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Trade unions and the informal sector:Towards a comprehensive strategy
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Country |
Year |
Percentage of total employment |
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Total |
Men |
Women |
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Bolivia |
1996 |
57 |
53 |
62 |
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Chile |
1997 |
30 |
32 |
27 |
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Colombia |
1996 |
53 |
54 |
53 |
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Côte d’Ivoire |
1996 |
53 |
37 |
73 |
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Ecuador |
1997 |
40 |
39 |
42 |
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Ethiopia |
1996 |
33 |
19 |
53 |
|
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Gambia |
1993 |
72 |
66 |
83 |
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Madagascar |
1994 |
43 |
43 |
43 |
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Mexico |
1996 |
35 |
36 |
34 |
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Peru |
1996 |
51 |
50 |
52 |
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Philippines |
1995 |
17 |
16 |
19 |
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South Africa |
1995 |
17 |
11 |
26 |
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United Rep. of Tanzania |
1995 |
67 |
60 |
85 |
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Uganda |
1993 |
84 |
68 |
81 |
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Source: Based on data from the ILO contribution to the 1999 World Survey on the Role of Women in Development (forthcoming). |
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It is evident from the table that the informal economy makes a very significant contribution to production and job opportunities. Consequently, the removal of the informal sector without a dramatic increase in the size of the formal economy would significantly exacerbate problems of unemployment and poverty in these countries.
Moreover, the economic significance of the informal sector seems to be increasing in most developing countries. For example, ILO estimates indicate that in Latin America more than 80 per cent of the new jobs created between 1990 and 1994 were in the informal sector. In the region, informal sector employment grew at an annual rate of around 4.7 per cent, compared with 1.1 per cent in the formal sector. In Africa, urban informal employment absorbs 61 per cent of the urban labour force, and this sector was expected to generate more than 93 per cent of all additional jobs in this region in the 1990s. In Asia, before the financial crisis began in 1997, it was estimated that the informal sector absorbed between 40 and 50 per cent of the urban labour force, with differences between the newly industrializing countries (less than 10 per cent) and countries such as Bangladesh, where the sector’s employment share was estimated at 65 per cent (ILO, 1997a).
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Country (year) |
Non-agricultural |
Total |
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Informal sector as a share of non-agricultural employment (%) |
Informal sector as a share of non-agricultural GDP (%) |
Informal sector as a share of total employment (%) |
Informal sector as a share of total GDP (%) |
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Benin (1993) |
93 |
57 |
41 |
37 |
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Burkina Faso (1992) |
77 |
40 |
9 |
25 |
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Chad (1993) |
74 |
45 |
12 |
31 |
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Colombia (1992) (10 metropolitan areas) |
55 |
18 |
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Fiji (1990) |
43 |
2 |
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India (1993-94) |
47 |
63 |
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Madagascar (1995) (Antananarivo) |
26 |
17 |
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Mali (1989) |
79 |
42 |
13 |
23 |
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Mauritania (1989) |
75 |
14 |
10 |
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Mauritius (1992) |
24 |
19 |
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Niger (1987) |
30 |
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Philippines (1988) |
26 |
12 |
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Senegal (1991) |
76 |
41 |
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United Rep. of Tanzania (1991) |
22 |
32 |
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United Rep. of Tanzania (1995) (Dar es Salaam) |
30 |
65 |
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Thailand (1995) |
6 |
1 |
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Tunisia (1995) |
49 |
23 |
38 |
20 |
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Source: Du Jeu (1998). |
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1.3. Activities and occupations in the informal sector
The informal sector is heterogeneous in terms of activities and actors. Sectors of the economy involving informal operators include commerce, agriculture, construction, manufacturing, transportation and services — in other words, virtually every sector. The informal financial sector, including money lenders and money changers, plays a major role in many countries. Almost all crafts and most other occupations can be found in the informal sector: hairdressers, beauticians, money changers, bidi workers, rickshaw pullers, plumbers and mechanics, head load workers, garbage pickers, vegetable sellers, kiosk operators, second-hand clothes dealers, tailors, textile workers, wood carvers, watch repairers, furniture carpenters, charcoal dealers and domestic servants.
