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ILO and the Informal Economy
Thomas Kring, CTA
ILO DWT for South Asia
New Delhi, India
Country, Year Persons in informal employment,
% of non-agricultural employment
Argentina (2009 IV Qtr) 49.7
Armenia (2009) 19.8
Bolivia (2006) 75.1
Brazil (2009) 42.2
Colombia (2010 II Qtr) 59.6
Costa Rica (2009 July) 43.8
Dominican Republic 48.5
Ecuador (2009 IV Qtr) 60.9
Egypt (2009) 51.2
El Salvador (2009) 66.4
Honduras (2009) 73.9
India (2004/2005) 83.5
Liberia (2010) 60.0
Madagascar (2005) 73.6
Mali ((2004) 81.8
Mexico (2009 II Qtr) 53.7
Nicaragua (2009) 65.7
Panama (2009 August) 43.8
Paraguay (2009) 70.7
Sri Lanka (2009) 62.1
South Africa (2010) 32.7
Thailand (2010) 42.3
Turkey (2009) 30.6
Vietnam (2009) 68.2
Zambia (2008) 69.5
Country data:
Employment in
the informal
economy in
non-agricultural
employment
Source: Statistical update on
employment in the Informal
Economy.
ILO Department of Statistics
June 2011
The Informal Economy
• Informal Economy acting as a sponge
• New Trends – Contract Labour,
Outsourcing
• Coverage under the Law
• Capturing the Informal Economy in
Surveys
The Informal Economy
ILO’s Work on the Informal Economy
ILO’s Work on the Informal Economy
The ILO has put in place an overarching framework for its
work on the informal economy though a number of
resolutions.
The Resolution on Decent Work and the Informal
Economy adopted in 2002.
'encompasses all economic activities by workers or
economic units that are - in law or practice - not covered
or sufficiently covered by formal arrangements'
ILO Framework
• International Conference of Labour
Statisticians (ICLS) (2003)
• Promotion of Sustainable Enterprises (2007)
• Rural Employment for Poverty Reduction
(2008)
• Skills Development (2008)
• Gender Equality (2009)
• Conclusions on Recurrent Discussion on
Employment (2010)
ILO’s Work on the Informal Economy
“Facilitating transitions from the informal economy to
the formal economy”.
The Governing Body in March 2013
The meeting of experts is to provide guidance on
the nature and content of the proposed instrument
Double discussion at the ILC 103rd Session (2014)
and 104th Session (2015)
Objectives of ILO
Achieving Formalization of the
Informal Economy
Objectives of ILO
• Immediate term:
• give priority to reducing decent work deficits in the
informal economy
• Short and medium term:
• Enable those currently in the informal economy to
move upwards along the continuum / new entrants
join the more formal and decent parts of the
continuum
• Longer term
• Create enough employment opportunities that are
formal, protected and decent for all workers and
employers.
TRANSITION TO
FORMALITY
Growth strategies and quality employment generation
Regulatory environment, including enforcement of ILS & core rights
Organization, representation and social dialogue
Equality: gender, ethnicity, race, cast, disability, age
Entrepreneurship, skills, finance, management, access to markets
Extension of social protection, social security, social transfers
Local (rural and urban) development strategies
DECENT WORK STRATEGIES FOR THE INFORMAL ECONOMY : An integrated approach to move out informality
INTE
GR
ATE
D S
TRA
TEG
Y
Role of Labour Market Partners
Importance of Employers’ Organisations
• Support formalisation of enterprises
• Awareness raising
• Facilitate easier registration process
• Work together to limit informalisation of workers
• Lobby government for improved business
environment for MSEs
• Incentive package for MSEs
Jointly engage in policy dialogue with Government!
ILO Framework
Current ILO Work on the Informal Economy:
Sub-regional Project on Facilitating
Formalisation of the Informal Economy
Project Background
Summary of Project:
Coverage: India, Nepal and Bangladesh
Duration: Five years (2012 – 2016)
Budget: USD 5 million
Funding: Japanese Government under the ILO/Japan
Multi-Bi Program
Project Objectives
1. Facilitate formalization of informal
businesses and employment
relationships,
2. Discourage informalization of formal
economy firms and jobs
Immediate Outcomes
Outcome 1 (policy & regulation): The regulatory and policy environment in the target areas made more conducive to formalization and protective to the risks of informalization Outcome 2 (local area pilot): Formal job growth promoted through job-rich growth strategy and integrated formalization assistance in the target areas Outcome 3 (knowledge): Good practices and tools of promoting formalization better understood by key stakeholders at the national level in South Asia
Formalization Scenarios
1. Regulatory & policy environment
Information
campaign
Studies
Capacity
building
Policy
dialogue
Value
chain
aggregators
Community
development
programmes
Parallel
projects of the
ILO
2. Local growth
strategy &
formalization
assistance
Socially
responsible
MFIs
3. Knowledge management
How the Three Components Work Together
At firms level: • Reduce the regulatory cost of formalization; • Link incentive schemes;
At workers level: • Formalize the employment relationships, e.g.,
through the appointment letter;
• Extend the social security benefits; and
• Help find new jobs in the formal economy
Through a constituents driven process
The constituents will guide: national and local
level consultative process to prioritize sectors
and interventions;
Way Forward
India: Micro and Small Enterprises
Manufacturing (Automobile)
Nepal: Construction
Hotel and Tourism
Bangladesh: Construction
Transport
Training Programme
•Cooperation with ITC Turing on development of
training programme targeting labour market
partners with specific components for Employers’
Organizations
•To be validated in December 2013
Other Activities
The Informal Economy and Decent Work: A Policy Resource
Guide supporting transitions to formality
http://www.ilo.org/emppolicy/pubs/WCMS_212688/lang--
en/index.htm
Transitioning from the Informal to the Formal Economy. Report
V(I)
http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---
relconf/documents/meetingdocument/wcms_218128.pdf
ILO Resources on the Web:
http://www.ilo.org/public/english/support/lib/resource/subject/in
formal.htm
Sub-regional Project on the Way out of Informality
http://www.ilo.org
Resources:
Thank you For more information, please visit:
www.ilo.org/saie Thomas Kring, CTA
ILO DWT for South Asia
E-mail: [email protected]