. This is the secondnegative effect. That is, migrants’ huge insertion in the lowest strata of anunderground economy (the highest ones are for local workers, especially formoonlighters) is caused only partially by their unauthorized status. Even manymigrants who managed to hold a residence permit for working reasons thanksto a regularization, as a matter of fact are working as unregistered employees,or in marginal self-employed activities. But, an irregular working status usuallyprevents migrants from renewing their residence permits, so that the author-ized residence status for many is never achieved and a vicious circle starts,because migrants who have lost their authorized status are forced to takeirregular jobs.

In south European countries a residence permit for working reasons isusually temporary (1 or 2 years), and its renewal is subject to the condition thatthe immigrant either holds a regular job or can prove an income sufficient tofeed himself and his family, if present. That condition is very difficult for thosemigrants holding only occasional and irregular jobs. Failing to renew theirresidence permit is easy for other reasons, too: not obtaining a document intime, forgetting a date, losing a job at the wrong time, leaving for one’s homecountry without waiting for permission to re-enter, etc. Evidence shows that aserious contribution to the insurgence of unauthorized stay after regulariza-tion drives is due to internal reasons.

In Italy, although we cannot know how many people returned to their homecountries or migrated elsewhere, it is easy to assume that most of the 80,000migrants regularized in 1990, whose permits expired in 1992 and were notrenewed, remained in the country simply without any authorization. Thus,



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nearly one-third of migrants who had availed themselves of the 1990 amnesty,went back to an unauthorized status 2 years later. A similar phenomenon befellagain on occasion of the 1996 regularization, although to a far lesser degree,because the demand for regular migrant wage earners had by the timeundoubtedly increased. However, one-third of the migrants who obtained aregular job thanks to that regularization, are estimated to have lost it a fewmonths later. The proportion is far lower in the northeastern regions, wheremore and more migrants have been able to find regular work in small and mid-sized factories. If those migrants had not succeeded in having a regular jobbefore the expiration of their permit, they came back unauthorized.

A similar vicious circle happened in Spain after the 1991 regularization: oneout of four regularized migrants did not manage to renew their residencepermit in 1994. The risk of losing their privilege again was even higher amongthose who availed themselves of the regularization as workers in those twosectors where it is most difficult to keep a regular job: agriculture and house-keeping. Sometimes an irregular working status reproduced itself immediately,as many of the employers who did hire migrants, continued employing themirregularly even if the regularization process was underway; whereas otherspromised to hire them regularly, which meant the migrants could apply forregularization, but did not actually do so. In all these cases, regularizedmigrants could not renew their permits afterwards. Some of those migrantswere able to get a residence permit thanks to the opportunity offered by thequota system. Many, however, had to wait for a new regularization, in 1997,which was expressly devoted to regularizing migrants who had lost a previouspermit.

In Portugal, too, it is quite common for migrants to return to an unauthor-ized status. This is not only due to the already explained difficulty of keepinga regular job for an extended period of time, but also to the general awarenessthat there is no advantage for an immigrant in being authorized. It does not,as a matter of fact, allow him/her to find regular or better jobs. On the otherhand, police checks are rare as well as controls by labor inspectors on workingsites, and the likelihood of being expelled, reduced to almost none. No realbenefit can come out of it. Furthermore, those migrants whose applicationsfor an authorized status were approved in 1992, only got a provisional 1-yearauthorization, which had no follow-ups. Applicants were not adequatelyinformed and, when provisional authorizations expired, many of them fellback to an unauthorized status again.

Still, among those migrants who manage to renew their residence permitperiodically, several are not always working within a regular standardizedeconomy. They, in fact, can ‘arrange’ a fixed term registered work contractonly in order to either renew their residence permit, or to receive it thanks toa regularization, and afterwards go back to their usual irregular activities.These migrants, too, find themselves living in a precarious situation, only a bitless severe than those people who are seesawing back and forth betweenauthorized and unauthorized statuses throughout their stay in the country. Inboth cases, in fact, migrants have scarce opportunities of reaching a perspec-tive of a long-term settlement, and of being well inserted in the receivingsociety.