For analytical purposes in this paper, the informal sector workforce will be grouped into three main segments: owners or employers of micro-enterprises, own-account workers and dependent workers. The first segment corresponds to the owners or employers of micro-enterprises who employ a few workers and/or apprentices. They do not generally constitute a target group for trade union organizing policies. They may, however, represent a potential negotiating partner since they are directly or indirectly involved in an employment relationship with many of the informal sector workers that trade unions might attempt to represent.
The second segment comprises own-account workers, working alone or with unpaid employees. It includes mainly the self-employed and is the largest segment in the informal sector.
The third segment encompasses dependent workers, engaged in full-time or casual employment. It includes wage labourers engaged in micro-enterprises, generally without a formal contract and working on a regular or casual basis, unpaid workers, including family members and apprentices, homeworkers and paid domestic workers.
In many respects, the problems of workers in the informal sector are closely related to their employment status. For example, the problems facing a street vendor differ substantially from those of a homeworker. Within the same group of workers, the position of men and women differs. Despite these differences, precariousness and vulnerability apply to both the self-employed and the dependent workers in the informal sector in so far as they operate beyond the scope of legal and social protection.
The self-employed create their own one-person business. They work alone or with unpaid workers, generally family members and apprentices. The efficiency of their activities is often hindered by a lack of credit for small investments; technical skills for conducting their activity; raw materials and access to water and electricity supplies. Despite their self-employment status, they may be dependent on other people for their premises and credit. They generally do not have access to the loans of credit institutions because they cannot offer sufficient economic security, and often need to borrow sums that are insufficient compared with the administrative costs of loans. As a result, they are susceptible to exploitation by money lenders. They generally cannot afford the fees charged by official training institutions, and the courses offered by the latter are not necessarily adapted to their basic needs. Their workplaces are often unhealthy and hazardous and sometimes located in areas that discourage potential buyers.
The situation of the self-employed in rural areas deserves special attention, because of the large share of the agricultural labour force in the total economically active population in developing countries (59 per cent) (ILO, 1999a). Reduced trade barriers and other reforms associated with the restructuring of the world economy during the last two decades have resulted in reduced waged employment in agriculture in many developing countries. As a result, the distinction between waged rural workers and the rest of the working population becomes less clear, with everyone working in agriculture facing similar hardships. Evidence suggests that self-employment and casualization of the rural workforce are on the increase in many developing countries. Among the categories of rural non-waged workers or "self-employed" as defined by the Rural Workers’ Organisations Convention, 1975 (No. 141), are smallholders, sharecroppers and tenants; they also include other landless people living in rural areas often with little or no security of tenure in relation to the land they work (ILO, 1990). These categories of workers constitute most of the rural informal sector. This sector is the largest category in the rural class structure in developing countries and is at present growing steadily. A study carried out by the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) reveals that in countries for which data are available for 1988, the smallholders’ sector accounts for 52 per cent of the rural population and the landless sector for 24 per cent. Latin America has the most disturbing statistics on socio-economic polarization. It is estimated that 71 per cent of agricultural households in this region are now landless or nearly landless (as compared with 69 per cent in 1988), while in Brazil, for example, 1 per cent of landowners control 44 per cent of productive farmland (IUF, 1997).
Street vendors, the majority of whom are women, represent a significant percentage of the workforce in the informal sector. These vendors are certainly the most "visible" component of the informal sector and play an important role as suppliers of a wide range of goods to low- and middle-income families. But they are often seen as a nuisance and sometimes even as a threat to security by the police and municipal authorities. Shopkeepers regard them as unfair competitors. Therefore, they are regularly subjected to harassment and eviction from public areas. Because of the public location in which they operate, their goods can easily be destroyed by natural disasters (such as fire or water), stolen or confiscated. Access to space and basic facilities, such as water and electricity, are their major concerns.
