Politics and Governance (ISSN: 2183–2463) 2022, Volume 10, Issue 2, Pages 279–292 https://doi.org/10.17645/pag.v10i2.5166 Article Labour Mobility and Informality: Romanian Migrants in Spain and Ethnic Entrepreneurs in Croatia Abel Polese 1,2,3,4, *, Ignacio Fradejas‐García 5 , Ružica Šimić Banović 6 , Vlatka Škokić 7 , Tanel Kerikmäe 2 , José Luis Molina 8 , Mirela Alpeza 9 , Miranda J. Lubbers 8 , and Alberica Camerani 4 1 Aleksanteri Institute, University of Helsinki, Finland 2 Tallinn University of Technology, Estonia 3 Institute of Social Theory and Dynamics, Japan 4 Dublin City University, Ireland 5 School of Social Sciences, University of Iceland, Iceland 6 Faculty of Law, University of Zagreb, Croatia 7 Faculty of Economics, Business and Tourism, University of Split, Croatia 8 Department of Social and Cultural Anthropology, Autonomous University of Barcelona, Spain 9 Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek, Croatia * Corresponding author (abel.polese@dcu.ie) Submitted: 4 December 2021 | Accepted: 4 March 2022 | Published: 15 June 2022 Abstract Post‐Weberian definitions see the state–individual relationship as a “do ut des” one. The state grants protection, education, medical care, and its citizens contribute labour, compliance, and taxes. When this does not occur, it is generally accepted that the citizens are deviating from state goals. However, there are cases where lack of compliance stems from the fact that society members do not feel protected by formal structures, and they rely on informal ones to replace, supplement, or even compete with state institutions. The starting point of this article is that this lack of support may result from enhanced labour mobility (and migration) across Europe, and may enhance the creation and persistence of informal practices. Taking advantage of two case studies, Romanian migrants to Spain and ethnic entrepreneurs in Croatia, we observe how gover‐ nance is constructed and provide two novel interpretative frameworks. First, we explore the use of informality (informal practices) to suggest that apparently insignificant actions that are repeated routinely and without much thought, are a way to contribute to the construction of the political and that everyday governance should receive more attention. Second, we use this claim to argue that a better understanding of informality can help identify governance areas where interventions are more urgent. These are the spheres of public life where it is possible to identify a larger gap between the wishes of a state and the ways citizens actually act as they informally avoid or bypass its rules. Keywords Croatia; informality; labour mobility; Spain; welfare Issue This article is part of the issue “Re‐Visioning Borders: Europe and Beyond” edited by Artur Gruszczak (Jagiellonian University) and Roderick Parkes (German Council on Foreign Relations). © 2022 by the author(s); licensee Cogitatio (Lisbon, Portugal). This article is licensed under a Creative Commons Attribu‐ tion 4.0 International License (CC BY). 1. Introduction: Diverging Moralities and Alternative individual relationship as a “do ut des” relationship, sug‐ Forms of Governance gesting a possible universality of such a claim (Deacon & Stubbs, 2007; Lendvai, 2008). The state grants protec‐ A large body of scholarship on the welfare state, tion, education, medical care, and its citizens contribute framed in post‐Weberian approaches, looks at the state– labour, compliance, and taxes (Esping‐Andersen, 1996; Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 279 Fenger, 2007). When this does not occur, the most imme‐ endangering the integrity of those around them. The two diate conclusion is to assume that citizens are deviating cases feature quite different situations and methodolog‐ from state goals. Indeed, the state and its institutions are ical approaches. However, these two cases are also used selected by the citizens to look after their welfare. As a to give continuity to the dichotomy “beyond” vs. “in spite result, it is people, as individuals or communities, that of” the state (Morris & Polese, 2014). The starting point seem to fail to pay back and need to be encouraged, or are edge situations, where individuals do not act the coerced, to do so when needed. Yet, a growing body of way their state expects them to. In such cases, one scholarship has been questioning this top‐down power can look for contradictions and conflicts between moral relationship (Jones, 2007; Kasza, 2002). It has also been boundaries by juxtaposing the way moral values are con‐ suggested that certain regions of the world might have a structed within a group and are used to renegotiate sui generis mode of constituting welfare that is embed‐ state’s values. However, these contradictions refer to two ded in a path‐dependent historical evolution (Draxler & distinct contexts. In the first (beyond the state), infor‐ van Vliet, 2010; Hacker, 2009; Kevlihan, 2013). A mis‐ mal structures stretch to reach areas of state governance match of expectations between a state and its people that remain largely unregulated. This may include situ‐ can take many forms (Scott, 1998). This phenomenon has ations where the state claims to regulate but does not been analysed from a holistic historical perspective, argu‐ provide a sufficient amount of instructions (or not suf‐ ing that the whole state system can be against all, or at ficiently clear instructions) for people to find their way least most, of its citizens (Courtois et al., 1997) as well through the maze of rules and obligations. This is shown as by looking at how this affects particular categories of through the case of ethnic entrepreneurs in Croatia that people who are bound by ethnic ties, who belong to a are supposed to rely, at least theoretically, on a series specific economic class (Granovetter, 1983; Scott, 1985), of structures and institutions that are largely absent or live in a particular area (Davies & Polese, 2015), or share weak. In particular, the Croatian case looks at the net‐ a common ideology. working activities among ethnic entrepreneurs in Croatia This article is a further effort in this direction. and examines in depth the ways ethnic entrepreneurs We explore a range of elements that may worsen the use different network types to access different resources. state–citizen relationship and put some people, those Data was gathered through in‐depth interviews with already in a vulnerable position regarding the state, in an 27 non‐native entrepreneurs carried out in periods: even weaker one. We refer here to individuals and com‐ January–November 2019 and April 2020–June 2021. munities that sometimes receive little or no attention The case stresses the importance of informal networks from the state because they are newcomers to the sys‐ in regular circumstances and its increased importance tem or have never truly managed to navigate their envi‐ (yet diminished opportunities) in more demanding cir‐ ronment. These newcomers are either not supported cumstances such as the Covid‐19 pandemic, natural dis‐ or only partly supported by the state that should look asters, and major regulatory change. after their welfare. In our specific case, we expect this In the second case (in spite of the state), structures lack of support likely to become widespread, or simply are in place and rules exist; however, they are largely deeper, in the case of enhanced labour mobility (and designed for insiders, leaving newcomers in a state of migration) across Europe. We subsequently set out to limbo which they can out only get out of through infor‐ study ethnic entrepreneurship, multicultural relations mal connections, practices, and actions. Romanians in between migrants, and their novel socio‐cultural settings Spain can rely on some solid institutions, but their capac‐ to examine how governance is constructed and provide ity to understand and interact with them is limited. two novel interpretative frameworks. First, we explore The case relies on mixed‐methods research performed the use of informality (informal practices) to suggest between 2017 and 2020, combining multi‐sited ethnog‐ that apparently insignificant actions that are repeated raphy (qualitative interviews, focal groups, and obser‐ routinely and without much thought, are a way to con‐ vant participation) and a binational link‐tracing survey tribute to the construction of the political and that every‐ (Mouw et al., 2014) to connect the transnational per‐ day governance should receive more attention. Second, sonal networks of research participants in Spain and we use this claim to argue that a better understanding Romania (N = 495). It ultimately explores the relationship and measurement of informality can help identify the between informality and intra‐EU mobilities (Romanian areas of governance where intervention is more urgent. migrants in Spain), analysing how the informal practices These are the spheres of public life where it is possible to evolve when people migrate from one social and cultural identify a larger gap between the wishes of a state and context to another. This is not necessarily due to a sin‐ the ways citizens actually act as they informally avoid or gle reason but is rather a synergy of cultural, social, eco‐ bypass its rules. nomic, and policy factors that do not always match those Thanks to two case studies, we examine and dis‐ present in their host country. As a result, a bit of “nego‐ cuss the different understandings of informality emerg‐ tiation” is required to survive the local environment. ing from the divergence between state and individual Founded on the above reflections, this article is thus morality. The cases we focus our attention on are not intended to point at ways governance results not only those where individuals violate state principles while from formal regulation by the state and its institutions Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 280 but also is the result of synergies between formal and diverse forces that might define a result very distant from informal actors, top‐down instructions and bottom‐up the original plan. Some theorists of the state (Migdal, attitudes developed by adapting to an overarching con‐ 2001) suggest that state and society mutually consti‐ text that does not always take into account the needs of tute, and contribute to, the transformation of each other. some segments of society. To do this, the next section The main point here is that in a complex system, where provides an overview of the main state–citizen debates, initiators do not always see or even directly influence the and it is followed by two empirical sections which doc‐ result of their choices, the final effects of an input may be ument, first, the synergies between Romanian migrants very distant from initial intentions. across two areas of Spain and, second, the dynamics This opens to the possibility that a given policy could behind ethnic entrepreneurship in Croatia. By looking at be renegotiated by street‐level bureaucrats or other the way labour mobility affects, and is affected by, state– interest groups, even ingrained cultural norms (Cook, citizen relations, our ultimate goal is to unveil a number 2007; Morris, 2014) to lead to different ways of welfare of hidden mechanisms and unconventional mechanisms provision that are embedded in social structures or sim‐ of governance that are only visible through an everyday, ply a compromise between how things should work and micro, and hands‐on approach that was possible thanks how they work in reality. In this direction, informal wel‐ to engagement in the field with the target groups. fare has been defined as the area between what a state is doing (or claiming to do) and the needs of a society 2. State–Citizen Relations (Polese et al., 2014; see Figure 1). The area of informal welfare, however, may become Scholarly discussions about welfare state divergence substantially large with a variety of economic and have relied on the “old vs new” paradigm (Adascalitei, non‐economic strategies employed by people to make a 2012, p. 60), eventually acknowledging the possibility living (De Haan, 2012). These include informal practices that different political systems may generate “unique such as “regular strategies to manipulate or exploit formal hybrids” (Draxler & van Vliet, 2010; Hacker, 2009), map‐ rules by enforcing informal norms and personal obliga‐ ping possible variations (Ó Beacháin et al., 2012) or con‐ tions in formal contexts” (Ledeneva, 2008, p. 119), which ceptualising possible patterns (Hacker, 2009). The waves penetrate all aspects of public life globally, including of crises which question the success of the state‐centred economic, social, and political practices (Polese, Morris welfare model and the partly failed transition to private et al., 2016). They are embedded in market exchanges welfare have led some to suggest bringing back what can but also in non‐economic dimensions such as non‐profit be called the privatisation of social protection, where activities and in exchanges within personal relationships private here also refers to the family (Hrzenjak, 2012; (Ledeneva, 1998). Their pervasiveness suggests that they Williams & Martínez, 2014). It is this privatisation that, are adopted irrespective of the economic circumstances when markets and appropriate governance mechanisms of citizens or countries (Morris & Polese, 2014). Ledeneva are lacking, pushes people to diversify their risk avoid‐ (2011, p. 722) stresses the importance of unwritten ance mechanisms (Deacon, 2000; Wood & Gough, 2006). rules, or “the know‐how needed to ‘navigate’ between In particular, welfare regimes outside advanced welfare formal and informal sets of constraints.” Informal prac‐ states are characterised by: (a) weak state legitimacy and tices vary across time