However, in the case of most migrants, the reason for their unauthorizedstatuses has to be looked for neither in a scarce propensity to find registered


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jobs, nor in a typical free-rider behavior, but in the structure of the workingopportunities in the receiving labor markets themselves, which for migrantsare mainly directed by an underground economy. As migrants frequentlychange jobs, they are often faced with a choice between the relative ease offinding an irregular job, and the great difficulty of filling a registered one. Asmigrants are usually not covered by unemployment benefits, and are verypoorly sustained by family or friends, they are ill equipped to face extendedperiods of job seeking. Thus, only the need to obtain or renew their residencepermit justifies the long wait required to find a registered job. Not to mentioncases where a migrant must pay in order to obtain a registered job.

This means that most of the migrants, who entered southern Europeancountries to make money easily in their large underground economies, are notat all living according to their expectations. Irregular and odd jobs allowmigrant workers to survive, but crush their hopes. Nevertheless, the impact onmigratory flows is very scarce, as the well-known self-sustaining effect of themigratory chain (Portes, 1995) is prevailing even in this case. According tofieldwork carried out in Italy, among migrants declaring themselves to be indifficult situations, not one even vaguely hints at the possibility of returning tohis/her country of origin, and they all say that their negative opinion wouldnever suffice to prevent their friends and relatives from emigrating too.

Migration is a kind of bet between those who leave and those who stay:therefore, those who emigrate feel obliged to show those who have stayedbehind that the hardships they have suffered have been worth it. A migrantwill try to avoid coming home without money at all costs, because he/shewould be a ‘walking dead person’ among his/her friends and relatives. He/she is thus, forced to prolong his/her stay, even if life becomes increasinglydifficult. That is why the migrant tends to paint a rosy picture of his/hersituation to those who have remained at home. Migrants can only justify theirchoices, by concealing all negative aspects related to living and working con-ditions in the country of destination. Furthermore, migrants add, negativeadvice wouldn’t be heeded, and would not serve as a deterrent. Apart from thefrequent contradiction between verbal and non-verbal communication in themessages given by migrants when they return home, their negative commentswould be interpreted as a sign of hostility or rivalry. The new immigration tosouth European countries is seldom a successful story, as it was true for the pastmigratory movement to the old European receiving countries. The migratorychain has, however, the effect of prolonging migration, and increasing in thosewho remained at home a desire to follow those who had left, even in the faceof serious difficulties encountered by those people who have emigrated.

6. An Underground Economy Making Migrants’ Stigmatization Easier

There may be several reasons why southern European countries have adoptedso fast a very negative attitude towards a new phenomenon such as that ofimmigration. Several reasons must be found inside the receiving societies,others may be attributed to the characteristics of migratory inflows. In bothcases an underground economy plays an important part.

First of all, because of a large underground economy, both officialunemployment rates and social pressure for jobs appear higher than theyactually are. That is why governments think they are paying attention to public



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opinion and requests by jobless, by simply closing the borders to new inflowsof migrants seeking work. But, as we have already stressed, a concoction ofclosed borders and easily available opportunities for irregular jobs exerts a pulleffect on undocumented immigration. Some students consider a strict migra-tory policy, causing the social construction of the unauthorized immigrant, asthe main reason why south European receiving societies develop a feeling ofrejection towards migrants. But, it is very likely that undocumented andunchecked inflows may have a worse impact on whichever receiving society,both in everyday life and at a symbolic level.

Furthermore, working in an underground economy, as well as living withoutdocuments, contributes hugely both in stigmatizing migrants and in rousingnegative attitudes among local people. First, the working contribution ofmigrants to the receiving countries’ economy and social system is far lessevident than would occur if they were working in a formal economy. Receivingsocieties usually guard mixed feelings concerning migrants’ insertion in anunderground economy. On the one hand, this confirms the idea that there isscarce competition with local jobless. On the other, migrants working in anunderground economy may appear redundant, it being difficult to admit thatunregistered activities are necessary. More generally, most of the irregular jobscarried out by migrants are scarcely visible. This is the case of housekeepers,agricultural laborers and other jobs in personal services, which are the workingactivities most ‘useful’ for the receiving societies. In contrast, activities thatappear unnecessary, such as street selling, are very visible.