Paid workers in micro-enterprises often face harsh and unsafe working conditions and generally do not have access to many of the benefits that workers in the formal sector receive, such as old-age pensions, health and invalidity insurance, limits on regular working hours and penalty payments for overtime, paid leave and maternity protection. They have limited or no industrial relations strength, they are usually unorganized, and their wages and employment conditions are determined unilaterally by the owner of the micro-enterprise. They can be engaged on a regular or casual basis. In the latter case, they have limited employment security.
Unpaid workers are mainly family members and apprentices. Women and children represent an important percentage of these workers. This type of employment is not necessarily recorded in statistics and is often unpaid because of cultural traditions. Unpaid work is extensive in rural areas.
Workers engaged as contract labour in the informal sector are often at the very end of an invisible chain of subcontractors. In addition to the problems faced by paid workers, they operate in circumstances which enable the employer to avoid legal responsibility for controlling working conditions. This has a direct impact on their occupational health and safety conditions, including hazards due to exposure to chemical agents, or inappropriate weights or technology.
Homeworkers are one of the most "invisible" groups in the informal sector. The total number of workers within this group is certainly underestimated. Nonetheless, anecdotal evidence suggests that homeworking is on the increase all over the world. In developing countries, women represent the majority of these workers. In many societies, for cultural and religious reasons, home work is the only possible way for women to satisfy family responsibilities and income needs. Home work, as defined by the ILO’s Home Work Convention, 1996 (No. 177), refers to work carried out by a person, for remuneration, in his or her home or in other premises of his or her choice, other than the employer’s workplace, which results in a product or service as specified by the employer, irrespective of who provides the equipment, materials or other inputs used. In general, homeworkers are not covered under national labour legislation. The majority of homeworkers work under verbal agreements and therefore their dependent employment status is not recorded and their employer is hidden behind several levels of subcontractors. This deprives them of access to social security. Their working conditions are usually unhealthy and they commonly suffer from overwork and stress. Homeworkers are generally underpaid and, because of competition, are forced to endure long hours of work.1 They are totally dependent on the "middleman" to get work.
Women represent the majority of paid domestic workers. Like homeworkers, they are not visible and their number is underestimated because they are rarely covered in national statistics. However, evidence suggests that these workers constitute a large part of the female labour force in the informal sector in developing countries. Their main problems are long working days, low wages and the daily threat of dismissal. They are exposed to exploitation and sexual harassment.
1.3.2. Mobility of the workforce and complementarity
of the sectors
The above classification of informal sector workers does not adequately reflect the complexity of the sector. In the real world, no clear-cut borders exist between the above segments and there is constant mobility of workers between different employment categories and even occupations, depending on the time of year, the economic situation and the demands of their survival strategies. It may happen that a hired worker leaves the micro-enterprise employing her to set up a business, thereby becoming self-employed or even a micro-entrepreneur. Alternatively, she may hold two jobs or more at the same time. Homeworkers can be engaged in paid labour for some periods and sell directly the same goods and services for the rest of the year. In rural areas, many smallholders supplement their subsistence farming with casual work on large commercial farms during harvesting periods or with non-farming activities at a convenient time of the year. Workers on commercial farms cultivate small vegetable plots, and engage in the production of handicrafts or in other activities in order to supplement their meagre wages.
There are also strong links between the formal and informal sectors. A considerable percentage of workers belong to both the formal and the informal sector. Moreover, households are often part of both sectors, with one member — usually a male — working in the formal sector, and another member — generally a female — working in an informal sector job or running an informal sector business (Venkata Ratnam, 1999). Formal enterprises rely on informal workers to a very large extent to supply services, and the lower- and middle-income groups of the formal sector buy goods and services in the informal sector. The producers and traders in the informal sector have to buy most of their materials and merchandise in the formal sector; often they work as suppliers or subcontractors for formal enterprises. This establishes a mutual dependence, though an asymmetrical one, since informal work can easily be substituted.
