Informal Economy & Decent Informal Economy & Decent Work:Work:

Challenges for Trade UnionsChallenges for Trade Unions

Arun Kumar, Actrav-ILO-TurinArun Kumar, Actrav-ILO-Turin

What is Informal Economy?What is Informal Economy? Activities (&employment) outside the purview of Activities (&employment) outside the purview of

fiscal & labour laws?fiscal & labour laws?

Large & growing fast, with millions dependent on it Large & growing fast, with millions dependent on it for livelihoods; accounts for for livelihoods; accounts for 50-75% of non-50-75% of non-agricultural employment in developing countries, agricultural employment in developing countries, in some countries more; in some countries more;

Not a homogenous sector; highly diverse depending Not a homogenous sector; highly diverse depending on the nature of enterprise & the kind of on the nature of enterprise & the kind of employment offered; covers a wide variety of employment offered; covers a wide variety of activities, enterprises and different types of workers activities, enterprises and different types of workers with diverse employment relationships (Examples?) with diverse employment relationships (Examples?)

Very difficult to arrive at a universally accepted Very difficult to arrive at a universally accepted 'definition' of informal sector or informal economy 'definition' of informal sector or informal economy that would be applicable in all cases.that would be applicable in all cases.

Definition of Informal Definition of Informal Economy?Economy?

Definition based on legal status of the Definition based on legal status of the enterprise sees - enterprise sees - Informal economy as part of Informal economy as part of the household sector of unincorporated the household sector of unincorporated enterprises owned by households (includes enterprises owned by households (includes own account workers, unpaid family labour, own account workers, unpaid family labour, besides employees in informal enterprises).besides employees in informal enterprises).

……this however leaves out a large number of this however leaves out a large number of workers in other informal low paid, low workers in other informal low paid, low productivity work situations such as home productivity work situations such as home workers, domestic workers, casual daily wage workers, domestic workers, casual daily wage labour not declared by employers in formal labour not declared by employers in formal and informal enterprises.and informal enterprises.

Some characteristic features of Some characteristic features of informal economy workersinformal economy workers

Engaged in enterprises & activities for which Engaged in enterprises & activities for which data is not regulated & which do not maintain data is not regulated & which do not maintain any regular accounts;any regular accounts;

Casual, part time, irregular or seasonal Casual, part time, irregular or seasonal employment;employment;

Frequently changing work places as also Frequently changing work places as also employers;employers;

Unclear (or denied) employer-employee Unclear (or denied) employer-employee relationship; relationship;

Although entitled to but generally not covered Although entitled to but generally not covered under the labour laws;under the labour laws;

Poor working conditions, Unorganized; No Poor working conditions, Unorganized; No collective bargaining;collective bargaining;

Some characteristic features of Some characteristic features of informal economy workersinformal economy workers

Minimum wage or piece rate work - low Minimum wage or piece rate work - low earnings (exceptions exist);earnings (exceptions exist);

Little or no access to formal sector credit, or Little or no access to formal sector credit, or skills training facilities; skills training facilities;

Unpaid workers in family business;Unpaid workers in family business; Home workers; &/or Self employed; &/or Home workers; &/or Self employed; &/or

Artisans;Artisans;

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Informal economy work linked with Informal economy work linked with formal sectorsformal sectors

Why is Informal Economy Growing?Why is Informal Economy Growing? Lack of growth of employment in the formal sector Lack of growth of employment in the formal sector

– due to slow growth of economy &/or faster growth – due to slow growth of economy &/or faster growth of populationof population

Due to economic crisis & economic restructuring Due to economic crisis & economic restructuring policies – declining public investments on social & policies – declining public investments on social & economic sectors - adversely impacts on workers economic sectors - adversely impacts on workers chances of finding employment in modern/ chances of finding employment in modern/ organized sectors, leaving people with no choice organized sectors, leaving people with no choice but to seek survival in informal sector activities but to seek survival in informal sector activities

Restructuring in production & services sectors Restructuring in production & services sectors (decentralizing of production, sub-contracting & (decentralizing of production, sub-contracting & outsourcing, downsizing of employment, outsourcing, downsizing of employment, encouragement of self employment, home working, encouragement of self employment, home working, part time work, etc.)part time work, etc.)