Second, as unregistered workers do not pay income tax and social contribu-tions, many migrant workers may appear as claimants for public subsidies.Newspapers often paint such a picture of migrants, but we can detect it alsounderlying some policies for migrants from charities or public bodies. The factthat unauthorized migrants are prone to take the most ‘undesirable’ jobsreinforces the idea that they are all poor people needing assistance.

Third, even in south European countries where local people working in anunderground economy are quite legitimized by social consensus, migrants,instead, are highly stigmatized by performing in this way. A reason maybeshowing that in-group free riders are more tolerated than out-group freeriders. On this subject, we can remark that most regularization drives wereaimed at forcing migrants to get out of an underground economy as well as ofan unauthorized residence. In fact, in addition to demonstrating theirpresence in the country before a deadline, migrants had to prove either anongoing/past working position or a job offer by an employer. This was the case,above all, of the Italian amnesties in 1996 and 1998. To prove job offers for theapplication, an important amount of money had to be paid to Social Security(up to 2–3 months’ wages for a migrant worker), supposedly by employers, butin fact often by migrants themselves. To a lesser degree, a similar pattern wasalso followed by regularization schemes in Spain, Portugal and Greece. Theunderlying idea is that migrants could be accepted only if they were workingin the registered economy. This is a paradox in countries where such a largeproportion of domestic people is working in an underground economy.Anyway, the huge gap with the effective insertion of migrants in the labormarket can actually foster their stigmatization.

Finally, a second reason why migrants can be stigmatized if working in anunderground economy, even in countries where local irregular workers are


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tolerated, may be that crossing the borders between irregular work and illegalactivities is considered an easier task for them than for local people. This isonly partially true, but what matters in social reactions is public opinion,however biased it is.

7. An Underground Economy Contributing to Increasing Migrants’ Deviant Behavior

A careful analysis both of the social construction of criminal statistics, and ofthe proceedings of police activities and penal trials has allowed us to depict towhat extent immigrants are discriminated against. Especially in Italy and morerecently in Greece, a ‘short circuit of securization’ started favoring repressiontowards migrants in place of social policies. An increase in the number ofpeople in prison, common to all southern European countries, is especiallymarked by an increase in the proportion of foreigners, making it possible tostate that foreigners have replaced locals as the objects of law enforcementefforts, and in prison. The process of ethnification of illegal activities, thus, wasvery fast also in countries that migrants have only recently entered.

This is not the right place to deal with all the many reasons residing behindthis impressive phenomenon: from economic and political crises in the unde-veloped societies of origin, to the increasing pressures aiming at excluding andpenalizing outsiders and poor people in post-industrial and aging receivingsocieties. However, we can stress that an underground economy willing toaccept them, may contribute to increase deviant behavior among migrants,although in an indirect way.

From a strict labor market point of view, an easy opportunity of finding workin an underground economy, as it occurs in southern European countries, mayhave opposite impacts on risks of deviant behavior. On the one hand, thatopportunity may reduce the risk, as migrants not eligible for regular jobsshould be forced to commit crimes if they could not make money in theunderground economy. On the other, however, when they lose an irregularjob, migrants are not eligible for any public support; thus, if they do not findhelp from their country-fellows, they could be prone to get money for survivalat any cost, even by stealing or drug dealing. Those opposite impacts may makethemselves void, as also the analysis of life stories show. But this precariousbalance is based on a large availability of irregular jobs; otherwise the secondeffect should prevail.

The connection between working in an underground economy and deviantbehavior may rather concern a self-selection effect, changes in migratorymodels and a more general attitude among migrants. First, those people whoare willing to enter European countries must be prone to cross closed bordersillegally, entailing high risks, even that of losing their own life. However, a risk-taker person is more likely to do risky, but profitable activities, as criminalsusually do. Second, many migrants were pushed to commit crimes not becausethey were marginalized, but because they were willing to ‘make money’ veryquickly, as models of deviant behavior were largely spreading among youth ofsending countries. The old myth of social climbing thanks to hard working asa migrant is over, because of the precarious, irregular, low-paid jobs offered bythe receiving labor markets. Young people not willing to accept low-level jobsaiming to make money are prone to do whichever illegal activity. However,



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most of them have not the specific skills necessary for a criminal career, so thatthey often ‘burn them’ in a short time, either damned to heavy punishmentsor killed by people like themselves.

