Fighting world of work insecurity: High-level conference discusses ways to formalize the informal economy
High-level representatives from Europe and Central Asia have gathered under the banner of the ILO to exchange experiences and formulate coherent policies and programmes to boost the fight against informality.
Bečići, Budva – A Regional Tripartite Conference, organized by the ILO, and hosted by the Government of Montenegro took place in Bečići, Budva, Montenegro. At this two-day conference, representatives from the ILO, participating Ministers and representatives from Governments, workers and employers organisations from sixteen countries exchanged experiences and formulated coherent and tailored policies and programmes to boost the fight against informality in the Region.
Informality is one of the main features of today’s world of work insecurity that not only concerns developing countries, but also the industrialized world. It undermines both current consumption and potential output and productivity growth in long term”, said Heinz Koller, ILO Assistant Director General and Regional Director for Europe and Central Asia, in his opening remarks.
In a regional context marked by growing vulnerabilities in the world of work, the transition to formality is increasingly seen as a major economic and social challenge. The average share of informal economy in the Europe and Central Asia region is estimated at around 36 per cent of official national GDPs, albeit with marked sub-regional differences between the EU (18.5 per cent) and the countries of Southeast Europe, Eastern Europe and the CIS (up to 40 per cent).
Most informal workers have lower-than-average earnings and are deprived of stable and secure work. They lack coverage by social protection measures, are exposed to poor working conditions – including higher safety risks – and are unable to exercise their fundamental rights to voice and representation at work. More fragile categories of workers such as young people, women and migrants tend to be more exposed to these risks, as informal employment may represent their only possible entry point into the labour market.
Against this backdrop, participants at the conference agreed that there is an urgent need in the region to reformulate policy interventions in a way that facilitates transition to formality, thus yielding beneficial effects on jobs creation, poverty reduction, labour productivity, working conditions, market fairness and fiscal revenues.
Conference discussions showed that technical interventions and programmes that address one aspect of informality in isolation usually produce only limited sustainable results. In contrast, when a set of policies are implemented through an integrated approach, results are more significant. This precondition for efficiently fighting informality is reflected in the recently adopted ILO Recommendation on Transition from the Informal to the Formal Economy (No. 204), as it was widely acknowledged during the conference discussions. As Azita Berar, Director of the Employment Policy Department of the ILO, put it in her intervention: “The new Recommendation 204 on Transition from the Informal to the Formal economy provides a powerful and practical policy tool for the tripartite partners in the European region to set in motion integrated strategies that address specific drivers of informality in different national realities." According to Ms Zorica Kovačević, Minister of Labour and Social Welfare of the Government of Montenegro, “the process of implementing the Recommendation on the Transition from the Informal to the Formal Economy in practice will be of key importance given the extremely negative impact the informal economy has with respect to exercising labour rights, ensuring decent work, quality employment and social protection,.”
Three main kinds of policies and programmes to address informality were identified during the conference: 1. Actions aimed at increasing the capacity of the economies to ensure compliance with labour standards; 2. Targeted interventions for labour market segments such as wage workers, own account workers and domestics workers; 3. Policies that enhance skills and productive capacity. They should be combined with enforcement measures: it should not only aim at strengthening the labour inspectorate’s capacities, but also at increasing the supply of formal jobs and creating appropriate incentives to formalisation and to remain in the formal economy by bringing in different actors, such as tax and social security administrations.
Stressing the need for macroeconomic policy to go beyond price stability and strive for job-rich growth, Heinz Koller stated that “the conference agreed to promote an integrated approach that encompasses the four pillars of decent work – promotion of rights, employment, social protection and social dialogue – while having in mind the multifaceted nature of informality, the strong diversity of our Region as well as the specific needs and circumstances of each country concerned. Tailored and country specific approaches are needed, which also combine incentives with enforcement measures and – always – social dialogue with the full involvement of tripartite constituents”, he concluded.