Other reasons - ???Other reasons - ???

TUS & Informal EconomyTUS & Informal Economy Large no. of efforts being made to organize & Large no. of efforts being made to organize &

improve conditions of work in informal improve conditions of work in informal economyeconomy

Unions campaigns generally focus on - Unions campaigns generally focus on - Organizing, minimum wages, inflation Organizing, minimum wages, inflation compensation, social security & compensation, social security & recognition of trade union rightsrecognition of trade union rights

Participants views…. What are their unions Participants views…. What are their unions doing? doing?

Hurdles in Organizing Hurdles in Organizing Attempts to organize often pose risk of denial of work Attempts to organize often pose risk of denial of work

& threat to livelihoods;& threat to livelihoods;

Traditional form of organizing against a well-defined Traditional form of organizing against a well-defined employer does not work since in the informal sector employer does not work since in the informal sector the employers keep changing as does the work place the employers keep changing as does the work place and often the nature of work;and often the nature of work;

Often the identity of the employers is hard to Often the identity of the employers is hard to establish as per the existing requirements of the establish as per the existing requirements of the labour law; labour law;

The law often does not cover home based workers (a The law often does not cover home based workers (a major form of employment in the informal economy) major form of employment in the informal economy) who are often thought of as self-employed workers;who are often thought of as self-employed workers;

Trade unions have shortage of resources (cadres and Trade unions have shortage of resources (cadres and finances);finances);

Hurdles in OrganizingHurdles in Organizing Trade unions, being male dominated, have little Trade unions, being male dominated, have little

access to the women workers (who constitute a access to the women workers (who constitute a sizeable part of the informal economy workers);sizeable part of the informal economy workers);

Inadequacy of the labour law administration also Inadequacy of the labour law administration also hinders the efforts of the trade unions to improve the hinders the efforts of the trade unions to improve the situation in the informal sectors. situation in the informal sectors.

In the informal sector, often it is more a case of In the informal sector, often it is more a case of providing social protection services (such as micro-providing social protection services (such as micro-insurance, health care, access to markets, schemes insurance, health care, access to markets, schemes for training & welfare rather than negotiating against for training & welfare rather than negotiating against any one particular employer (though in many cases any one particular employer (though in many cases this too can be done). this too can be done).

Very few trade unions play these roles or provide Very few trade unions play these roles or provide such services (although the unions are beginning to such services (although the unions are beginning to recognize the necessity for these new functions);recognize the necessity for these new functions);

What else?What else?

Why should unions organize informal Why should unions organize informal economy workers? economy workers?

There cannot be any one strategy for There cannot be any one strategy for organizing in the informal economy, given organizing in the informal economy, given the diverse nature of activities and the the diverse nature of activities and the organization of work in the informal sectors organization of work in the informal sectors as also the needs of the workers.as also the needs of the workers.

What kind of initiatives have been taken by What kind of initiatives have been taken by unions for informal economy workers?unions for informal economy workers?

Issues that need TU’s AttentionIssues that need TU’s Attention

Organizing!Organizing! Improving conditions of workImproving conditions of work Promoting Income Security, Employment Promoting Income Security, Employment

Security & Social SecuritySecurity & Social Security Legislative protectionLegislative protection Promoting rights & protection of women Promoting rights & protection of women

workers, in particular non-discrimination workers, in particular non-discrimination in employment, education, skills training, in employment, education, skills training, credit availability & working conditions - credit availability & working conditions - Organizing & integration of women in the Organizing & integration of women in the trade union movement trade union movement

