Local Solutions for a Global Economy

Read Karen Tramontano's piece on Informality for CFR

GFI Founder and President, Karen Tramontano, writes an incredible article on Informality as a part of the Council on Foreign Relations' Development Channel series on global justice and development.

Formalizing Economies to Fight Poverty

"Sixty percent of the labor force in most developing countries works in the informal economy. Even though the informal economy is vibrant and provides essential services and goods to many communities, most governments disregard it. If governments instead sought to bring informal economies into the fold, they could enjoy substantial economic benefits. Even more important, granting economic and legal rights to these overlooked workers and producers could lift thousands out of poverty—simply because social security is one of the most effective poverty-fighting tools that a government can utilize."

"The Global Fairness Initiative (GFI), a non-profit organization I founded, works to expand livelihood opportunities for the poor through market-based interventions. In 2008, we launched a project in Guatemala to prove that formalizing workers and enterprises is feasible and can directly reduce poverty. Because the Guatemalan government had almost no data on the informal sector prior to the project, GFI first surveyed informal workers and small enterprises to understand the dimensions and economic value of the sector. The results shed light on both the strengths and challenges of the informal economy. Community discussions, interviews, and surveys that GFI conducted revealed that workers were eager to escape the shadows of the informal economy, voice their opinions, and be taken into account by the government and its leaders. We found that many workers and producers were completely excluded from their country’s economic and legal framework: they lacked access to legal protections, fair wages, safe working conditions, and social safety nets and services. As a result, these men and women often worked harder and longer hours than their formalized counterparts and were among the most exploited and the least protected from harsh labor conditions.".....

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