Third, an easy insertion in a country where residence is unauthorized, workis irregular, gives migrants the idea that in the receiving society there are norules to comply with. Thus, they guess that they can do everything without anycontrol or consequence, even more than in their own undeveloped societiesof origin. A social worker with a lot of experience said:

Foreigners realize at once that everything is relative in Italy. We don’tallow anyone to enter to work, but then we reward the transgressors byregularizing them all. From their point of view, our contradictions areseen as an unreliable attitude, which makes them not very confident inlegal behaviors favoring exploiters.

In Greece, too, migrants are living an unfamiliar condition. Migrants experi-ence confusion between legality and illegality when they buy documentsproviding an authorized residence, and regularization makes legality a nego-tiable commodity. That is why in the eyes of migrants the state loses any moralauthority, and laws stop being respected guidelines of conduct. Any transgres-sion becomes possible, chiefly concerning the so-called crimes without victims,which are the most frequent among immigrants.

8.

Medice cura te ipsum

: Only a Difficult Policy for the Domestic Labor Market could Face the Problems of an Unauthorized Immigration

Getting to an end, research findings have stressed a major problem from apolicy point of view. The broad way leading to informal employment insouthern European countries plays a very crucial role in understanding whatis happening within migratory movements, and their impact on receivingsocieties. Public opinion, politicians and state agencies employ a large amountof energy and resources to control the external borders of the European‘fortress’. Such a policy is not controversial and is supported by all theeconomic and social groups, since it does not hurt any local interest. But forthe reasons that we have carefully pointed out, its results have reached evenopposite effects.

A formal policy denying the admittance of migrants, justified by highdomestic unemployment, coupled with sizeable unauthorized inflowsattracted by an underground economy, the lack of a policy of integrationcoupled with a strong exploitation and stigmatization of migrant workersemployed in the black labor market: all these factors are causing more andmore negative effects. The interruption of such a cycle is not an easy task, butthe simple solution of tightening border controls is undoubtedly destined tofail. On the contrary, a complex and difficult strategy should be implemented,if southern European countries effectively want the problems of unauthorizedimmigration solved. This strategy is difficult in particular because it concernsreceiving societies, and may hurt some local interest.

Medice cura te ipsum

, asthe ancient Latin saying goes.

First, southern European countries should recognize themselves as immigra-tion ones. In fact, they should admit and institutionalize the segmentation of


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their own labor markets, i.e. that both a large youth unemployment and anunfulfilled demand for bad jobs can simultaneously exist. Second, they shouldopen the borders to a sizeable labor immigration, of course well checked, inorder to fulfill that specific labor demand. But for which jobs, if they are in asubmerged economy, i.e. they officially do not exist? At the same time, as permedia and public opinion, a new rhetoric should be based on the idea that ‘weneed migrant labor’ to redress at present all mismatches in the labor market,and in the near future the imbalance between generations which is expectedto have an increasingly negative impact on the welfare state itself. But, how canthis rhetoric be sustained if migrant workers do not pay social contributionsfor welfare state, as they are performing irregular jobs?

We return, therefore, to the domestic underground economy, which is themain question to deal with in order to seriously face the issue of unauthorizedimmigration. The third and most important step of this complex strategy mustbe a set of policies aiming at reducing the domestic underground economy.

Economists highlight the negative impact of an underground economy onthe state budget, but its impact on social cohesion is as negative: we mustremember that welfare state is less an economic than a social–political issue.Unauthorized immigration, of course, reinforces its negative impact.Unluckily, the causes of an underground economy are deeply rooted in theeconomic and social systems of south European countries. Therefore,reducing their strength becomes a hard and long-term problem.

Evidence shows that an underground economy is not a heritage of the pastbackwardness, but, on the contrary, it is an emerging phenomenon even insome of the wealthiest regions of Europe, as those in northeast Italy. A recentin-depth review on social and spatial distribution of black labor markets inEuropean countries (Williams and Windebank, 1995), came to the conclu-sion that no straightforward correlation between the level of economicaffluence and the size of the black labor market exists. Across Europe, anunderground economy has an important impact in deprived as well as inaffluent localities. Neither economic backwardness, nor rigidity in the labormarket regulation are sufficient, by themselves, to account for the level ofunregistered and irregular economic activities. The main reason for thisresult is given by the different types of underground economy, which canhardly be simplified as exploitative versus autonomous in character. There-fore, many factors should be taken into account when explaining the size ofblack labor markets.

