The International Labor Organization has adopted a new international labor standard that is expected to help hundreds of millions of workers and economic units move out of informality and into the formal economy.
The informal sector, informal economy, or grey economy is the part of an economy that is neither taxed, nor monitored by any form of government. Unlike the formal economy, activities that are engaged in the informal economy are not included in the gross national product of a country. The informal sector can be described as a grey market in labor, Asia Plus reported.
More than half of the world’s workforce is estimated to be trapped in the informal economy, which is marked by the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection, a lack of social dialogue and low productivity, all of which constitutes a significant obstacle to the development of sustainable enterprises.
The new recommendation acknowledges that most people enter the informal economy not by choice but due to a lack of opportunities in the formal economy and an absence of any other means of livelihood.
The recommendation–the first ever international labor standard specifically aimed at tackling the informal economy–was passed by 484 votes in favor and garnered outstanding support from the ILO’s tripartite constituents.
Crucial Step
The new labor standard provides strategies and practical guidance on policies and measures that can facilitate the transition from the informal to the formal economy.
The vote by the International Labor Conference is seen as a crucial step in assisting countries to set up the necessary measures to promote decent job creation and sustainable enterprises in the formal economy.
The recommendation is of great significance for all those who are concerned with inclusive development, poverty eradication, reducing inequalities and who are looking forward to a strong focus on the goal of decent work for all in the context of the new post-2015 development agenda.
ILO notes that the adoption of this recommendation constitutes a historic landmark event for the world of work, as it points to the desired direction of many countries in making the transition to formality. It provides concrete guidance about the multiple pathways to achieve decent work and to respect, promote and realize the fundamental principles and rights at work for those in the informal economy.
Depending on the developing region, between 45 and 90 percent of workers are in the informal economy. As concerns small and medium enterprises with 10 to 250 employees, as many as 90 percent are informal.
The share of women in informal employment is higher than men in most countries, and other vulnerable populations, such as youth, ethnic minorities, migrants, older people and the disabled are also disproportionally present in informality.
