David is a full-time employee in company X. In his job contract, it is stated clearly about his job responsibility, payment, and benefits he could earn while working. He is entitled to a fixed salary in addition to incentives based on his performance. And when he gets sick, he can claim medical leave while not losing his salary during the days off.

Meanwhile, different from David, John is a temporary worker at the local sugar factory. He only gets hired when the factory needs additional staff during peak sugarcane season. However, when sugar production is low, John will stop working and does not get paid. He also does not have regular work hours, as he can work 5 hours a day and sometimes 10 hours a day. When he gets sick and unable to go to work, John will lose his salary on that day.

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The two different working environments of David and John portray a brief picture of how formal and informal job looks like. David has the formal job as he works in a more stable company that provides him with a legally-written job contract, pre-defined work conditions and job responsibilities, decent fixed salary with perks and incentives, fixed work duration, opportunities to self-improvement, as well as social security for health and wellbeing.

On the other hand, John is in an informal job with slightly stable working condition. Usually, informal workers are offered with no formal contract with the employer, no systematic work conditions, irregular payment, no fixed working hours, only a few to none access to achieve self-development, and sometimes covered with a social security system with poor protection to health and wellbeing.

On the surface, the formal job seems to offer more benefits than the informal one. However, it does not mean that informal job is full disadvantages. Let’s dive further about the formal and informal sector.

Benefits and drawbacks of formal workplaces

With stable authority and responsibility, employees can easily access company’s features that can benefit them such as self-learning access or training. You don’t need to worry about overlapping working hours as you will get fixed working hours with occasional overtime hours if needed. The formal sector also offers an opportunity to leverage your network with professional and experts in your field of work. That being said, your social status in the society could be leveraged as well.

However, working in formal workplaces can also be disadvantageous in terms of flexibility, workload process, and communication. For example, in a formal working environment, you might have to work with people from different departments. You have to master good communication skill so you can convey your message clearly. Any miscommunication might lead to ultimate inefficiency.

Moreover, you are required to work in a little margin of flexibility and spontaneous in decision making. For instance, offices often give formal and fixed procedures for employees to finish their tasks. It might dampen your implementation in the decision-making process if you lack creativity in solving the problem. Consequently, your motivation to work will decrease and so, it will hamper your productivity.

Benefits and drawbacks of informal workplaces

Working in an informal organisation means you will be assigned to various job functions with no systematic working structure. The working structure will result in a complicated job condition or task. So, you might get stressed easily because of the workload. Informal sector also brings little to zero policy and change of management that will make it difficult for you to complain about unpleasant events.

However, informal workplaces also benefit you in terms of communication, social satisfaction, and feedback. Communication happens naturally in the informal sector. Employees can discuss work and non-work related problems and find a solution without the support of superiors. Feedback given will be direct and explicit which ease you to improve your working. Last but not least, working in an informal organisation will tighten the bond between its employees. In this matter, your social needs between employees to employees will get stronger.

Moreover, oftentimes, members of an informal company share common thoughts, social, and cultural beliefs. This interest is promoted which adds to the strength of an organisation and commitment to accomplishing goals. With common interest also, informal workplaces will ease you in term of corporation and coordination with each other.

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