Economic factors, of course, account substantially for an undergroundeconomy. Economists are used to emphasize the weight of non-wage costs forlabor (income tax and social contributions), and the structure of employment(the proportion of small firms, and that of self-employment and subcon-tracting). While the latter factor is evident, the former is more questionable.Non-wage labor costs are as high in large black economy countries as in scarceblack economy ones. Such an approach, however, forgets social and institu-tional dimensions, which may be even more important than the economicones.

An underground economy is based necessarily on personal networks. First,only through ‘word of mouth’ recruiting systems can firms find workers proneto take irregular jobs, and irregular self-employed workers find theircustomers. Second, connivance guarantees against complaints to either labor



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offices or other state authorities. More generally, the state and its legal normsare, in principle, absent from this segment of the economy. Thus, its regulationmust be provided by social control: either mutual trust between employer andworker, kinship and community networks, or belonging to a reference groupare usually pre-requisites to enter an underground economy. Sanctions mustbe essentially determined by those within the group or network and thoseinvolved in these arrangements must be aware of them. Beyond the intensityof social networks, in order to work steadily, an underground economy needsa social consensus both in public opinion, and in people’s attitudes. Thestrength of the underground economy, which allows it to escape any control,comes from its deep roots in the society.

As no negative stigma is attached to irregular economic arrangements, stateenforcement against them can be tolerant and inefficient, without raising anyserious scandal. According to a widespread social feeling, punishments sched-uled by legislation may be relatively soft, and the risk of irregular employersbeing detected and penalized may be even lower. In fact, state regulation ofeconomic activities looks often strict, but actual enforcement is quite slack, aslabor inspectors are very few in number, and scarcely organized. Lack ofefficiency in state agencies is a more general phenomenon in some countries,but in this case it has the latent function of not disrupting the social harmonythat coexistence of formal and informal work traditionally provides. There-fore, the institutional dimension matters, too.

A policy apt to reduce the size of an underground economy becomes adifficult task not only because it upsets a well-established social equilibrium,but also because it may have some negative effects in the short term. This wasthe case of Spain. In fact, a stricter control on the labor market caused on theone hand increasing competition between migrant and local workers forregistered jobs, and on the other a process of social exclusion for migrants notable to take a regular job, who cannot rely anymore on occasional jobs in anunderground economy. Furthermore, a process of economic criminalizationof migrants may start, because they may be easily identified as the workers mostinvolved in an underground economy that is now highly stigmatized.

In conclusion, we can say that a strategy capable of dealing with unauthor-ized immigration as well as a domestic underground economy should be evenmore complex than is usually forecast. In particular, it should be coupled withan important policy respecting the creation of regular jobs, more generouswelfare provisions, and an advertising program to make public opinion awareof how useful the migrants’ work is for the receiving society. Higher paymentsin income tax and social contribution, thanks to a smaller undergroundeconomy, could provide economic resources for those measures; but therecould be a problem in timing. Such a strategy is so complex and difficult thatit should need an important policy management, and a far-seeing governmentclass. Unluckily, its realization is becoming less and less feasible in our times,characterized by a predominant day-by-day politics.

Notes

1. Note on the terminology: we will refer to the residence status as authorized/unauthorizedand to the working status as regular/irregular. The article is largely based on the conclu-sions of a TSER project I coordinated from 1996 to 2000.


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2. United Nations,

World Population Monitoring, 1997. Issue of International Migration and Devel-opment: Selected Aspects

, New York.3. We do not at all intend by ‘projects’ rational choices and behaviors, because, like all crucial

(as, to a large extent, non-reversible) decisions, deciding to emigrate also involves one’swhole identity. Nor do we refer to the casual events that migration is often related to. Onthe contrary, ‘projects’ are ideal types used to represent the different meanings people giveto their action of emigrating, when they are living in a receiving country. This is just ofinterest if one wants to grasp immigrants’ orientations to action, in order to better under-stand their behavior, expectations and inclinations.

