Thank you to all of you for being here today. Job creation in the informal economy is the key issue for the future of many of our countries and I truly wanted to have this opportunity of being present with you at the moment of launching this meeting.

This is my first time to be back in India in my capacity as Director General of ILO. So, it is a very symbolic moment for me and that is why I want to thank you, very particularly Mr. I.P. Anand, who had a lot to do with my being present here today. He is a great friend of mine; I admire him enormously and I want to thank him for the role he has played to make sure that I would be in India today. Minister Dhindsa, I want to thank you for your presence here in representation of the Government together with the Secretary of the Ministry of Labour, Dr. Mishra, who plays such an important role in our Governing Body.

It is a particular pleasure for me that Mr. Manmohan Singh is chairing this session. All of you of course know his role in the intellectual and political life of India. I also have to say that he is a symbol of the contribution that India has made to the international community in so many different spheres. And I am very proud that he is here with us today. Mr. Thüsing is Employer Vice-Chairperson of our Governing Body and his presence is also very important. I want also to thank Mr. Narsimham, who speaks later on, and all the authorities from Haryana State who are also with us.

India, over the years, has been central to both my thinking and my world of action. As I stand here today the images of different 'Indias' across the ages pass in front of me. The India of Tagore, which for a Chilean is very important because he was a very good friend of Pablo Neruda, the famous Chilean poet who was also a Nobel prize winner. The India of Gandhi; I visited his resting place today and when you see the list of seven sins that Gandhi formulated in 1925 and then you look at the world of globalization today and you go through them one by one, you see that every single one of these sins is the right question to pose today. A certain world is being created, people have a right to ask what is this world and even how should you be responding to the seven questions Gandhi posed already in 1925. The India of Nehru and the search for independence and identity after colonialism; the fight for that and for the country that was going to become the biggest democracy in the world. These are the things that make India what it is and these are the reasons why you are such an extraordinary country and the reason for which I am so happy that I am here with you today.

India has also played a key role in the ILO almost from its inception. In 1928, the ILO opened its branch office in New Delhi. The ILO field office for Asia was set up in Bangalore in 1949 from where the ILO covered all of Asia for many years. This may be seen as an acknowledgement of the leadership of the Indian Government, the Employers' and Workers' representatives and their contribution to the ILO's technical and substantive work throughout the last century. For these and many other reasons, it is a privilege to be able to join you in opening this important workshop on Job Creation in the Urban Informal Sector of India.

Let me turn to the issue that has gathered us together today. This is a key subject which demonstrates the relationship between the ILO and India. Many of you no doubt know that the term "Informal Sector" was launched by the ILO in 1972. Just to refer to a little bit of history; when my friend Prof. Hans Singer led the Employment Strategy Mission to Kenya in 1972 he was struck by a phenomenon that did not fit into traditional economic analysis, and this is what was then called the informal sector. He reported that the informal sector provides income earning opportunities for a large number of people, though it is often regarded as unproductive and stagnant. He saw it as providing a wide range of low cost labour-intensive, competitive goods and services. Continuing to quote from his report: "a most important consequence of low income was the primacy of risk and uncertainty. We therefore advocate a positive attitude on the part of the Government for the promotion of the informal sector".

Since 1972, the informal sector has grown in developing, transition, and developed economies and continues to attract tremendous attention. Statistics vary. According to one estimate, the informal sector represented 43 per cent of non-agricultural workers in North Africa in the beginning of the last decade, 74 per cent in Sub-Saharan Africa, 57 per cent in Latin America, 63 per cent in Asia and 88 per cent in India. But this is not the whole story. What is now being observed is the growth of a wider informal sector and I think we do need to move to a new concept, that of the informal economy, which permeates all countries and represents up to 15 per cent of GDP in developed countries, according to some data. One could and should research further these numbers, because there are many different ways of measuring the informal economy. But the fact remains, the informal economy is large and increasing, particularly in times of economic downturn. This has been the case during the Asian crisis under the pressure of deregulation of labour markets. In 1999, virtually all new jobs generated were in informal activity in Latin America. In Africa the informal sector accounts for 60 per cent of the urban labour force, and 80 per cent of its growth, while formal employment is declining.

The conclusion that I would like to draw from this is that we have, on the one hand, as a result of the global economy now being shaped, the growth of a knowledge economy, the network society, the information technology revolution that is driving many of the changes that occur in the world, and on the other hand, and at the same time, the growth of the informal economy in all sectors of production. And this is probably one of the biggest dangers in front of us - the digital divide, which, is expressed by this new duality of the knowledge economy, of financial services, entertainment, the media, the things that we see in the press every day.