Elimination of Bonded & Child LabourElimination of Bonded & Child Labour

ILO & Informal EconomyILO & Informal Economy

Informal Economy refers to - all economic Informal Economy refers to - all economic activities by workers & economic units that – activities by workers & economic units that – in law or in practice – are not covered or in law or in practice – are not covered or insufficiently covered by formal arrangementsinsufficiently covered by formal arrangements

Activities that are not – recognized, recorded, Activities that are not – recognized, recorded, protected or regulated by public authoritiesprotected or regulated by public authorities

Unregulated wage, self and home based Unregulated wage, self and home based workers with little or no social protection, workers with little or no social protection, organization or voice at work organization or voice at work

Informal Sector – term first used in 1972 by Informal Sector – term first used in 1972 by ILO – it was expected to disappear as ILO – it was expected to disappear as economy developed economy developed

Dilemma of the informal sectorDilemma of the informal sector (1991 ILC) – (1991 ILC) – utility of informal sector as provider of utility of informal sector as provider of employment & incomes v/s regulation – employment & incomes v/s regulation – conference sought comprehensive & conference sought comprehensive & multifaceted strategy to support employment multifaceted strategy to support employment creation role of informal sector while creation role of informal sector while eliminating progressively the exploitation & eliminating progressively the exploitation & inhuman working conditionsinhuman working conditions

Dilemma continues – flexibilization & Dilemma continues – flexibilization & informalization of production and employment informalization of production and employment relations grew so much so as to give rise to relations grew so much so as to give rise to informal economy concept – most new informal economy concept – most new employment is in informal economyemployment is in informal economy

What is Informal Employment?What is Informal Employment? Own-account workers employed in their own informal Own-account workers employed in their own informal

sector enterprises;sector enterprises;

Employers employed in their own informal sector Employers employed in their own informal sector enterprises;enterprises;

Contributing family workers, irrespective of whether they Contributing family workers, irrespective of whether they work in formal or informal sector enterprises;work in formal or informal sector enterprises;

Members of informal producers’ cooperatives;Members of informal producers’ cooperatives;

Employees holding informal jobs, whether employed by Employees holding informal jobs, whether employed by formal sector enterprises, informal sector enterprises, or as formal sector enterprises, informal sector enterprises, or as domestic workers employed by households;domestic workers employed by households;

Own-account workers engaged in the production of goods Own-account workers engaged in the production of goods exclusively for own final use by their household.exclusively for own final use by their household.

Source: 17th International Conference of Labour Statisticians Source: 17th International Conference of Labour Statisticians (ICLS) in 2003(ICLS) in 2003

‘‘Informal’ does not mean there are no rules Informal’ does not mean there are no rules or norms regulating the activities of workers or norms regulating the activities of workers or enterprises - informal economy activities or enterprises - informal economy activities have their own political economy, their own have their own political economy, their own rules, arrangements, institutions & rules, arrangements, institutions & structures for mutual help, trust, providing structures for mutual help, trust, providing loans, training, enforcing obligations, etcloans, training, enforcing obligations, etc

Securities/Rights denied in Securities/Rights denied in Informal economyInformal economy

Labour market securityLabour market security – employment opportunities – employment opportunities Employment securityEmployment security – protection against arbitrary – protection against arbitrary

dismissals, regulations on hiring & firing, etcdismissals, regulations on hiring & firing, etc Job securityJob security – secure occupation &/or opportunities – secure occupation &/or opportunities

for career developmentfor career development Work securityWork security – protection against accidents, – protection against accidents,

illnesses at work, safety &health regulations, working illnesses at work, safety &health regulations, working hours, etchours, etc

Skill reproduction securitySkill reproduction security – opportunities to gain/ – opportunities to gain/ retain skills (formal apprenticeship, emp trg)retain skills (formal apprenticeship, emp trg)

Income securityIncome security – – Representation securityRepresentation security (FoA, collective bargaining) (FoA, collective bargaining)

Decent Work DeficitsDecent Work Deficits Poor quality, unproductive & unremunerative Poor quality, unproductive & unremunerative

jobsjobs Un recognised &/or unprotected by lawUn recognised &/or unprotected by law Absence of rights at workAbsence of rights at work Inadequate social protectionInadequate social protection Lack of representation and voice at workLack of representation and voice at work

These aspects are also true of formal sector These aspects are also true of formal sector jobs in many cases.jobs in many cases.