While it is true that both men and women work in the informal sector, their position differs in many respects, for example in terms of hours and type of work and also remuneration. The female workforce is concentrated in petty trade and services, where little capital and only low vocational skills are required to start an activity. In the trading sector women are mainly engaged in small own-account activities such as selling food, while male traders tend to have larger-scale operations and to deal with non-food activities. In manufacturing, women are mostly in contract work or unpaid family work. In industrial home work, men usually play the role of subcontractors or are responsible for activities such as collecting raw materials and delivering the finished work. They rarely work at home themselves. In the construction, transportation and services sectors women are mainly engaged as casual workers.
In gaining access to credit, women often have to face additional problems caused by cultural and religious factors that exclude them from property ownership as well as from loans without their husband’s approval. Ignorance, high levels of illiteracy and cultural taboos are other factors pushing women towards the lowest paid and most precarious forms of employment in the informal sector.
2. The role of the State in the informal sector
The attitude and policy of the government towards the informal sector will significantly affect the magnitude and the quality of employment in this sector as well as the influence that own-account workers, dependent workers and micro-enterprises in the informal sector exert on other components of the economy. Government policy towards the informal sector varies between countries and has evolved over time in accordance with changing political ideologies and perspectives on the theory of economic development. It does not exist in a vacuum, nor is it unrelated to broader political and economic thinking among government policy-makers.
The role of the State is therefore critical to any policy discussion among trade unions concerning the informal sector. It is essential that trade unions develop and promote a coherent view as regards what economic, legal and administrative policies governments should adopt in relation to the informal sector.
2.1. The impact of deregulation and structural adjustment policies on the informal sector in the 1980s and 1990s
During the late 1970s and 1980s in most developing countries and many industrialized countries economic growth was either non-existent or insufficient to absorb expanding populations; and job creation was too slow to prevent an explosion of unemployment and underemployment. For those lucky enough to have a regular job, real incomes declined, working conditions deteriorated and job security vanished. For the remainder, the only alternative was to try to scratch a living in the informal sector. The important contribution that the informal sector has made to the economic survival of billions of workers is undeniable, and it is acknowledged that there is often considerable entrepreneurial spirit and creative potential within certain components of the informal sector. Very often, mutual support systems emerge in the sector which enable workers to cope with problems and harness new opportunities. Self-help and self-finance networks develop within the informal sector, based on families or friends. In short, informal sector workers are usually innovative, dynamic and flexible — but poor.
It is also generally recognized that the quality of work, the standard of living and the degree of exploitation of workers in the informal sector are unacceptable. Consequently, working in the informal sector amounts to little more than a survival strategy or a second-best solution for the vast majority of people who find themselves confined to working in that sector. Nevertheless, many people would say that a low income is better than no income at all and that any job is better than no job. Despite major concern for the welfare of workers in the informal sector, trade unions would generally concur with these sentiments, provided that public policy is directed at trying to improve the position of workers in this sector and integrate them into the formal sector.
In an effort to reduce the exploitation of workers, it being recognized however that the informal sector can make a valuable contribution as a survival strategy for those outside the formal sector, attempts have been made to strike a balance. For example, the ILO’s Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169), calls on member States to recognize the importance of the informal sector as a source of jobs while seeking "progressively to extend measures of regulation to the informal sector", even though account should be taken of the fact that integration of the informal sector may reduce its ability to absorb labour and generate income, at least in the short term.
Part V of the Recommendation, devoted to the informal sector, recommends that member States: (i) elaborate and implement employment promotion programmes to encourage family work and independent work in individual workshops; (ii) promote complementary relationships between the formal and the informal sectors; (iii) provide greater access for undertakings in the informal sector to resources, product markets, credit, infrastructure, training facilities, technical expertise and improved technology; and (iv) seek to facilitate the progressive integration of the informal sector into the national economy while taking measures to increase employment opportunities and to improve conditions of work in the informal sector.
With regard to small undertakings, the same ILO instrument recommends that necessary measures be taken to improve not only the access of these undertakings to product markets, credit, technical expertise and advanced technology but also the working conditions in these undertakings.
