Tackling the shadow economy

This B2–C1 English lesson on the shadow economy and informal economy explores why people and businesses operate outside the formal economy and what consequences this can have for workers, businesses, consumers, and governments. Students examine real-life examples of undeclared work and income, learn key vocabulary related to taxes, employment, compliance, and workers’ rights, and develop the language needed to discuss the causes and consequences of the informal economy, as well as possible ways to reduce the shadow economy. Other lessons you might like are “Taxes“, “Emerging markets” and “Labor unions“.

Lead-in: What Is the Shadow Economy?

The lesson begins with examples of informal economic activity. Students discuss which situations are common in their country, consider how acceptable they are, and suggest other examples of the informal or shadow economy.

Vocabulary: The Informal Economy

Students learn and practise key vocabulary connected with the shadow economy, taxation, employment, and workers’ rights. Target language includes expressions such as undeclared income, tax evasion, cash in hand, social security contributions, labour rights, exploitation, tax burden, compliance, supplement your income, and under the table/off the books. Students then use the vocabulary in short dialogues about taxes, employment regulations, exploitation, additional income, informal payments, and social security contributions.

Speaking: Causes and Consequences of the Informal Economy

Students discuss why individuals and businesses participate in the informal economy and examine its possible effects. They consider how informal economic activity can influence taxes, access to loans and insurance, prices, consumer protection, workers’ rights, and employment benefits.

Speaking: Who Is Responsible for the Shadow Economy?

Working in pairs or small groups, students discuss the roles of workers, employers and businesses, consumers and clients, and governments in the growth of the shadow economy. They use useful language for comparing responsibility, giving reasons, challenging ideas, and reaching a conclusion.

Listening: How Big Is the Shadow Economy?

Students watch the video “How big is the shadow economy?” and complete three listening activities. First, they identify countries and the percentage of GDP accounted for by the shadow economy. Next, they listen for factors that contribute to the growth of the informal economy. Finally, they complete extracts from the video focusing on possible solutions, international cooperation, and the reasons why people may work informally.

Speaking: Tackling the Shadow Economy

Students examine a range of possible measures for reducing the informal economy, including changes to tax policy, stronger enforcement, digital payments, better access to formal employment, social protection, collective bargaining, anti-corruption measures, tax education, and greater transparency in government spending. In groups, they discuss how these measures could affect the informal economy, the official economy, and citizens’ well-being before developing a multi-faceted approach.

Speaking: Country Profile Research

Students choose a country they do not know well and research its informal economy. They investigate how large the informal economy is, where it is most common, why it exists, who benefits, who loses, and what the government could do to address it. Students then present their findings to the class, giving them an opportunity to apply the lesson vocabulary and ideas to a real-world context.

For more speaking practice, you can use the printable conversation cards.