4. This was not the case only for the PALOP migrants in Portugal: the low level of risk probablyexplains, in part, their relative lack of self-selection.

5. In the 1990s it was over 24% in Spain and 12% in Italy, whereas it was

only

10% in Greeceand 7% in Portugal, but with a steady upward trend.

6. This pattern contrasts with the center-north European one, whose feature is just theopposite (Reyneri, 1999).

7. For an updated review on ethnic business in Italy see Ambrosini (2001).8. The proportion of migrant workers to total employment can be estimated at about 4.5%

in Italy and no higher than 1.3% in Spain.9. Migrant workers are estimated as 12–13% of the working population in Greece.

10. In Portugal migrant workers are nearly 2% of total employment.11. A ‘marketable’ definition excludes both the self-service economy and mutual help among

relatives, friends and neighbors, as they are usually unpaid activities, and the criminaleconomy, as activities such as drug trafficking and prostitution are illicit (but productionand distribution of counterfeit goods as well as selling of smuggled goods are consideredborderline between the informal and illegal economy).

12. Regular workers, too, may also perform informal activities: moonlighters, self-employedworkers who evade taxes, employees who get overtime paid in cash. But a broader defini-tion is useless to study migrants’ insertion in south European labor markets.

13. The number of long-term unemployed migrants is not estimated to be important. In fact,only few migrant workers holding a residence permit get unemployment benefits, even incountries like Italy, where labor legislation does not distinguish between citizens andforeigners. The de facto exclusion of authorized migrants from unemployment benefitsstems from the fact that, in south European countries, short-term and occasional jobsgenerally lack coverage. Yet, these are just the regular jobs taken by the vast majority ofmigrant workers. Therefore, both authorized and unauthorized immigrants can only relyon their savings and on the help of friends, countrymen and welfare organizations tosurvive during the breaks between jobs. Their spells of being jobless must be short toremain inside the labor market. Thus, when short spells of work alternate with short spellsof unemployment without benefits, migrants can be better pictured as occasional workersthan jobless.

14. In the international literature unregistered work by migrants is closely linked to theirunauthorized stay, so that the terminology recommended by the United Nations (non-documented migrant workers) makes no distinction between their work status and theirresidence status.

15. In fact some of the income that is not taxed or registered by government agencies is notthe result of black workers, but the product either of criminal activities (prostitution anddrug trafficking) or of registered workers evading taxes (moonlighters or self-employed).

References

Ambrosini, M. (2001) ‘Immigrati e lavoro indipendente’, in Zincone, G. (ed

.

),

Secondo rapportosull’integrazione degli immigrati in Italia

, Bologna, Il Mulino.Cavounidis, J. (1998) ‘The immigrant labour force in the informal economy in Greece’, Paperpresented at the Third International Metropolis Conference, Israel, November 1998.Magatti, M. and Quassoli, F. (2000) ‘The Italian case: socio-economic characteristics of immi-grant businesses in Italy’, Second Conference of the Network ‘Working on the Fringes: Immi-grant Businesses, Economic Integration and Informal Practices’, Jerusalem, June 2000.Portes, A. (1994) ‘The informal economy and its paradoxes’, in Smelser, N. J. and Swedberg, R.(eds),

The Handbook of Economic Sociology

, Princeton, NJ, Princeton University Press.



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Portes, A. (1995) ‘Economic sociology and the sociology of immigration: a conceptual overview’,in Portes, A. (ed.),

The Economic Sociology of Immigration

, New York, Russell Sage Foundation.Reyneri, E. (1999) ‘Unemployment patterns in the European countries: a comparative view’,

DML-online

, No. 1 (www.lex.unict.it/DML-online).Rowlands, D. (1998) ‘Poverty and environmental degradation as root causes of internationalmigration: a critical assessment’, in UN-IOM,

Technical Symposium on International Migration andDevelopment

, The Hague, 29 June–3 July 1998.United Nations,

World Population Monitoring, 1997. Issue of International Migration and Development:Selected Aspects

, New York.Williams, C. C. and Windebank, J. (1995) ‘Black market work in the European Community:peripheral work for peripheral localities?’,

International Journal of Urban and Regional Research

,Vol. 19, No. 1: 23–39.


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