The regional conference took place in the context of “The Oslo Declaration: restoring confidence in jobs and growth” that called upon the ILO to provide assistance to constituents on specific challenges. It was the first of several regional events as a global follow up to the adoption of the ILO Recommendation on Transition from the Informal to the Formal Economy (No. 204).
Informality is one of the main features of today’s world of work insecurity that not only concerns developing countries, but also the industrialized world. It undermines both current consumption and potential output and productivity growth in long term”, said Heinz Koller, ILO Assistant Director General and Regional Director for Europe and Central Asia, in his opening remarks.In a regional context marked by growing vulnerabilities in the world of work, the transition to formality is increasingly seen as a major economic and social challenge. The average share of informal economy in the Europe and Central Asia region is estimated at around 36 per cent of official national GDPs, albeit with marked sub-regional differences between the EU (18.5 per cent) and the countries of Southeast Europe, Eastern Europe and the CIS (up to 40 per cent).
Most informal workers have lower-than-average earnings and are deprived of stable and secure work. They lack coverage by social protection measures, are exposed to poor working conditions – including higher safety risks – and are unable to exercise their fundamental rights to voice and representation at work. More fragile categories of workers such as young people, women and migrants tend to be more exposed to these risks, as informal employment may represent their only possible entry point into the labour market.
As Heinz Koller stated, “informality has been fuelled by various factors such as the globalisation of trade and economies, deep changes in the world of work and forms of employment, including undeclared work and other non-standard forms of work. And the financial and economic crisis has undoubtedly contributed to further deteriorate the situation.”
Against this backdrop, participants at the conference agreed that there is an urgent need in the region to reformulate policy interventions in a way that facilitates transition to formality, thus yielding beneficial effects on jobs creation, poverty reduction, labour productivity, working conditions, market fairness and fiscal revenues.
Conference discussions showed that technical interventions and programmes that address one aspect of informality in isolation usually produce only limited sustainable results. In contrast, when a set of policies are implemented through an integrated approach, results are more significant. This precondition for efficiently fighting informality is reflected in the recently adopted ILO Recommendation on Transition from the Informal to the Formal Economy (No. 204), as it was widely acknowledged during the conference discussions. As Azita Berar, Director of the Employment Policy Department of the ILO, put it in her intervention: “The new Recommendation 204 on Transition from the Informal to the Formal economy provides a powerful and practical policy tool for the tripartite partners in the European region to set in motion integrated strategies that address specific drivers of informality in different national realities." According to Ms Zorica Kovačević, Minister of Labour and Social Welfare of the Government of Montenegro, “the process of implementing the Recommendation on the Transition from the Informal to the Formal Economy in practice will be of key importance given the extremely negative impact the informal economy has with respect to exercising labour rights, ensuring decent work, quality employment and social protection,.”
Three main kinds of policies and programmes to address informality were identified during the conference: 1. Actions aimed at increasing the capacity of the economies to ensure compliance with labour standards; 2. Targeted interventions for labour market segments such as wage workers, own account workers and domestics workers; 3. Policies that enhance skills and productive capacity. They should be combined with enforcement measures: it should not only aim at strengthening the labour inspectorate’s capacities, but also at increasing the supply of formal jobs and creating appropriate incentives to formalisation and to remain in the formal economy by bringing in different actors, such as tax and social security administrations. Stressing the need for macroeconomic policy to go beyond price stability and strive for job-rich growth, Heinz Koller stated that “the conference agreed to promote an integrated approach that encompasses the four pillars of decent work – promotion of rights, employment, social protection and social dialogue – while having in mind the multifaceted nature of informality, the strong diversity of our Region as well as the specific needs and circumstances of each country concerned. Tailored and country specific approaches are needed, which also combine incentives with enforcement measures and – always – social dialogue with the full involvement of tripartite constituents”, he concluded.
The regional conference took place in the context of “The Oslo Declaration: restoring confidence in jobs and growth” that called upon the ILO to provide assistance to constituents on specific challenges. It was the first of several regional events as a global follow up to the adoption of the ILO Recommendation on Transition from the Informal to the Formal Economy (No. 204).