and space, responding to cultural, the marginality of well‐functioning capital and labour political, and economic transformations (Ledeneva, 2018; markets; (b) the limitations these pose on welfare states’ Yalcin‐Heckmann, 2014). Informality can take many forms capacity to compensate for social inequalities; (c) social (Polese, 2021); for instance, in the case of Romanians per‐ policy needs to account for non‐state actors; (d) social forming Spanish informal practices, in this article, we talk rights/entitlements may arise from domains other than of chapuzas (minor repairs) which makes them known formal state provision, i.e., familial and other informal as manitas (handymen) who perform good work cheaply. relationships; and (e) these phenomena and relation‐ However, beyond localised practices, some tendencies ships are path‐dependent and reproduce social stratifi‐ emerged during turbulent transitional times, and the cation, inequalities, and power asymmetries (Wood & capacity to generate strategic responses (Manolova & Gough, 2006, pp. 1697–1698). Yan, 2002) and create informal networks (Aidis et al., The above discourses have suggested looking more 2008) are here defined as alternative forms of regula‐ deeply into agency (Cook, 2007) as replacing or supple‐ tion that often operate outside the state norms. They menting state‐led policies (Polese, Rekhviashvili et al., serve as an alternative social mechanism to support eco‐ 2016) to consider the possibility that informality and nomic interaction where formal institutions are either formality are complementary or that informality may non‐existent or ineffective (Šimić Banović et al., 2020). “replace” formal processes and structures. In other They often rely on long‐term cultivated exchange of words, where the welfare state does not penetrate, wel‐ favours or services (Škokić et al., 2019, p. 26) that has fare might also be spread through informal channels become widespread in the region (Puffer et al., 2010). and redefine the very dynamics underpinning a soci‐ These kinds of mechanisms have encouraged studies on ety (Morris, 2019; Polese et al., 2014). Welfare policies similar widespread practices such as blat in Russia, guanxi result from negotiation and compromise between very in China, and veza in Croatia, as summarised in Table 1. Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 281 WHAT STATE ACTORS DO IN REALITY NON-STATE ACTORS STATE INFORMALITY (BUSINESS, SOCIETY CIVIL SOCIETY) STATE COMPETENCIES WHAT THE STATE IS SUPPOSED TO DO Figure 1. Visualising informal welfare in a state. Table 1. Characteristics of veza, blat, and guanxi. Characteristics Attributes Veza Blat Guanxi Driver for activation Access to entrepreneurship Maximisation of individual Maximisation of the value for values (economy of a family; moral obligation shortages); access to necessities (food, jobs) Origin Transition period (1990s) Emergence of socialism; after Confucianism and ancient Russian revolution (1917) Chinese philosophies Operating mechanism Exchange of favours; one‐off Exchange of favours; gifts Exchange of favours, gifts reciprocal transaction; and resources; unlimited and resources; unlimited transaction to be completed exchange of favours; time lag exchange of favours; time lag without significant time often preferred often preferred delays Relations Short‐term; utilitarian Continuous and long‐term; Continuous and long‐term; utilitarian; emotional; social utilitarian; emotional; social Structure Dyadic relationships Dyadic relationships with Dyadic relationships often extended vertical and embedded in or influenced horizontal structures, by actors outside the dyad affiliated with a circle of trusted people Dynamics Very dynamic, exchange fairly Very dynamic, exchange fairly Very dynamic, exchange fairly equal unequal unequal Diversity Diverse, but individual Diverse; vertical and Diverse; circles open to relations not linked in a horizontal circles relatively expansion and can grow particular network closed easily Meaning Positive Negative, closely linked with Neutral to positive corruption Source: Škokić et al. (2019, p. 34). Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 282 Despite their cosmetic differences, the main com‐ hand delivery. These practices are combined with travel mon point here is the widespread use of connections from Spain to Romania by air, bus, or private cars to get things done, overcome institutional barriers (Kets back and forth for holidays, social events, and arranging de Vries & Florent‐Treacy, 2003), or establish informal bureaucratic necessities (Fradejas‐García, 2021). The for‐ networks, increasing the chances of success (Kuznetsov mal and the informal are rarely separated; it has been et al., 2000). In some cases, informal practices (Morris, suggested that the informal is used to “manipulate 2015) can make up for the inadequacy of formal finan‐ or exploit the formal rules” (Ledeneva, 2008, p. 119). cial institutions (Peng, 2004) or allow people to engage Examples include those who receive Spanish unemploy‐ with authorities. Veza has a similar function, helping ment benefits while in Romania or access regional social overcome hostile business environments (Aidis et al., and economic benefits by acquiring a Spanish document 2008; Ireland et al., 2008). In addition, networks have or keeping residency in Spain by paying someone to reg‐ been defined as horizontal (people supporting other peo‐ ister them at their residence (Fradejas‐García, Molina ple with similar status) or vertical (belonging to differ‐ et al., 2021). ent social strata and linked by kin or personal contacts During socialism in Romania, instrumental social rela‐ [see Ledeneva, 2008] to endlessly expand their “friends tions were necessary to overcome scarcities, obtain of friends” circle). This leads to the core of this article, access to good quality services, or resolve legal issues. where migration networks, mobility, and informality are Despite the fall of socialism, informal networks and prac‐ intertwined (Fradejas‐García, Polese et al., 2021), which tices are still fundamental to obtaining access to edu‐ generates awareness of some informal legal pluralism cation, health, business, and the labour market (Stoica, (von Benda‐Beckmann & von Benda‐Beckmann, 2016) 2012). In this context, neo‐liberal reforms amplified embedded in formal vs. informal rules and the relation‐ the competition for scarce resources, increasing power ship with these rules, as documented in the case stud‐ inequalities in patron–client relations in basic sectors ies below. such as the healthcare system (Stan, 2012). In Romania, the “widespread networks of personal exchange and 3. Informal (Im)mobilities of Romanian Migrants favours [similar to Russian blat] have been ‘relatii’ (rela‐ in Spain tions), ‘cunostinte’ (acquaintances), and ‘pile’ ” (Stoica, 2012, p. 173), where pile (or “A avea o pilă”) refers to con‐ The