1. UNDERSTANDING THE INFORMAL ECONOMY FRANCIE LUND, WIEGO Director: Social Protection Programme (with acknowledgements to Martha Chen and Joann Vanek) European Commission Meeting, 25 th to 27 th June 2012

2. A granny in Durban, looking after her grandchild, working in a street market in the traditional herbs and medicines sector

3. The IE – what is it? The informal economy is the diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state.

4. Informal employment as share of non-agricultural employment  South Asia: 82 percent  Range: 62 in Sri Lanka to 84 percent in India  E and SE Asia: 65 percent  Range: 42 percent in Thailand to 73 percent in Indonesia  Sub Saharan Africa: 63 percent  Range: 33 percent in South Africa to 82 percent in Mali  Latin America: 51 percent  Range: 40 percent in Uruguay to 75 percent in Bolivia Source: 1) James Heintz Regional Estimates for ILO; 2) WIEGO and ILO 2012 ‘Women and Men in the Informal Economy: A Statistical Picture’

5. The informal economy The informal economy can be classified into two broad groups of workers: self-employed in informal enterprises wage workers in informal jobs How are informal enterprises and informal jobs defined?: informal enterprises = unincorporated enterprises that may also be unregistered or small in size informal jobs = jobs without employer contributions to the social protection of the employee

6. ICLS categories of informal employment, internationally accepted Self-Employed in Informal Enterprises employers who hire others own account workers who do not hire others  single person operations  heads of family enterprises/farms o unpaid contributing family workers Wage-Employed in Informal Jobs o informal employees in informal enterprises o informal employees in formal enterprises o domestic workers in households o casual day laborers with no fixed employer

7. The pyramid of status in employment related to risk, earnings, and gender segmentation

8. Some barriers to improved conditions of work, linkages, ‘exit’  Employers (particularly where there are ‘disguised’ employment relationships)  Government – shortage of resources for regulation of even formal places of work; vested interests  Trade union movement – generally, resistance to informal workers; but rapid changes in attitude recently  Informal workers themselves  Income is a priority; piece work may lead to self-exploitation  Unregistered status of small-small enterprises means little security, and little incentive to invest to improve work conditions (Rongo et al 2004)  Even where an SME is registered, high turnover of workers may mean employers resist paying for employees’ expensive health screening (Alfers, 2010, in Accra)  Reconciling child care with the need to earn an income

9. Incentives to formalisation  For waged informal workers/ industrial outworkers, it is most often the owners of capital/ employers who avoid formalisation.  When the barriers to becoming formalised are lowered, many informal enterprises and workers choose to formalise/ be recognised/ be regulated (World Development Report 2005 for summary of initiatives – good examples from Africa).

10. Approaches for inclusion of workers’ needs All of these relate to empowerment and sustainability  Recognition  Sectoral approach  For TVET  And for social protection  Level of government to engage with  Organisation and representation of informal workers (and then scaling up)

11. Recognition as workers  Official statistics (labour force surveys)  Recognition in law as workers  Registration at city level (as traders for example)  Accreditation of courses  Representation as interested parties  Recognition as a worker in a sector(s)

12. Using a sectoral lens to explore policy interventions  Industrial outworkers  Sectoral differences: construction compared to garment workers  Different scope for improving work conditions through trade agreements; codes of conduct; Fair Trade; Ethical Trade Initiative – better scope for horticulture, wine’ non-timber forest products, fisheries  Sometimes good links with formal trades union  Street vendors  Sectoral differences: fresh food compared to cosmetics compared to tourist trade – different training needed?  Primary importance of site/ secure place of work – for ‘passing feet’, for access to people with disabilities

13. Sectoral approach (continued)  Domestic workers  TVET: ‘women’s skills’; huge demand globally for domestic workers and for care workers as more women enter labour market  Social protection: relatively easy to extend unemployment insurance, accident insurance  Waste pickers  Sectoral differences: medical waste compared to household refuse  good examples of negotiating directly with multi-national chains in which they work (and partnerships with local authorities – KKPKP, Pune)  But it is NOT decent work

14. Linkages, and levels of government  Informal workers and their enterprises need the same things as formal firms need – affordable and secure place in which to work, water, sanitation, storage, electricity (lighting, production, refrigeration), waste disposal, and safety at the work place.  These are usually local government functions.  Are the policies of different levels of government compatible regarding informal workers and their place in value chains, income-generating activities, use of public space, right to organise ?

15. Informal worker’ representation on national commissions, and health reform bodies Homenet Thailand (industrial outworkers) -Commission for the ‘30 baht’ health scheme (now UHC); alliance of 9 civil society sectors (all ‘vulnerable groups’) KKPKP, Pune, India (waste pickers) -social security scheme for waste pickers – Task Force SEWA, India -National Commission on the Unorganised Sector -WHO Global Commission on the Social Determinants of Health -Integrated Health System for India

16. Scaling up  Design of equipment  Health screenings  Litigation on right to work, stopping harassment and confiscation, giving access to sources of products  City level policy and intervention dialogues  Exposure Dialogue Programmes

17. KKPKP Waste Pickers Organisation, Pune, India Waste collector with cart designed to ease her load – iterative participatory work with Maharashtra State Institute of Design

18. Self Employed Women’s Association, India SEWA’s solar head torches for early morning flower pickers

19. Brazil: ear plugs for informal workers at Salvador’s famous and NOISY annual festival

20. Health screenings – bringing health to the people, and the people to health  Large scale community event – general health or particular issue (eye testing, dental caries)  Spread information about health services – opening times, referrals, costs  Spread information about work-related risk, early detection, and prevention  Create demand for health services  Volunteer/ committee involvement in organising screening, and learning about health services

21. Scaling up  Litigation  Waste collection routes in Bogota, Colombia  Return of confiscated goods in Durban, South Africa  Stop the destruction of the historical food market in Durban (for the FIFA World Cup)  City level dialogues for policy reform  Fire extinguishers in Accra, Ghana

22. Concluding remarks  A sectoral approach enables focused strategic thinking about interventions  The essential need is for higher and more reliable incomes  Formalization has limits – and what would be the basic elements of formalization would mean from the informal workers’ perspective  Informal workers and their organisations should be represented on all platforms where policy decisions are made (not just ‘be consulted’)  Make clear the contradiction between calls for active labour market policies, at same time as the destruction of livelihoods by a different level/ branch of government

23. Concluding remarks ….  The importance of infrastructural provision as a form of social and economic security  The importance of child care in social protection  Make private savings for elderly years more affordable and reliable – many informal workers want to save  Social protection cannot redress the effects of macro-economic and trade policies that reinforce inequality and insecurity and exclusion.