Informal economy

Opening address at the ITCILO Workshop on “Transition from informal to formal economy: Awareness raising on R204 towards designing an integrated policy framework in the Philippines”

By Mr Khalid Hassan, Director, ILO Country Office for the Philippines at the ITCILO Workshop on “Transition from informal to formal economy: Awareness raising on R204 towards designing an integrated policy framework in the Philippines”, Manila, Philippines, 29 November 2017

Statement | Manila, Philippines | 29 November 2017
  • Undersecretary Maglunsod of the Department of Labor and Employment (DOLE);
  • Undersecretary Barinaga of the National Anti-Poverty Commission (NAPC);
  • Ms Funatanares, Sectoral Representative of the NAPC Workers in the Informal Economy
  • Distinguished officials from the Senate, House of Representatives, government, employers’ and workers’ organizations;
  • Colleagues from the International Training Center in Turin;
  • Ladies and gentlemen, good morning to all of you!
It is a great pleasure to welcome you to this awareness-raising workshop on ILO Recommendation 204 concerning the Transition from the Informal to the Formal Economy towards designing an integrated policy framework for the Philippines.

First of all, let me thank the International Training Centre of the ILO, the Department of Labor and Employment (DOLE), National Anti-Poverty Commission-Workers in the Informal Sector (NAPC-WIS) for making this event possible.

In 2015, during the 104th International Labour Conference, the ILO adopted a historic labour standard – the ILO Recommendation 204 concerning the transition from the informal to the formal economy. I am pleased to inform you that this is a very well elaborated standard built on the basis of the long-standing discussion on informal economy within the ILO. It also reflects a good amount of global experiences in addressing the informal economy challenges for the last few decades. I must recognize that the Philippines has been a key contributor to this global discussion and experiments. It is therefore my grand pleasure to bring this international training contents as the special in-country workshop for the Philippine constituents.

The informal economy challenge is enormous in the world we live today. It is estimated that more than half of the world’s workforce is trapped in the informal economy. The Philippines is no exception to this global picture with the estimated rate of informal employment being around 56 per cent. The challenges faced by workers within the informal economy often stem from their absence of sufficient opportunities for quality employment, poor working conditions, inadequate social protection, lack of rights at work and ‘voice’ through effective representation by trade unions and similar organizations, and, as you know well, low productivity. All of these constitutes a significant obstacle that workers and enterprises face when caught in the informal economy. That is what we call the “informality trap.”

The ILO Recommendation 204 acknowledges that the transition from the informal to the formal economy is essential to achieve inclusive development and to realize decent work for all. Given the prevalence of informal employment in the country, the Philippine Development Plan 2017-2022 makes frequent references on “informal sector” and “workers in informal economy”. The PDP further recognizes the facilitation of transition of workers from the informal to the formal economy as a strategy to manage economic risks of those in informal employment. The ILO Recommendation therefore provides guidance to facilitate the transition of workers and economic units from the informal to the formal economy but at the same time seeks the following:
  • First, promote creation, preservation and sustainability of enterprises and decent jobs in the formal economy, which is relevant to the over one million annual job creation target of the administration;
  • Second, prevent informalization of formal economy jobs,which of course is relevant to the on-going campaign on ending contractualization; and
  • The last but not least, ensure that workers’ fundamental rights are respected.
The Recommendation is also a very powerful policy tool to achieve the in the 2030 Sustainable Development Agenda as this specifically contributes to Goal 8. In particular, it is a condition for achieving target 8.3, which looks at development-oriented policies that encourage the formalization and growth of micro, small, and medium-sized enterprises.

At the national level, there have been ongoing efforts to identify key policy gaps and challenges in relation to the government’s thrust in addressing informality, as well as strategies and models to operationalize the transition from informal to formal economy. This has been led by our DOLE and NAPC-WIS colleagues here today. Efforts are also being done to transform livelihoods into competitive, resilient, and sustainable enterprises, ensure safety and protection of informal economy workers, ensure representation of workers from the informal economy in the social dialogue process.

Although a number of initiatives are being done, challenges still lie ahead as moving people from an informal to a formal employment situation is very challenging and that the processes are complicated and will definitely take time. It is easier said than done.

We believe that this activity came in the right timing as there is an ongoing discussion aimed toward a legislative measure that will address the root causes of informality and facilitate formalization of the informal economic units and its workers.

The workshop is an opportunity to take stock, raise awareness and strengthen the capacity of lawmakers, government, workers' and employers' organizations in the Philippines to discuss and assess promising practices on formalization of enterprises and workers as well as reflect on the components of a road map to promote the transition to formal employment and enterprises, within the framework of ILO Recommendation 204.

Moreover, this workshop aims to foster tripartite discussion and consensus building on issues related to formalization policies and intervention strategies as well as shedding the light on the roles and responsibilities of social partners to engage with governments and other key actors and players on elaborating and implementing successful models.

With that said, it is my hope that we will continue to work more closely towards bringing significant improvements in the lives of workers and thereby contribute to a truly inclusive development in the Philippines. May you take this opportunity and the presence of various stakeholders to discuss measures promoting the transition to formal economy, paving the way for the design of an integrated policy framework.

Finally, I look forward to the productive and rich discussions that will come out of this awareness raising workshop.

Thank you!