Informal economy

Informal employment is generally a larger source of employment for women than for men. The majority of poor and extremely poor workers are found in the informal economy.

Informal economy workers, and in particular women, often work in the most hazardous jobs, conditions and circumstances, and are especially vulnerable and unable to defend themselves against natural and man-made hazards and problems. The vast majority of these workers are not covered by social security schemes, occupational safety and health measures, working conditions regulations and have limited access to health services.

The International Labour Conference (ILC), in its 89th session in 2001 on social security and in its 90th session in 2002 on the informal economy has placed the extension of coverage to excluded people, in particular in the informal economy, as the new priority of the ILO in the field of social security.

Thus, the ILO launched in 2003 the Global Campaign on social security and coverage for all.

This new priority has been translated by the Social Security Department into several strategic directions :

• Improve the knowledge base on main risks faced by informal workers and current strategies they use to face these risks. Research in this field includes needs assessment of specific groups of informal workers, both men and women, review of "traditional" arrangements to cope with risks, analysis of interaction between informality, social protection and poverty.
• Extend coverage of existing formal social security schemes. Numerous examples show that the coverage of such schemes can be extended to some categories of workers in the informal economy. It should also be noted that incentives to formalization are limited if social security schemes do not function effectively and efficiently. Therefore, improving governance and the financing of social security is part of the overall effort to extend coverage.
• Develop community-based schemes such as micro-insurance. The Social Security Department, mainly through its STEP Programme , tests approaches to scale-up and increase the efficiency and sustainability of such schemes. It has developed a comprehensive set of tools on micro-insurance. It explores the best ways to link community-based schemes with public efforts to extend coverage, including the role that the schemes can play with regard to equity subsidy redistribution.
• Explore opportunities for the provision of access to cash transfers for vulnerable groups of the population. Experiences from many countries show that regular minimum cash transfers can be an affordable, effective and efficient means to reduce poverty. Such programmes include conditional child benefits, social pensions and targeted cash transfers for the poorest in the informal economy.
• Increase international financing of social security to extend coverage to unprotected workers. The Social Security Department has developed an innovative concept: the Global Social Trust. It connects the global, national and community levels of social security financing. The basic idea is to request socially insured people in richer countries to contribute on a voluntary basis a modest monthly amount that will be invested to support the build-up of national social security programs in developing countries.
• Integrate the different strategies to prevent and compensate occupational and social risks in the informal economy. Integrated strategies that include measures to prevent risks and to mitigate their impact are the most effective. The Social Security Department participates in the ILO Social Protection Sector initiative to develop a comprehensive approach that combines actions related to occupational health and safety, working conditions and social security.
• Link the extension of social security with working conditions, job creation and income generating activities in the informal economy. The Social Security Department tests innovative approaches to link social protection with job creation and income generating activities including local economic development, cooperative development, skills development, employment-intensive programmes, in the framework of integrated strategies for poverty reduction and the fight against social exclusion.