In economy, there is market that is illegally operate or also known as black market. The definition of black market is all economics activities that contribute to the officially calculated (or observed) gross national product but are currently unregistered (Schneider& Enste, 2005, p.78).
Black market is happening all over the world. A lot of people know black market in another public definition as an illegal traffic or trade in officially controlled or scare commodities. The effect of black market to our economy are less revenue to the government, underestimation of unemployment data and losses to legitimate industries (Pradhan, 2016) . Black market is naturally illegal where all the transaction of buying and selling is unrecorded, so it make government revenue less than it should be. This is because, people who sell product in black market are currently trying to avoid from paying taxes of what they are selling. On the other hand, government however get most of their fund from people paying taxes for whatever they are selling and black market make it hard to happen. All those taxes should be used for the benefit of country and the citizens.
For example, citizen paying tax to government so they can operate and help citizen who are in need. Furthermore, other necessary development that citizen might need in the future is also under government responsibility. However, a lot of money that going in and out from black market that should be the taxes is not going to government. For example, it happen in Norway.
DNB has said 60 per cent of Norwegian cash usage is out of government control and is being used in money laundering schemes and black market deals (Payton, 2016). The next effect of black market is underestimation of unemployment data. Besides that, unemployment data has a loophole because of black market is happening all around the world. Unemployment is a situation where someone of working age in between sixteen years old or older is not able to get a job or actively looked for work or in the past four weeks and are currently available for work.
Government is a hard time to track unemployment rate because of this mixed economy. This is because those who are employed in black market is consider as unemployment. In Malaysia, unemployment rate has been increases more than three time the national employment rate 3.1%. Bank Negara Malaysia said Cautious business sentiments and moderating economic performance have restrained businesses from expanding their workforce (Online, 2017). Finally, the losses to legitimate industries is one of the critical impact in business world. The legal market has to compete with the black market in term of pricing and it bring losses to legitimate industries.
Black market made it easier to get what people need when there are limited supply in legal market either by making it cheaper or higher price than it should be. Product that people sell in black market are often something they stole or something they smuggled. Mostly those product are an illegal product such as drug, gun, and many others. The legal market have to compete with black market which is almost half of citizens compromise with all this time and we know that it is kind of impossible. Domestic industries and government losses and the black market gain easily. For example, a product that black market sold in a cheaper price but in legal market is a bit expensive such as cell phones, computer software, cigarettes and even baby formulas (AmberWarren, 2014).
In conclusion, black market encourages people to break the law. However, a lot of people did not know that the quality of product that people sell in black market and the one that they sell at legal market are different. Black market has a great impact on our economy without realizing that our government losses their revenue, the unemployment data is currently underestimate and it losses to legitimate industries. The only reason why black market still strive all around the world is because we still compromise with some of major economics player that active in black market. I hope that government will apply more strict law to overcome this crisis before it get worse. People should put themselves in government shoes to know how it feel to face such a problem. I believe that government should do an event that might give citizen some knowledge about the impact of black market to our economy.