However, it is evident from the data presented in the previous chapter about the growth of the informal sector that this strategy of gradual formalization is simply not working. While policies and programmes developed to assist small enterprises are generally addressing entrepreneurs’ problems of access to product markets, credit, technical expertise, advanced technology and managerial skills, the improvement of working conditions in the enterprises is rarely targeted as a goal per se. The justification for this lies in the often unstated assumption that once these enterprises take off, workers’ terms and conditions of employment will automatically improve. This assumption is based on a "trickle down" theory of economic and social development that has proved to be unrealistic.
The dramatic expansion of the sector and its apparent relative "success" when compared with declining job opportunities in the formal economy have induced a romantic view of the informal sector in some circles. During the 1980s and most of the 1990s an excessively optimistic perspective on the informal sector was popularized by the proponents of neoclassical economic theory. Consequently, the development of public policy concerning the informal sector in the last few decades must be seen in the context of the pervasive influence that the standard structural adjustment policies, imposed by the international financial institutions, have exerted on economic development.
As part of the neoclassical paradigm, a new and controversial view of the informal sector emerged. According to this line of thought, rather than trying to restrict or regularize the informal sector, governments should concentrate on creating an enabling environment for it. It was argued that the high costs and the time involved in registering a business, the complexity of administrative procedures and the inadequacy of the regulations to meet the informal sector’s needs acted as deterrents and discouraged entrepreneurs from legalizing their activities. At the centre of the criticism was the assertion that the costs of compliance with labour legislation were particularly excessive, and that this resulted in firms remaining in the informal sector. In addition, for enterprises in the formal sector it was argued that high labour costs would encourage entrepreneurs to reduce their workforce and substitute more capital equipment for labour. In either case, the neoclassical economists claimed that the outcomes were economically inefficient and society as a whole would suffer.
The response advocated by the neo-liberal economists, and at times by the international financial institutions, was to remove the barriers between the formal and the informal sectors by eliminating or reforming a range of regulations in fields such as labour legislation, minimum wages, social security, workplace health and safety, and taxes, as well as regulations concerning the registration and administration of an enterprise. The proponents of these reforms argued that they would free private initiative and the economic potential of the self-employed and micro-enterprises operating in the informal sector (de Soto, 1989). The whole emphasis switched to deregulation and withdrawal of the government to ensure that the private sector was not "crowded out" by public investment or overburdened with government red tape. These policies were pursued first, and most vigorously, in a number of Latin American countries, but they spread to other regions and assumed centre stage globally.
This policy towards the informal sector was part of the broader laissez-faire approach to economic policy and the dominance of sheer self-interest in the 1980s and most of the 1990s. In this period the focus of economic policy narrowed from the pursuit of broad-based development, full employment and high levels of income for all to concentration on fighting inflation, encouraging private investment and promoting market forces at all costs. The policy package advocated by neoclassical economists for developing countries also included devaluation of the currency; removal of subsidies for basic commodities; reduction of government expenditure on education, health and social protection; employment reductions in the public sector; labour market reforms to increase flexibility and mobility in the formal sector; and reduced trade protection.
The rationale for this policy package was a belief that all government intervention was bad: that government cannot make a positive contribution to jobs and growth and that the economy should be left entirely to market forces. In developing countries it was argued that government intervention had distorted or removed the incentives for export industries, particularly primary industries in which developing countries were thought to have a comparative advantage. The policy measures mentioned above were designed to remove or reverse this situation, thereby creating incentives to increase the production of exportable goods, mainly in the agriculture and resource extraction sectors of the economy. Stabilization policies were also designed to reduce the disposable incomes of urban wage earners and their expenditure on consumption, thereby reducing the demand for imports. The stabilization and structural adjustment policies were expected to stop inflation, correct balance-of-payments problems and encourage private capital inflow. In talking about the policy package in the 1980s, neoclassical economists and representatives of the International Monetary Fund and the World Bank would often talk about "getting the prices right", by which they meant creating the incentives for entrepreneurs in developing countries to produce more basic exportable commodities.
