Tackling Vulnerability in the Informal Economy

Foreword
Acknowledgements
Abbreviations and acronyms
Executive summary
	Key findings
	Key recommendations
Assessment and recommendations
	Portraits of informality
		Informality affects most workers in the world
		Informality is the norm in developing and emerging countries
		Some demographics are more exposed to informality
		A majority of working households rely solely on informal employment
		Most children and older individuals live in completely informal households
	Informality in the development process
		Links between informality and development are complex
		Informality mirrors various development patterns
		Drivers of informality are diverse and vary across countries, periods, types of firms and segments of the informal economy
		The informal sector is less productive and absorbs more unskilled workers in most countries
		Negative connotations of low tax revenue from informality seem weakly justified empirically
		Informal economy workers contribute to skills acquisition and GDP growth
	Risks and vulnerabilities in the informal economy
		Informal economy workers face high risks of poverty
		There is no simple link between changes in income poverty and movements into and out of informality
		Informal economy workers face high occupational risks
		Inferior working conditions are reflected in a large informal-formal job satisfaction gap
		Absence of adequate risk management instruments makes informal economy workers and their families particularly vulnerable
		Risks and vulnerabilities are particularly high for women in the informal economy
	Protecting informal economy workers and their families
		Extending social protection to informal economy workers is key for inclusive development
		Extending social protection should be done through a gender lens
		Extending the coverage of social protection systems should take into account informal support mechanisms
		Equity and sustainability in financing the extension of social protection require careful assessment
		A number of policy options exist to address the equity and sustainability dimensions of financing
		Social insurance needs to adapt to the situation of workers in different types of employment and facilitate labour market transitions
		The household dimension is essential in identifying the right mix of interventions and developing an integrated policy package
		Extending social protection needs to be complemented with measures to tackle OSH in the informal economy
		Extending social protection should be complemented with measures to raise productivity and labour income and empower informal workers
		An integrated policy mix should seek to reduce the cost and time to register businesses and comply with regulations
		Policies should encourage formalisation of enterprises and their workers
		Productivity enhancement is important to foster enterprise and worker formalisation
	Notes
Chapter 1.  Portraits of informality
	Informality is a global phenomenon, but manifests itself in unique ways across countries and regions
		Informal employment is the reality for the majority of the world’s employed population
		Informality is the norm in the Global South
		Informality has a strong rural dimension
		Informality dominates in agriculture and industry
	Vulnerable groups are disparately exposed to informality
		Globally, informal employment is a greater source of employment for men, but there are large disparities across countries
		Youth and older workers are more exposed to informality
		Informal employment absorbs less-educated workers
	Informal jobs have distinguishing characteristics
		Own-account workers are most at risk of informality, but employees are most represented in informal employment in developed countries
		Workers in non-standard forms of employment are particularly exposed to informality
		Most employment in small enterprises is informal, but informal employment in large formal enterprises is significant
	The household dimension is key to better understanding vulnerability in the informal economy
		Informality takes different forms at the household level
		Children and older individuals disproportionately live in informal households
	Notes
	References
Chapter 2.  Informality in the development process
	The complex relationship between informality and development mirrors various development patterns
		Informality correlates with key development outcomes across countries but no longer within countries
		Type of growth matters in informality trends
	Drivers of informality are diverse and vary across countries, time periods and segments of the informal economy
		Labour surplus and global competition are major drivers of informality
		Legal and institutional factors affect informality, from regulatory inadequacies to excessive taxes to weak law enforcement
	The role of the informal economy in development is not well recognised or understood
		The informal sector in many countries is less productive and absorbs more unskilled workers
		The negative connotation of low tax revenues from the informal economy is weakly documented empirically
		Informal economy workers contribute substantially to GDP growth and basic skills provision
	Notes
	References
Chapter 3.  Risks and vulnerabilities in the informal economy
	Informal economy workers are exposed to many risks
		In-work poverty risks are particularly high among informal economy workers
		The higher the degree of informality of households, the higher the incidence of poverty and low income
		Informal economy workers face high occupational risks
		Inferior working conditions in the informal economy are reflected in a large informal-formal job satisfaction gap
	People dependent on the informal economy are particularly vulnerable
		Informal economy workers need strong representation to improve working conditions, earn better wages and upgrade skills
		Absence of adequate social protection arrangements makes informal economy workers and their families particularly vulnerable
	Notes
	References
Chapter 4.  Protecting informal economy workers and their dependents
	There has been some progress with the extension of social protection to informal economy workers
		Some countries have extended social protection to informal economy workers
		Informal economy workers also rely on non-contributory social protection schemes
		Expanding labour market programmes to informal workers is receiving renewed policy attention
	The role of informal social protection has to be better recognised
		With large deficits in state provision of social protection, informal support plays a critical role for informal workers and their households
		Informal and formal social protection systems can complement and reinforce each other
		There is growing attention on financing the extension of social protection to informal economy workers
		The funding gap to extend social protection to informal economy workers is particularly pronounced in most developing countries
		Financing the extension of social protection to the informal economy comes with substantial equity challenges
	Measuring informality at the individual and the household level is key to developing social protection extension strategies
		Taking the diversity of the informal economy into account
		The extension of social protection to informal workers needs to account for labour mobility
		The household dimension is essential to identify the right mix of interventions and develop an integrated policy package for the extension of social protection to informal workers
	The extension of social protection needs to be accompanied by other measures
		Reducing costs and complexities to register and comply with regulations
		Improving productivity, earnings and wages
	Formalisation, inclusiveness and global supply chains
		Avoiding disengagement: Artisanal and small-scale miners in high-risk areas
		Promoting inclusive business models for smallholder farmers
		Protecting homeworkers in garment and footwear supply chains
	Regulating due diligence
		Strengthening inspection and compliance
	Tackling Occupational Safety and Health (OSH) in the informal economy
		Empowering informal economy workers and employers
	Notes
Chapter 5.  Addressing the gender dimension of informality
	Informality exposes men and women differently
		More men work in the informal economy, but women are most exposed in a majority of countries
		Women are more often found in the lower parts of the informal employment hierarchy
		Female-headed households are less likely to be mixed
		There are important gender disparities in informal employment outcomes
		Several factors affect the gender pattern of informal employment outcomes
	Addressing gender-related risks and vulnerabilities in the informal economy is critical
		Social assistance can ensure basic protection for women but can reinforce traditional gender roles
		Social insurance programmes for informal workers need to address women’s needs and work patterns
		Extension of pension and maternity coverage has protected women in the informal economy
		Much remains to be done to extend social protection to women workers in the informal economy
	Notes
		Annex A. Definitions of informal economy, informal sector and informal employment
Annex A. Definitions of informal economy, informal sector and informal employment
Annex B. Additional tables - The Key Indicators of Informality based on Individuals and their Households (KIIbIH) Database