Local Solutions for a Global Economy

GFI Report Calls for Action on Inclusion of Informal Sector

Informality Matters

Dear Reader,

It has been 40 years since the International Labour Organization first used the term “informal sector” to identify the now billions of unprotected workers engaged in legal but unregistered enterprises outside formal economic structures. Since then, the world’s economies, large and small, have undergone extreme booms and busts; and the most vulnerable have been those with the largest rates of informality. Today we face the challenge and opportunity to promote inclusive growth across interconnected and interdependent economies.

Informal workers WORK – often incredibly long hours under harsh conditions and for little pay. A large informal sector can improve a country’s overall economy by boosting innovation, production, and income levels—but only for the short term. Leaving these workers on the periphery means that as much as two- thirds of the world’s working population remains undeveloped and that we lose a potentially thriving addition to the mainstream economy. A sustainable global economy requires the integration of all workers.

With four decades of successes and failures in integrating informal workers into mainstream markets, we have the knowledge to imple- ment real and lasting change. Bringing together all stakeholders—workers, business, and governments—will move us beyond short-term, immediate (and, ultimately, ineffective) fixes to a concerted approach for inclusive economic growth.

We would like to thank the many people and organizations who continue to promote the rights and interests of the poorest workers around the world. Together we can ensure that everyone can realize the promise of a global economy.

Karen Tramontano & Caleb Shreve
Founder and President & Executive Director

Read the Summary Brochure "Informality Matters"

Read the Full Report "Informality in Emerging Markets: A Cross-Country Examination"

A Call to Action

The Global Fairness Initiative announces the publication of Informality in Emerging Markets: A Cross-Country Examination. Launched on November 8th, 2012 by President Karen Tramontano at the Pell Center for International Relations and Public Policy - the report highlights the need for policy makers, multilateral organizations, and grant makers to understand and address informality. If we hope to create truly sustainable and inclusive markets and end the cycle of poverty, we must address informality.

Informality Rates Among Sample Countries

Exclusion of Agricultural Workers from Informality Statistics

Because informal workers operate without registration, determining their exact number is difficult. In the case of agriculture workers-often temporary, migrant, or working in remote areas-quantifying informal participation is even more of a challenge. Current estimates put informal agricultural employment at more than 65% of total wage employment, with rates as high as 80% in regions that rely heavily on agriculture.

Addressing Informality is About More than Better Jobs

It's about including a marginalized group into social and economic structures that allow for productive and rewarding participation in increasingly interconnected markets, ultimately enabling stable sustainable economies with decent lives and livelihoods for all.

Strategies for Formalization Include:

- Sound employment statistics gathered independently by each government

- Direct surveying of workers to understand needs and perceptions

- Development of country-specific and sector-specific policies that can progressively transition workers and enterprises to the formal sector

- Affordable and accessible tax regimes that progressively create tax revenue

- Collaboration of government and the private sector to increase compliance

- Investment in missing middle financing to increase size of local enterprises, increase productivity, and decrease informality.

- Promotion of youth-flexible trade and entry-level placements for the integration of new workers to the formal labor market

- Aid to specific countries tied to improved legislation for the integration of the informal sector

Read the Summary Brochure "Informality Matters"

Read the Full Report "Informality Matters"