vast majority of the first wave of Romanian migrants, nections that can smooth things out. As Ledeneva (2018) who arrived in Spain before 2002, used mafia‐like net‐ shows, the instrumentality of sociability exists with simi‐ works to facilitate cross‐border travel and paperwork, lar patterns under different names worldwide. paying around $1,000 for a tourist visa and then either In Spain, the informal practice of using social net‐ staying hidden or developing ways to cross the bor‐ works to get things done is called enchufismo, trans‐ der with minimal risk (Elrick & Ciobanu, 2009). After lated directly as “to plug in” (enchufar), a figurative way 2002 and 2007, immigration requirements changed, and of denoting the practice of “pulling strings.” The verb the cost of migrating lowered (INE, 2020), leading to a enchufar means “to give a position or appointment sharp increase in Romanian migration to Spain; from a to someone who does not merit it, through friend‐ few thousand in 1998 to almost 900,000 in 2012 (INE, ship or political influence” (Real Academia Española, 2020), they became the largest foreign population in 2020), while enchufismo has been defined as “polit‐ Spain. This slightly changed after the 2008–2014 crisis, ical and social corruption” (Real Academia Española, but with 671,985 Romanians living in Spain in 2019, they 2020). Nonetheless, it is common practice within the are still the country’s second‐largest foreign population endogenous Spanish labour market and in Spanish pol‐ (INE, 2020). itics, which provide opportunities for corrupt practices The appearance of numerous formal and informal (Fradejas‐García, 2022). No fewer than 40% of the Romanian road transport companies in Spain favoured Spanish population finds work through informal chan‐ the arrival of more Romanians, as well as an informal nels of relatives, friends, and acquaintances, a much influx of products from Romania to Spain and vice versa, higher percentage than in northern European countries some of which are handmade, as well as unlabelled food such as the Netherlands, Denmark, or Finland (e.g., and alcohol (Petrescu & Rodriquez, 2006). This flow of Pellizari, 2010, as cited in Vacchiano et al., 2018). Thus, as products for trading, gifts, or self‐consumption contin‐ our participants noted, the Romanian term “avea o pilă” ues, and it was as cheap as €1 a kilo in 2020, facilitat‐ translates directly, both in theory and everyday practice, ing social remittances that reinforce transnational rela‐ to “enchufe.’’ tions (Levitt & Lamba‐Nieves, 2011) and transnational Respondents of the study had, on average, been liv‐ networks of trust (Tilly, 2007). In many cases, items, doc‐ ing in Spain for over 10 years and had left employment uments, and money (normally small amounts of cash) in Romania, considering Spain to have better opportuni‐ are sent via international passenger bus routes that ply ties. However, the move was just the beginning of a saga in both directions between Spain and Romania. This ser‐ through the formalisation of their status while still learn‐ vice is widely used due to it being faster, safer, and ing the informal rules of the game. Their arrival was the cheaper than the regular post, even offering hand‐to‐ starting point of a long parallel process of formalisation, Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 283 with access to formal jobs and administrative regulari‐ gested by Hart (1973) that these activities function as a sation occurring alongside informalisation. This process buffer against unemployment. involves adapting to new informal practices and learn‐ Eventually, the transnational social fields created by ing the new rules of “informality” through contact with Romanian migrants and their formal and informal activ‐ other migrants, the creation of local networks, or by ities resulted in a whole new generation of Spanish‐ simply gathering together at bars and public spaces Romanians who enjoy much higher stability than their with the local host population, who have generally wel‐ parents. In 2016 more than 100,000 Romanians under comed East Europeans due to cultural similarities, reli‐ 16 years old had formal residence in Spain (Ministerio de gion, or their similar racialisation (whiteness). The jour‐ Trabajo y Economía Social de España, 2016). Some were ney toward formality could take several years and involve born in Spain, but many others lived in Romania until passing through several undeclared trust‐building tasks. their parents brought them to Spain in a large‐scale fam‐ Once the person becomes known as a hardworking and ily reunification when Romania entered the EU in 2007 essential addition to a local business, efforts are made (Marcu, 2015). Family reunification is part of a long set‐ to regularise their position and grant them more respon‐ tlement and institutionalisation process, which is key to sibilities. However, trust between parts also contributes the institutional completeness of demographic enclaves to a different kind of informality. In many cases, the and transnational communities (Molina et al., 2018). employer and employees developed a friendship, or at It entails the emergence of specific institutions, a more least closer relations, thus allowing part of the salary to favourable Romanian legislation for citizens abroad, bilat‐ be paid in cash in some sort of family‐style arrangement. eral agreements, the opening of consulates and cultural Not all connections were informal and with close peo‐ centres, and the creation of Romanian associations and ple. Non‐state actors also sometimes played a role by church buildings. Also, local institutions in Spain, such as providing informal support, such as paying bills, provid‐ city councils, played a role in migrant settlement by sup‐ ing food, clothes, books, and language courses, backing porting basic social services, accommodation, and inter‐ up registration processes, and even helping Romanian cultural activities. migrants find jobs. Support came from charities as well In the hardest times of the economic crisis and as formal institutions in Romania that could see opportu‐ its aftermath, some migrants returned to Romania or nities in liaising with Romanians living in Spain. The result moved to other EU countries (Viruela & Marcu, 2015), was a net of inter‐ and intragroup solidarity, which was leading to a number of new tendencies: (a) highly used for various purposes. For example, typically, when mobile people who had experienced circular migra‐ a migrant passes away and has no repatriation insurance, tion or moved to third countries; (b) people who had nor the money to send the body back to Romania, money migrated unsuccessfully and went back; and (c) peo‐ boxes are placed in Romanian restaurants, associations, ple who had returned for work, care for the family or and churches to help the family with the costs. retirement. Some had been living for nearly 