1. They may avoid having to pay a legal minimum wage, and avoid wage increases demanded by a unionised work force.
2. They avoid responsibility for whether or not social-security contributions and other fringe benefits are paid to the workers by employers operating in the informal sector.
3. They are a ble to adjust output to fluctuations in demand by varying the amount of subcontrac ting rather than the size of their own labour force, thereby avoiding the costs associated with redundancy payments during a recession and training when demand revives.