Unregistered Micro-Performers of Business Activity: The “Who” and “Why” in North Macedonia

Abstract

The purpose of this paper is to understand who the unregistered micro-performers of business activity (MPBA) in North Macedonia are and why they decided to stay informal. We rely on a specifically designed Survey on Unregistered Micro-Enterprises collected from 151 unregistered MPBAs in May 2022. Results reveal that most common forms of unregistered MPBAs include: street sellers, individual farmers, handicraftsmen, providers of personal beauty services, painters, plasterers, bakers, lessons instructors, motor vehicle mechanics and housekeepers and cleaners. Costs of becoming a registered company, particularly taxes, social contributions, parafiscal charges and the cost for accounting, have been identified as an important impediment to registration. On the other hand, access to bigger customers, to more reliable sellers of inputs and to new markets have been identified as large benefits of formalization. The second motivation is the access to social protection and pension in the old age. Costs of staying informal have limited power in motivating registration.