20 years All these informal activities constituted a gradual for‐ in Spain before reaching retirement age. Others had malisation of the workers, some of whom ended up saved money and returned as entrepreneurs, opening with permanent employment and fully regularised sta‐ small businesses such as bakeries, restaurants, or guest tus, especially in areas where formal labour was scarce houses, sometimes supported by formal programs from and Romanians had to work harder, for longer hours, the EU and the Romanian government to promote the on minimum wages, such as in the ceramics facto‐ return of migrants, granting them 40,000€ to fund a ries of Castello (Molina et al., 2018) or agribusinesses start‐up. However, returning to Romania is not necessar‐ in Roquetas de Mar (Fradejas‐García et al., in press). ily easy. Many migrants have children, mortgages, and Eventually, this resulted in Romanians accounting for properties in Spain, and many others have lost the con‐ almost 10% (15,748 out of 169,498 inhabitants) of the nections that would help set up new activities and should population in Castello (INE, 2020) in 2017. Roquetas de thus start all over again. Romania is regarded as a backup Mar in 2017 hosted 8,939 Romanians, 9.5% of the total option compared to remaining in Spain, where the mate‐ population (INE, 2020). rial needs of their life seem easier to meet. Informal and solidarity networks were crucial in help‐ ing people find these formal opportunities. Such help 4. Ethnic Entrepreneurs in Croatia could come as a favour or through paying a fee to an informal broker, such as one might pay an employment Croatia is below the EU‐28 average for incoming migra‐ agency. In some cases, household income is created tion, with a ratio of 3.8 migrants for every 1,000 peo‐ through undeclared jobs and informal economic activi‐ ple and 0.9% of the population living in the country ties such as house cleaning or temporary or one‐off jobs on a non‐EU passport (Eurostat, 2019). Those migrants in agriculture, construction, and services, as well as child‐ that do come are likely to come from neighbouring care, baking sweets for parties, renting out rooms in their regions (Bosnia and Herzegovina, Serbia, Kosovo, North homes, working as a DJ at social events, and even col‐ Macedonia) or enter the country on a Croatian passport laborating in transnational enterprises that import and received due to family ties or descent. However, the past export cars (Fradejas‐García, 2021). It was already sug‐ years have seen a sharp increase in work permits for Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 284 non‐EU citizens, with 65,100 issued in 2019, contrasting for pandemic support aid. In addition, (new) contacts as with just 231 in 2014 (Centre for Peace Studies & Impact one of the main assets for running a business became Hub Zagreb, 2019). even scarcer once almost all the networking opportuni‐ Small‐ and medium‐sized enterprises account for ties were moved online. Thus, using informal networks 99.7% of the total number of enterprises in Croatia, and in order to compensate for formal deficits and remove have an employment share of almost 70% (Alpeza et al., or diminish formal obstacles became more difficult. 2018, p. 10). What is also important is that, despite Nevertheless, as discussed later, migrant entrepreneurs the poor survival rate and lack of growth of established have shown a very resilient mindset. entrepreneurial ventures, well below the EU average, Informal practices usually indicate the deficits in the entrepreneurial activity shows good technological readi‐ official structure of society (Ledeneva, 2008) and may ness, with 30% of newly started entrepreneurial ven‐ serve as either substitutes or complements to the offi‐ tures in Croatia in 2018 and 28.3% of “established” busi‐ cial economy (Aligica & Tarko, 2014; Dreher & Schneider, nesses using the latest technology (compared to aver‐ 2010). Furthermore, in Croatian society, instrumental‐ ages of 7.9% and 13.6% across the EU). ising personal connections for “getting things done” is In principle, obstacles faced by all entrepreneurs quite usual and expected (Šimić Banović, 2019). However, are similar and include administrative burdens, unpre‐ foreign entrepreneurs are still on their integration path dictable tax regulations, high tax rates, overly restric‐ and may not be fully aware of the extent and influence tive labour regulations, parafiscal charges, corruption, of informality in Croatian professional and private life. an inadequate health and education system, as well In spite of training initiatives, actions aimed at advo‐ as a limited understanding of entrepreneurship‐related cacy or lobbying remain scarce, and the lack of support‐ concepts (Brzozowski et al., 2021; Šimić Banović et al., ing business networks seems to prevail. Formal struc‐ 2022). However, non‐native entrepreneurs face addi‐ tures in place to support entrepreneurs seem unreliable tional obstacles, including language barriers and rela‐ and immigrant entrepreneurs are largely unsatisfied with tively high costs (and unclear procedures). In addition, them, raising doubts about the legitimacy of a member‐ the Covid‐19 pandemic and other shocks since the begin‐ ship fee given that—as many report—they do not get ning of 2020 have raised additional formal and informal anything in return (Šimić Banović et al., 2022). These barriers to ethnic entrepreneurs in Croatia. As shown in deficiencies have been addressed through in‐group (eth‐ Figure 2, that situation is mostly coupled with ambigu‐ nic entrepreneurs) solidarity and socialisation (Čapo & ous and lengthy procedures when establishing and scal‐ Kelemen, 2018, pp. 8–9) which, with time, results in ing up a business, facing natural disasters and applying stronger solidarity between foreign entrepreneurs and Key formal barriers Key informal barriers • lengthy asylum-seeking procedure (if applicable) • considered to be even bigger security (and health) Non-EU, less • threat than before COVID incertainty • perceived to expect social contribuons only developed • ignorance countries • a work/business permit procedure • emphasised lack of social and cultural capital, • a mandatory financial capital (10x or 200 x higher • i.e. lack of ‘safety net’ Non-EU, • than for the EU / nave entrepreneurs) • obligaon to employ 3 Croaan cizens developed • ambiguous/double procedures countries • new Law on Foreigners—even more unfavourable • the effects of Brexit (if applicable) • absence of any wri en instrucons in English • discriminaon (ethnic and racial origin, LGBT, • front office employees not speaking English • gender, age) EU • limited openness towards other naonalies, entrepreneurs • races and religions • administrave burden, inneficient public • lack of enrepreneurial spirit • administraon • lack of understanding for entrepreneurship • unpredictable regulaons, incl. shops possibly • sense of uncertainty due to current health, safety • closed on Sundays and ambiguous travel • (Zagreb/Central Croa a) and diminished • restric ons • purchasing power condi ons Nave • high tax rates and parafiscal charges • pre-elec on period (un l mid-2020) resul ng in entrepreneurs • corrupon prevalence • pre-elec on populist (mostly an -business) • weaknesses of the educaon and health system • decisions and implica ons of new rules • arbitrary criteria for COVID support aid • predominant online networking (that is • earthquake (and floods) reconstruc on ac vi es • considered inferior to live networking) • damaged offices, retail spaces and homes in • Zagreb / Central Croa a Figure 2. Formal and informal barriers faced by ethnic and native entrepreneurs in Croatia, updated for the Covid‐19 pan‐ demic period. Source: Šimić Banović (2022). Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 285 a higher degree of reliance on family members who are in the marine industry, openness towards immigrants is often involved in the same business and whose informal below expectations. networks are, in many cases, considered vital to busi‐ Ethnic communities also sometimes compensate for ness development. The immigrant entrepreneurs argue the lack of official support. Since 2013, the African that the (difficult) experience of being an entrepreneur Society of Croatia has been supporting African‐born peo‐ in a rather non‐entrepreneurial climate and the inten‐ ple operating in the country. Given the low number of tion of staying there made them push their self‐reliance, people of African descent living in Croatia, the lack of adaptability, and proactivity. The continuous self‐driven state‐funded initiatives in this direction is clear. Yet, this approach of the immigrant entrepreneurs and the sup‐ marginal initiative has attempted to increase awareness port of their in‐groups appear to be essential in their about non‐EU realities for locals that seem still far from survival during both regular circumstances and multiple accepting foreigners (especially those of other races) as external shocks. Their perception of Croatia as a pre‐ their peers, resulting in another “invisible” barrier for the ferred destination country is largely associated with their incoming person. formal and informal networks, with the latter being more An additional resource used by ethnic entrepreneurs important. Meaningful support from their family, friends, are the channels “back home.” In some cases, they men‐ and acquaintances in Croatia and abroad was already tioned that they become weaker, but in other cases, they recognised as key pillars of foreign entrepreneurs’ pri‐ can take advantage of connections in their country of vate and professional lives. In this respect, a high degree origin to find more affordable suppliers or source the of awareness about the role of connections is visible. goods that are not easily available in Croatia. However, As one informant reported, “doing business is possible the informal networks and channels used by foreign in Croatia; you just need good and trustworthy local entrepreneurs seem conceptually different to the local partners, and they exist, in spite of it being hard to ones. For example, none of the informants had reported find them.” Those reliable local partners, recognised as using veza (Šimić Banović et al., 2022), and many were essential for managing businesses in Croatia, include not even familiar with the concept, although they could lawyers, accountants, key business partners, and pos‐ indicate an equivalent concept from their home country. sibly co‐owners of their own businesses. In a nutshell, Interestingly enough, there seems to be a different the ethic entrepreneurs’ map of their key contacts con‐ attitude depending on the cultural background of the sists of their foreign peers, family members, and several entrepreneurs, with people coming from countries with local partners. more efficient bureaucracies seeming less able to cope Accountants and lawyers are particularly important with the Croatian one. This gap between their impor‐ in that they might have to explain local cultural nuances tance and their presence in the studies is particularly or more hostile aspects of national laws and perhaps evident in the Southeast European countries that have invest a higher amount of time and effort in the begin‐ joined or are intending to join the EU; they are expected ning when ethnic entrepreneurs have little awareness to be more vulnerable to the free movement of peo‐ of the local context. Eventually, language barriers might ple, labour, and goods. Research (Šimić Banović, 2022; lead entrepreneurs to rely on only those they can Šimić Banović et al., 2020) confirms that reliance on infor‐ communicate with, limiting the amount of information mal networks is essential for private and professional they receive. This may also be reflected in the cre‐ purposes, i. e., as a continuous way to circumvent var‐ ative ways they develop their businesses, particularly in ious obstacles and as a key resilience factor during the cases of arbitrary decisions made by public administra‐ recent multiple shocks that have occurred. As shown tion bodies. in Figure 2, since the beginning of 2020 in Croatia, the When this is impossible, it leaves entrepreneurs list of unfavourable circumstances grew ever longer: the unable to access local business network opportunities in Covid‐19 pandemic at the global level, Brexit effects at other sectors unless they share common ethnic origins. the EU level, natural disasters (two major earthquakes This highlights what has been described as a two‐speed, and floods), and the new Law on Foreigners at the or a two‐tier, situation. Foreign entrepreneurs sit on national level (Šimić Banović et al., in press). Non‐EU the external layer and have little or at least fewer con‐ citizens from developing countries are particularly vul‐ tacts with Croatian entrepreneurs while giving prefer‐ nerable, especially those affected by the most recent ence to creating networks with other non‐Croatians. migrant crisis. There are exceptions, and business people do mediate Hence, for these people, informal networks are par‐ and thus connect foreigners with locals, but there is ticularly important substitutes for missing or weak for‐ still widespread use of informal networks to make up mal institutions. Many immigrant entrepreneurs initi‐ for deficient formal ones. Furthermore, the integration ate their networking from expat groups and regularly with the locals is usually quite slow, especially in cases use them to socialise and obtain essential information. of different racial backgrounds. That also adds to the In small countries with a rather small share of foreigners importance of the expat networks. Paradoxically, even (such as Croatia), the reason may also lie in the relatively in the regions like Dalmatia, which have the greatest low