When you look at television, you are accustomed to hearing a lot about market fundamentals. But, you sometimes feel that people are forgetting about the fundamentals in peoples' lives. We have to be able to make the market work for everybody. We have to link market fundamentals to the fundamental needs of people. This is probably the biggest challenge that we have in front of us. Probably the way in which this tension is most clearly expressed, reflecting the fact that markets and globalization are not reaching enough people, is the growth of the informal economy. That is the biggest analytical, intellectual, and I would say, political challenge. How can we marry the potential, the creativeness, the richness, the entrepreneurship of the new economy with the fraction of our societies that are not part of it, but that should be part of it if we want to ensure stability in the future. One of the areas about which I believe we have to think concerns small enterprises, because they may provide the link. The small enterprise lives in a world that hovers between the informal economy and the more formal economy. I believe that this is a vast challenge for the ILO.

The strength of the ILO is precisely the presence of the three constituents, the employers, the workers and governments and I want to salute all representatives of employers and trade unions organizations that are here today because they confirm an essential dimension of what the ILO is about. Their vision and the way they perceive the scenario is very important. Why? Because the whole informal economy is precisely an area in which employers' organizations and workers' organizations are present, whereas governments have a big problem in reaching into it. Within the informal economy there are many people who are working on their own, isolated, generating a means of survival and no more. We have to be able to transform that basic instinct of survival into something that belongs, into something that is inclusive, into something that happens in the context of the society and not on the margins of society. This is, I think, the great challenge of your meeting today.

How can we make that happen? I believe that from an ILO point of view we must zero in on small enterprises. I am talking about a range that goes from self-employment and micro-enterprises, through different forms of sustainable livelihood into more and more organized and structured forms of enterprises, so it is a very wide spectrum that I am referring to. Look at what happens in the real world. It is probably more difficult to create a small enterprise than a big enterprise in the world today. It is ridiculous but that is the way it is. And the reason is because the small entrepreneur to begin with does not have a credit record, so the bank says sorry, I cannot lend to you because what happens if you go broke. And this goes on and on. The large enterprise benefits from a number of externalities, as a result of ownership of capital, of the knowledge factor, etc. But individual small entrepreneurs do not have these advantages. I think that from an ILO perspective the single instrument that in the future can make a difference is if we transform the small enterprise from being at the margins of the political economy and at the margins of the global economy, and we put it at the centre.

If we put the small enterprise at the centre of the future, we are going to be able to begin solving the problem of meeting people's aspirations for employment and jobs. Large enterprises, large transnational and multinational corporations may be the providers of trade, technologies, finance and of other things that are part of the economy, but they will not provide large numbers of jobs. So we need to interrogate the global economy of today, and ask who will be the providers of jobs. From where will the employment needs of our societies be met? The answer is that it is essentially in small enterprises that jobs are being created today.

I believe that we have an enormous interest in trying to make small enterprises the source of those jobs that are needed, but for that we have to develop radically different attitudes. If you look at the government side, there is no single government that does not have a Small Enterprise Department, but the fact is that this is not an issue that can be properly tackled by governments. If you look at banks, they usually do have a window for small enterprises, but it is always a small window for small enterprises. It is not a big window for small enterprises. Regarding organization, I ran into a very surprising situation in a particular country, it was a developing country. I was invited to meet with the trade unions, and people began to introduce themselves. Sitting in the meeting was the Head of the Association of Small Enterprises of that country. Of course, I was surprised seeing that person sitting there, but he said, look, you may be surprised to see me here, feeling comfortable, but for this country and this reality small enterprises have more interests in common with the trade unions than with the big enterprises. I am just reflecting on things I have seen, and they may or may not be typical, but clearly there is a question of representation which needs to be looked at carefully.

So there is a need and a potential for a new and different look at this area. I would very much like to make the ILO the centre of world reflection on the process of creating small enterprises, and consequently of creating jobs, the decent jobs that our countries need. And I think that we have the potential to do this because it also brings together very strongly the employers' interest, the trade unions' interest and the governments' interest in generating employment. The ILO is well placed to help in building consensus among its tripartite partners. Indeed, we are already doing a number of things in this field, and in particular have just launched a new major programme on boosting employment in small enterprises.

I think that employment and workers' rights go hand in hand. Probably one of the biggest enemies of workers' rights is unemployment. If you are do not have work, on the whole you do not benefit from workers' rights, and at the same time any increase in the pool of the unemployed diminishes the capacity for negotiation of those who are employed. So employment is fundamental for workers' rights. You sometimes hear comments such as, "it is better for people to have their noses above the water than to be drowning, so let us not care too much about the working conditions provided there is employment". That may be true for a moment, but, in the long run we all know that this is not sustainable. So if we are talking about the informal economy, right from the start we have to have the perspective, even if it is not immediate, of making it part of the formal economy, in order to defend rights and assure protection. How can we make sure it moves in the right direction, even if there is first a period of time in which it stays at a certain level? The only sustainable process would be one in which the working conditions and the processes in small and informal enterprises become part of a much wider framework of economic growth, social stability and recognition of social protection.