ILO’s Response – ILO’s Response – Decent Work For All!Decent Work For All!

All those who work, have rights at workAll those who work, have rights at work!! Decent Work approach conceptualized to Decent Work approach conceptualized to

cover all workerscover all workers

• Addresses all workers (w/m) in all economic Addresses all workers (w/m) in all economic sectors (formal, informal)sectors (formal, informal)

• Participatory & progressive goal – sets floor Participatory & progressive goal – sets floor of social & labour standards that should of social & labour standards that should apply to all;apply to all;

• Interventions in different but connected Interventions in different but connected aspects of the world of workaspects of the world of work

DECENT WORK AGENDADECENT WORK AGENDA Restatement of ILO’s historical mandate in Restatement of ILO’s historical mandate in

today’s context; represents tripartite today’s context; represents tripartite consensus within ILO as a way to respond to consensus within ILO as a way to respond to the challenges posed by the globalizing the challenges posed by the globalizing world;world;

It is a development strategy that reflects It is a development strategy that reflects people’s aspirations for decent jobs, better people’s aspirations for decent jobs, better opportunities, voice & representation; opportunities, voice & representation;

Although it puts forward a global social Although it puts forward a global social floor, it is a dynamic & a participatory floor, it is a dynamic & a participatory strategy that raises standards with strategy that raises standards with country’s development;country’s development;

What is Decent Work?What is Decent Work?

Work that is productive, Work that is productive,

gives fair income, gives fair income,

security in the workplace & social security in the workplace & social protection for the family, protection for the family,

equal opportunities & treatment, equal opportunities & treatment,

better prospects for - personal devt & better prospects for - personal devt & social integration, social integration,

freedom to organize and participate in freedom to organize and participate in decision makingdecision making

How is it to be achieved?How is it to be achieved? Creating productive jobs – thru Creating productive jobs – thru

sustainable economic & social devt;sustainable economic & social devt;

Guaranteeing basic rights at work to Guaranteeing basic rights at work to allall workers; workers;

Providing basic social protection Providing basic social protection for all for all – a minimum protection against low or – a minimum protection against low or declining living standards;declining living standards;

Promoting social dialogue and conflict Promoting social dialogue and conflict resolution;resolution;

• Freedom of association & recognition of the Freedom of association & recognition of the right to collective bargainingright to collective bargaining

• No forced/compulsory labourNo forced/compulsory labour

• No child labourNo child labour

• Elimination of discrimination in employment Elimination of discrimination in employment and occupationand occupation

……. a global social floor. a global social floor

Fundamental Principles and Fundamental Principles and Rights at Work (1998)Rights at Work (1998)

What needs to be done?What needs to be done? Recognize & improve labour rights of workersRecognize & improve labour rights of workers Enhance social protectionEnhance social protection Invest in knowledge & skills of workersInvest in knowledge & skills of workers Provide access to credit & support servicesProvide access to credit & support services Provide legal & institutional supportProvide legal & institutional support Give economic incentives to promote Give economic incentives to promote

formalization of informal economy activitiesformalization of informal economy activities Remove barriers to employment creation in Remove barriers to employment creation in

formal sectorsformal sectors Regulate labour supply – rural-urban Regulate labour supply – rural-urban

migrationmigration Promote organizingPromote organizing What else? (participants views)What else? (participants views)

Group WorkGroup Work

What, according to you, are the What, according to you, are the needs of workers in informal needs of workers in informal economy? economy?

What initiatives has your union taken What initiatives has your union taken to organize informal sector workers? to organize informal sector workers? Give two examplesGive two examples

What steps need to be taken by TUs What steps need to be taken by TUs to organize home based women to organize home based women workers?workers?