number of entrepreneurs from one single country exposure to foreigners due to tourism and employment so that “foreign” solidarity trumps solidarity with people Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 286 from the same country or village. In addition, for prag‐ shown, may occur when an externally imposed view on matic reasons, people choose to stick together depend‐ what is “moral,” “fair,” or “due” is enforced by the state ing on their speciality. but not understood by its citizens (Gill, 1998). Ultimately, Experienced English‐speaking Croatian entrepreneurs non‐compliance with state‐mandated instructions does are often connected to those expat communities. By tak‐ not necessarily imply that citizens plot against the state ing advantage of their language asset and their work or undermine its symbolic power. Non‐compliance may experience with foreigners, they provide services to a also result from citizens’ discontent with the state’s val‐ niche not accessible to other Croatian entrepreneurs, ues and impositions or lack of social protection. In such resulting in win‐win situations. Ethnic entrepreneurs are cases, formal structures are replaced, supplemented by, used to in‐group cooperation and support as an effi‐ or have to compete with informal ones. cient way of compensating for formal deficiencies in Our intention here was to explore situations where the business environment. Thus, there is a possibility reliance on informal practices becomes sufficiently for these networks to be used formally and to promote widespread to talk of a societal tendency, which the integration into the formal business. An association rep‐ state may choose to tolerate or tackle. Whilst institu‐ resenting ethnic entrepreneurs could further advocate tions can potentially eradicate the habit, a similar habit for entrepreneurs’ interests and foster their integration is likely to emerge if the very societal needs underlying into the Croatian business scene. that habit are not addressed properly. This practice rep‐ resents a way for these social actors to look after them‐ 5. Discussion and Conclusion selves and indicate that something concrete should be done to address societal needs. In both cases above, a number of unlawful or immoral Eventually, a large gap between how things are done (from the state perspective) practices emerge. They and how they should be done can be observed, and cit‐ persist and are at times encouraged by group dynam‐ izens, as individuals or associations, move away from ics where in‐group acceptance depends on the capac‐ state morality to engage in practices that are likely to be ity of individuals to ascribe to alternative moral orders punished (if discovered). Minor non‐compliance is some‐ (Wanner, 2005) or switch between moral principles how the norm in a modern state. We have criminal activ‐ depending on the situation and the context. In the ities, people falling out of the system temporarily, we Romanian case, this becomes more visible. Clear instruc‐ have deviant social behaviour, and executive forces deal tions and a modus operandi are regularly ignored, with that. However, when individual welfare becomes although not always and not everywhere, but only when the norm for a significant amount of people, one needs circumstances require it: when individuals find it more to reflect on how the human condition could possibly convenient than respecting the rules. Migrants fit a given be improved in that context. The persistence of infor‐ context but bend some particular categories of rules mal practices in the Eurasian context has encouraged when necessary and seem to fit the “in spite of the state” scholars to a specific and panoptic view on the role of situation where rules are there and function but remain informality in everyday state–citizen relationships. When partly ignored. In the Croatian case, we can instead wit‐ a socio‐economic definition of informality is employed, ness some association with the “beyond the state” situ‐ results showed that in areas where societal trust towards ation (Polese et al., 2018; Polese & Morris, 2015), where state institutions is lower, engagement in relations with formal rules are claimed to be in place but are in fact fellow citizens (including a form of payments or exchange non‐existent. Many entrepreneurs encounter nothing of favours) is regarded as a necessity, a moral obli‐ but barriers when surveying business associations; more‐ gation, and something useful (Polese, 2016; Polese & over, the rules that regulate the business environment Stepurko, 2016). When trust towards state and formal are, in spite of a facade of normality, by and large absent. institutions is low, citizens prioritise the consolidation of In this respect, we suggest that a great deal of interest relations with one another while bypassing state institu‐ should be devoted to further exploring the state–citizen tions (Polese, 2021). In such cases, high informality lev‐ relationship and what happens when individual and els can be used as a proxy for mistrust towards state state moralities do not overlap or even diverge. A grow‐ institutions, low quality of governance, and to argue that ing amount of attention in this direction has already citizens perceive their institutions as weak, incapable, expanded the literature devoted to informality and indi‐ or ineffective. vidual or society‐centred accounts contrasting with a When this happens, we have a situation in which state‐led view on individual morality (see Morris, 2011; the state works to liquidate informality at the declara‐ van Schendel & Abraham, 2005). Indeed, in contrast with tive level while actually pushing people into informality the general assumption that the state and citizens are or reliance on connections. In such a case, using coercive bound by a social contract whose terms are in primis measures to compel people to employ formal channels defined by the state lies an important question: What and avoid informal practices is not necessarily the best happens in cases where the state fails to deliver what strategy. By contrast, rebuilding trust in institutions and it has promised or the citizens are not willing or able to state authority might be a better way to encourage peo‐ accept the state’s morality as their own? This, it has been ple to rely less on informal transactions and connections. Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 287 Table 2. Direct (affecting fellow citizens) and indirect (affecting a society) harmfulness and legality. Direct harm (mostly illicit) Indirect harm (might be licit) Illegal Murder, trafficking, dealing hard drugs, ethnic Fiscal fraud, nepotism, ethnic or religious violence (might be licit in some cases) discrimination Legal Use legal action against unaware people to extort Laws that favour one (ethnic, religious) group over money or property; clauses written in a smaller font others (are licit for the favoured ones) at the end of a contract Source: Polese (2021). This article has been an attempt to survey elements Acknowledgments that may worsen (or improve) the state–citizen rela‐ tionship and put the newcomers in a weak position, This research was supported by a Marie Curie Research where they are not supported or are only partially sup‐ and Innovation Staff Exchange scheme within the H2020 ported by the state that should look after their wel‐ Programme (grant acronym: New Markets, no: 824027). fare. People engaging with mobility put themselves, in The research in Spain and Romania was funded by the many cases, in a vulnerable position, as the cases of Ministry of Economy, Industry and Competitiveness— Romanian migrants and ethnic entrepreneurs in Croatia Government of Spain (MINECO‐FEDER; CSO2015–68687‐ have shown. By investigating the solidarity networks in P, 2016–2020, and FPI grant number BES‐2016–076859). which these individuals are embedded, we have tried This article is a part of the Project “Institutional to show the political (and policy) relevance of appar‐ support to the immigrant entrepreneurs in Croatia: ently insignificant micro and individual actions. This rein‐ Socioeconomic and legal aspects” funded by the forces the claim that everyday governance should be University of Zagreb (short‐term research grants given more attention (Polese et al., 2020). In addition, obtained in 2020 and 2021). transcending from a moral judgement on these practices, our interest is to identify areas of governance that need Conflict of Interests to be addressed most urgently. Where we can identify a gap between state instructions and people’s behaviour, The author declares no conflict of interest. this is where intervention is needed. 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Journal of the Royal Anthropological opment, 34(10), 1696–1712. Institute, 18(1), 65–82. Yalcin‐Heckmann, L. (2014). Informal economy writ large Stoica, A. (2012). Old habits die hard? An exploratory ana‐ and small: From Azerbaijani herb traders to Moscow lysis of communist‐era social ties in post‐communist shop owners. In J. Morris & A. Polese (Eds.), The infor‐ Romania. European Journal of Science and Theology, mal post‐socialist economy: Embedded practices and 8, 171–193. livelihoods (pp. 165–185). Routledge. About the Authors Abel Polese is docent in East European Studies at the University of Helsinki and works on theory and practice of governance in Europe, Asia, and Latin America. He is also the author of The SCOPUS Diaries and the (Il)logics of Academic Survival. Ignacio Fradejas‐García is a post‐doctoral researcher in the School of Social Sciences at the University of Iceland. With extensive fieldwork experience in The Gambia, Chile, Morocco, Haiti, RD Congo, Turkey, Romania, and Spain, he does research in migration, transnationalism, (im)mobilities, human‐ itarianism, and informality. He has been the main editor of the journal Perifèria (2018–2021), and his work has been published in various peer‐reviewed journals such as Social Anthropology (2019), Mobilities (2019), Migration Letters (2021), and Social Inclusion (2021). https://orcid.org/0000‐0002‐ 2514‐0654 Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 291 Ružica Šimić Banović is an associate professor of economics at the Faculty of Law of the University of Zagreb, Croatia. She holds a PhD degree from the University of Ljubljana, Slovenia. As a Chevening scholar, she received her MA in Public Policy from King’s College London, University of London. She completed a fellowship in the Department of Economics at George Washington University. Before join‐ ing the academic community, Ružica was an adviser in the Croatian National Competitiveness Council and had also been working in the private sector. Vlatka Škokić is an associate professor of entrepreneurship at the University of Split, Faculty of Economics, Business and Tourism, Croatia. Prior to joining the University of Split, she spent six years as a lecturer at the University of Surrey, UK. Vlatka holds a PhD from the University of Strathclyde, Scotland. Her research is focused on entrepreneurship, innovation, and networks. Vlatka’s research has been published in the leading management and social science journals. She is a fellow of the Higher Education Academy (HEA). Tanel Kerikmäe is a professor of European legal policy and law & tech at Tallinn University of Technology (TalTech), and he has worldwide experience from different universities in teaching and research. Tanel has been an invited professor in Europe and Asia. He is an honorary professor at the Ho Chi Minh City University of Law and holds the title of doctor honoris causa at the National University of Law in Kharkiv; he also acts as a foreign member of the Academy of Legal Sciences of Ukraine. José Luis Molina is professor in the Department of Social and Cultural Anthropology (UAB). He is an economic anthropologist interested in livelihood practices in a globalised, digitalised, and unequal world. His approach is to use mixed methods with an emphasis on ethnography and personal network analysis. Southeast Europe and Romania are his particular geographical areas of interest. Mirela Alpeza, PhD, is an associate professor in entrepreneurship at UNESCO Chair in Entrepreneur‐ ship Education, Faculty of Economics in Osijek, Josip Juraj Strossmayer University of Osijek, Croatia. Mirela is also director of CEPOR, the SMEs and Entrepreneurship Policy Centre in Zagreb, Croatia. Her research is focused on entrepreneurship, small business management, family businesses, and business transfer of SMEs. She is a member of the board of directors of TRANSEO, the European Association for SME Transfer and a member of ECSB, the European Council for Small Business and Entrepreneurship. Miranda J. Lubbers is an associate professor in social and cultural anthropology at the Autonomous University of Barcelona, Spain, and the director of the Research Group of Fundamentally Oriented Anthropology (GRAFO). In 2021, she was granted a European Research Council Advanced Grant and the ICREA Acadèmia Award. Her research addresses social cohesion and social inclusion. In particular, she analyses the role that formal and informal social relationships and settings have in the production, mitigation, or exacerbation of exclusion and segregation. Alberica Camerani is a PhD candidate and Marie Curie early stage researcher at Dublin City University within the ETN‐MARKETS training network. Her research focuses on female entrepreneurship and informality in Central Asia. In her doctoral project, she investigates how the socio‐cultural environment enables and constrains female entrepreneurs in Kyrgyzstan. More broadly, she is interested in religion, secularism, and identity, as well the social‐political and security developments in Central Asian states. Politics and Governance, 2022, Volume 10, Issue 2, Pages 279–292 292