Decent work and the informal economy

This report was produced for the 90th Session of the International Labour Conference in 2002 . It sets out to describe the key components of the informal economy, reasons behind its expansion and also suggests key elements of a strategy that address the underlying causes and symptoms of informality and informalization.

It sheds some clarity around the defintion of informality by describing the situation of informal workers and entrepreneurs is in terms of seven essential securities which are often denied them as follows:

• labour market security (adequate employment opportunities through high levels of employment ensured by macroeconomic policies)
• employment security (protection against arbitrary dismissal, regulation on hiring and firing, employment stability compatible with economic dynamism)
• job security (a niche designated as an occupation or “career”, the opportunity to develop a sense of occupation through enhancing competences)
• work security (protection against accidents and illness at work, through safety and health regulations, limits on working time and so on)
• skill reproduction security (widespread opportunities to gain and retain skills, through innovative means as well as apprenticeships and employment training)
• income security (provision of adequate incomes) and
• representation security (protection of collective voice in the labour market through independent trade unions and employers’ organizations and social dialogue institutions)

Among the main issues covered by this report include the importance of closing the representational gap through implementing measures to strengthen voice in the informal economy:

• the role of governments is to guarantee the freedom of all workers and employers, irrespective of where and how they work, to form and join organizations of their choosing without fear of reprisal or intimidation. Strategies for the collective representation of interests by local institutions (informal traders, rural cooperatives, women’s organizations, trade unions or employers’ organizations) should also be able to evolve in a way that most appropriately addresses the particular issue of concern. Hence strengthening civil dialogue institutions and processes involving those in the informal economy and their organizations can be effective in promoting decent work
• role of trade unions would have to review and, where necessary, revise their internal regulations and statutes to remove limitations to their ability to organize informal workers; adopt innovative recruitment strategies, innovative strategies to reach informal workers
• the role of co-operatives - in the field of social protection and social services is an area that cooperatives have had significant success by providing their own social insurance cover through cooperative methods

The report also focuses on measures designed to invest in the workforce (with special attention to the most disadvantaged) in order to promote their employability and to make it easier for micro- and small enterprises to start up. These measures include:

• promotiong employability and productictivity through investing in knowledge and skills by emphasizing the key role of basic education for employability in collaborating with other organisations
• training and skills development focussing on the importance of portable skills and transmitting technical knowledge and skills
• implementing training needs assessments in order to provide training that tis meaningful
• providing training for those in the informal economy through lowering of vocational and training institution entry requirements and adopting flexible training methods
• promoting government, private sector and NGO-based training interventions in the form of extension services, government-sponsored vocational training for informal operators, entrepreneurship development programmes and linking training with production. Also, community-based training for self-employment and income generation projects
• promoting the creation of quality jobs through enterprise development through creating an enabling policy and legal framework; the development of an enterprise culture; the development of an effective service infrastructure; and the representation and organization of micro- and small entrepreneurs. Some of these measures would entail lowering the costs of establishing and operating a small business (easier registration procedures, reasonable and fair taxation) and increasing potential benefits of legal registration (access to commercial buyers in the formal economy, more favourable credit markets, legal protection, obtaining foreign exchange)