Enrique Alberola, an advisor at the General Directorate for Economic and Statistical Affairs of the Central Bank of Spain, stated on Thursday in Sarajevo that dividing the economy into formal and informal sectors is a significant obstacle to the country's development.

“It’s challenging to devise a comprehensive development strategy when a considerable portion of the economy operates ‘in the shadows’ and falls outside of any strategic framework,” he noted.

As the keynote speaker at the research conference “The Informal Economy: Measurement and Effects,” hosted by the Central Bank of Bosnia and Herzegovina, Alberola highlighted that productivity within the informal sector is markedly lower than in the formal sector, ranging from 25 to 75 percent less productive.

Alberola also drew attention to another critical issue: the large-scale loss of public revenue which funds social benefits, while the state still has to provide services such as healthcare and education to workers in the informal sector.

He stressed that, because these workers do not pay taxes or contributions, they effectively receive these services for free, which places a strain on the system and reduces the overall quality of these services.

Alberola acknowledged that the informal sector does present some advantages, such as flexibility, given the absence of employment costs for workers. Employers hiring informally do not need to comply with legal regulations, which applies also to those who are informally self-employed.

He noted that companies employing workers “off the books” may have greater agility and innovation since they aren’t bound by the same legal constraints, but this also opens the door to worker exploitation.

From a macroeconomic perspective, Alberola emphasised, the informal sector does contribute to overall employment and thus represents a “necessary evil.”

Governor of the Central Bank of Bosnia and Herzegovina, Jasmina Selimović, underscored that research plays a vital role in the Bank’s operations, even though it often receives less attention amidst day-to-day responsibilities.

She added that meaningful research is essential for a robust central bank, expressing her gratitude to all participants contributing to the success of today’s conference.

The conference was organised in collaboration with the Swiss State Secretariat for Economic Affairs (SECO) to strengthen cooperation between central banks and the academic and professional community.