Unrecorded cash payment makes it much easier to pay undocumented staff

That may just be good old-fashioned tax evasion.

(If you pay cash, the business owner can just pocket the money without ever recording the transaction. For digital payments, this is much harder to do undetected.)

It's tax evasion.

First comment I see that addresses this. This is a big part of accepting and paying cash. Tax evation. From both sides.