SOCIAL PROTECTION FOR THE INFORMAL ECONOMY

Koen Rossel-Cambier, International Training Centre

of the ILO

Group work

1. What are the main characteristics of the informal economy?

2. What are the barriers to entry into the ‘formal’ economic and social protection system?

3. What are the respective roles of governmental and non/governmental organisations in addressing these situations?

What seems to be the problem?

• Poverty> the working poor• Underemployment• Disrespect for fundamental

rights• Lack of social protection• Child labour• Occupational safety and

health hazards• Low quality products• Saturated markets• Misallocation of resources• ………….

What is the ‘Informal Economy’

Defining characteristic: not recognized, registered, regulated or protected under the law

Many different kinds of informal jobs and informal enterprises in urban and rural areas

‘Sector’ suggests specific industry group or economic activity

Increasing informalization of production and employment relationships

Differentiated from the criminal or illegal economy: majority produce legal goods and services

What the informal economy is not

• A marginal phenomenon• A transient phenomenon• Completely unorganised, unstructured,

unregulated• A men’s world only• Mere petty traders, parking boys and prostitutes• Mostly tax evaders and others disrespecting the

law• The same as the underground or illegal economy• Mainly illiterates and always income poor

Informal economy workers: Who are they?

• Women and men– owner/employers of

micro/enterprises• Paid workers

• Apprentices

• Unpaid family workers

– Own account workers

Informal economy enterprises

• Fixed location or not• Covered premises or

open air• Independent or not• Long standing or just

starting• Traditional or modern

Why is the informal economy growing

Legal and institutional frameworks inappropriate, constraining or ineffective, lack of good governance

Global employment deficit: not enough jobs Failure of macro-economic policies Increasing poverty and feminization of poverty Demographic factors, including migration and the

impact of HIV/AIDS Benefits of globalization not inclusive and fair Flexible specialization and global chains

What may be the solution?

• Ignoring the informal economy

What may be the solution?

• Acting against it

What may be the solution?

• Forbidding it

How to reduce decent work deficits in the

Informal Economy

In the SHORT AND MEDIUM TERM, to promote the conducive legal and policy frameworks to upgrade jobs and enhance the capacity of workers and employers to move from informal to formal decent work

In the LONGER TERM, to create enough jobs that are protected, recognized and decent for all workers

In the IMMEDIATE TERM, to ensure that those in the informal economy are recognized and protected under labour law and have improved rights, social protection, organization and representation

Enhancing Rights in the Informal Economy

All those who work have rights at work irrespective of where they work

ILO Declaration and labour standards provide solid international basis for application to the IE

Rights deficit due to how standards are expressed and enforced through national law and practice. Therefore: Improve labour legislationStrengthen labour administration and enforce labour rightsPromote legal literacy, especially for women workers Improve regulatory framework for businesses

Improving Social Protection

Statutory social security (preventive and protective) provisions: social insurance, universal benefits and social assistance programmes

Decentralized schemes of social protection Linking decentralized schemes with other social

protection systems for equity and efficiency reasons Improving occupational safety and health, with attention

to hazardous occupations and vulnerable groups Strengthening HIV/AIDS services

Organization and Representation in the

Informal Economy Framework of law and governance protecting freedom

of association and right to organize and bargain collectively: fundamental right and enabling right

Strengthening organization and representation:The role of national and local governmentsThe role of trade unionsThe role of employers’ organizationsThe role of cooperativesThe role of other social actors

Formation and strengthening of strategic alliances

Meeting the global demand for decent employment

Not enough jobs in the formal economy, hence interest in the employment creation potential of the informal economy

1991 ILC Discussion on the Informal Sector:“there can be no question of the ILO helping to ‘promote’ or ‘develop’ an informal sector as a convenient, low-cost way of creating employment unless there is at the same time an equal determination to eliminate progressively the worst aspects of exploitation and inhuman working conditions in the sector”.

Meeting the global demand for decent employment Promoting employability and productivity and upgrading

employment through education, training, skills development Securing property rights Quality job creation through enterprise development ILO Recommendation concerning General Conditions to

Stimulate Job Creation in SMEs, 1998 (No.189): Creation of an enabling policy and legal framework Development of enterprise culture Development of effective service infrastructure Representation and organization Improving market opportunities and access Sending the message that job quality is good business for SMEs.

Thanks!