Something that worries me is that we have a big debate in the world about social protection, focussed on whether it should be public or private, whether individuals should be responsible for their own security or whether the state should intervene, whether the money is going to be there to pay for the benefits of increasing numbers of older people. The ILO is following these debates and contributes with analysis and views, but here we are faced with a different problem, that the majority of people in the world do not have social protection of any kind. That is the reality and let us not confuse ourselves as to the nature of the problem. On one side there is a discussion as to the best way of ensuring relatively decent forms of social protection. On the other side there is nothing.

So these are the questions that I believe ILO has to pose in a constructive way, in a creative way, in a consensus building way, acknowledging the problems, without attributing fault to one side or the other. Everyone has something to contribute to solve the problem. And what I feel is my responsibility is to obtain from everyone the willingness to put something on the table in order to solve the problem, rather than thinking that "I am going to lose by sitting down at the table". It is this sort of social dialogue which I would encourage at the national level and which it is ILO's responsibility to promote - and of course it is also a shared responsibility of the employer, worker and government representatives in ILO within the country, to promote the idea of sitting down together to try to reach solutions in the same way as when we sit down in Geneva.

Let me finish by saying that I think two things cut across all of this. In a seminar on the urban informal sector we are inevitably talking about women, about the situation of women in the whole productive sector, whether working in enterprises, at home or elsewhere. One of the things that strikes me when I travel in Latin America is the large number of women, who when they are asked, "do you work?", say "no, I do not work", but in reality they are working 15-16 hours a day, only they are not in formal employment, they are engaged in informal work and care work and work in the home. In your discussions the work of women is absolutely the key to understanding informal work, and if we do not get that equation right, and we just use more traditional conceptions of employment, a lot of the action is going to be missing.

The other thing that we need to talk about is entrepreneurship. There is an incredible amount of entrepreneurship in the world. Information technology, for instance - people decided to do it and they did it. That is extraordinary. A couple of kids began working in a part of their house, and that was Bill Gates. Somehow they have done this incredible thing. A company that only started ten years or so back grows to the point where it can go out and buy the biggest entertainment business on the market. So obviously entrepreneurship is out there, strong and alive and quite extraordinary.

The other side of the picture is that I believe that the biggest entrepreneurs of all in the world today are the poor people that have the guts to subsist. It is the people that were born into conditions that would condemn them, and yet they subsist, they struggle, they live through it. It is day to day, they do not have a long term perspective. It is today and tomorrow, and then tomorrow again. And it is this entrepreneurship that we have a responsibility to back. It is that will to live, it is that commitment to life. It is that belief that in the end it is worthwhile for them to have that energy. How can we look away when that is happening? Is it not our responsibility to be absolutely beside that person and help him or her work out how, and in which way, what is the form, what is the policy, that will give you that energy to transform yourself and your situation towards a life in which your family will be better off? So when we talk about entrepreneurship let us not forget that type of entrepreneurship, which is probably the single most important energy in this world.

One of the things that worries me most is that when we discuss policy we often do not make connections, we do not realize that the unemployed person means a very unhappy family. A family that does not have a regular income is a family in which there are more possibilities for violence, violence against women or violence against children, or for linkage with drugs or for petty crime or for all the other things that add up what are sometimes called "dysfunctional" families. But how can you call a family dysfunctional if it is because a person was not able to find an adequate job, and loses his dignity as a human being. Can we say, well, it is that person's fault, he was not up to it, he was incompetent, incapable? This is what one sometimes hears, from those who put too much emphasis on individual responsibility. I think personal responsibility is important, it is the key in order to move forward, it makes a major contribution to economic and social progress. But it is only part of the story, and society has major responsibilities too, society has to be present to support those who are disadvantaged and to accompany the people who want to fight and who have that energy.

So I want to end with that notion. Every time we are talking about a policy option we are talking about life options, every policy has its impact on the life of people and we cannot disassociate policies from people and simply say, this is going to be very hard and stop there. We have to say, this is going to be very hard and this is the way we are dealing with the harshness of it. Both things go together. The need is to combine economic efficiency and social efficiency and this, I believe, is the essence of resolving the policy tensions that we have in front of us. We have to make economic efficiency and social efficiency operate at the same time and not separately.

Thank you so much for the opportunity of opening this session and I want to say that I look forward to your conclusions, to the different things that are going to be said here. This is a key moment in your country, a key moment worldwide for the issues we are going to discuss today. You can be absolutely sure that your conclusions and the policy lines or ideas and the sensitivities that emerge in your debate will leave a very strong influence on the work that we do in the ILO. Thank you, thank you so much.

Updated by GS. Approved by MJ. Last update: 4 July 2000.

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