Informal economy

More than 6 workers among 10 and 4 enterprises among 5 in the world operate in the informal economy. Contrary to the old forecasts, informality has not diminished over time and is even increasing in many countries. Informal economies are typically characterized by a high incidence of poverty and severe decent work deficits. Without formalization, decent work for all and equity in society will remain an illusion. In 2015, the ILO adopted the Transition from the Informal to the Formal Economy Recommendation. The Recommendation is a powerful tool to advance towards the attainment of SDGs. During the last years, a growing number of countries worldwide have developed strategies and policies to facilitate transition to formality. Social partners are also developing their relations with workers and enterprises in the informal economy.

Formalization of the economy is a complex and long term process that often requires to combine interventions on laws and regulations with those aiming to foster productivity and the ability to generate wealth. For part of the workforce, the reduction of decent work deficits is the first step toward a progressive formalization in the longer term. The significant reduction of informality in some countries illustrates that achieving results is largely possible.

Key issues

  1. International Labour Standard

    R204 - Transition from the Informal to the Formal Economy Recommendation

    At its 104th Session (2015), the ILC adopted R204, based on strong tripartite consensus and near unanimous vote, following a two-year process of consultations.

  2. Theory of change

    Transition from the informal to the formal economy

    This umbrella theory of change provides the main pathways for the transition to formality of workers and enterprises. It is a general framework that can inform the development of theories of change focused on a specific sector, occupational groups, forms of informality or policy areas.

Statistics on informality

  1. Women and men in the informal economy: A statistical update

    This report provides a snapshot of the situation in 2019 and trends in selected countries since 2020.

  2. Methodological note

    Diagnosis of informality

    This methodological note presents the 10 steps of diagnoses of informality allowing for flexibility depending on national circumstances.

  3. Browse through various indicators & countries (please use Chrome or Mozilla browsers).

  4. Women and men in the informal economy: a statistical picture (3rd edition)

    This publication provides for the 1st time comparable estimates on the size of the informal economy & a statistical profile of informality in all its diversity at the global and regional levels.

Courses and trainings

  1. Policy resource package

    Extending social security to workers in the informal economy: Lessons from international experience

    How to develop viable policy options to address the multi-fold challenges of facilitating transitions to formality.

  2. Turin, Italy

    ILO-ITC courses on informal economy

    Courses designed to increase capacity of constituents to effectively collect data & to design, implement, monitor, evaluate formalization policies and strategies.