The outcome of these policies was detrimental in most countries. The promised economic rebound through export-led growth failed to materialize in most countries, and unemployment and underemployment increased, while access to health, education and other social services diminished. At the same time, however, marked inequalities in income, access to work and the quality of jobs were reintroduced both within countries and between countries. In part, these inequalities derived from promoting a global economy and powerful multinational companies while simultaneously strangling social protection at national level, eroding worker solidarity and replacing collective responsibility with individualized working relationships.
In most countries the national trade union centres opposed the basic thrust of this policy because of its harsh social impact and failure to produce the promised benefits in terms of economic and employment growth. The international trade union movement consistently pointed to several fundamental problems with the timing, ordering and packaging of stabilization and structural adjustment policies. Trade unions argued that policies should be more country-specific, that the stabilization component was excessively stringent, and that the structural changes should be spread out over a longer period of time and be the subject of tripartite dialogue.
Trade unions also argued that the promotion of tradeable goods through devaluation of the currency and alterations to price incentives was an insufficient response to the economic problems facing most developing countries. In economies with low development, characterized by an absence of basic infrastructure, and by underdeveloped markets and entrepreneurs, and where producers have only a limited knowledge of production technology and market possibilities, it would be unrealistic to expect an automatic supply response to price adjustments resulting from devaluation. In many developing countries dependence on a limited range of primary commodities for export has been a major source of vulnerability to fluctuations in the terms of trade. Therefore, trade unions consistently argued that it was important to achieve an improvement in the trade balance through a diversification of the structure of exports rather than simply selling more primary products. They also argued that production of higher value, non-traditional exports required a redirection — rather than a reduction — of public investment into productive infrastructure and human capital development. It also called for the development of capital markets and new innovative credit schemes targeted at small producers.
It is evident that the response being advocated by trade unions to the structural adjustment programmes and economic problems of developing countries was, and remains, completely inconsistent with the simplistic notion that economic growth and prosperity can be rapidly generated by removing legislative, tax and administrative controls over industry and the informal sector. The trade union perspective recognized that unconstrained market forces are not a panacea for all manner of economic problems and that the State has a fundamental role to play in correcting market failure and fostering economic development through investments in infrastructure, human capital development and access to credit.
The trade union perspective is supported by empirical evidence from ILO research which has, over the last two decades, attempted to examine the real reasons for the growth of the informal sector rather than basing policy prescriptions on predetermined ideological preferences (Tokman, 1992; Maldonado, 1995; Lagos, 1995). For example, Maldonado concludes that the existence of the informal sector results from the "interaction of multiple economic, political, institutional and sociological factors. This conclusion is at odds with the analysis attributing the existence of the informal sector to a single cause (with the law as the main determining factor) and invalidates the neo-liberal thesis which is itself built on a very shaky empirical foundation".
Chapter 4 will examine some possible ways in which trade unions could elaborate on the arguments described above and how, in particular, to make these policy proposals more specific to the informal sector.
2.2. The role of labour standards and labour legislation in the informal sector
The importance of labour standards and labour legislation for the informal sector can be examined from an economic perspective and from a social and human rights angle. The latter is intrinsically important, but we will first consider the former since it is closely related to the discussion immediately above.
2.2.1. The impact of labour standards on productivity
As noted above, the neoclassical model of economic development can be challenged on several fronts. For example, other models of economic development that recognize the existence of market failure, and also appreciate the long-term economic advantages that are derived from preserving and promoting the social fabric of society, lead to vastly different conclusions about the importance of labour standards and labour market institutions such as trade unions. According to the institutional or structuralist model of economic development, we should be concerned about the impact that unfair competition in the informal labour market may have on productivity in that sector and also how it might affect the long-term economic viability of the formal economy (Sengenberger, 1994; Lee, 1997, 1999). Trade unions have traditionally been concerned that in the absence of minimum labour standards a "race to the bottom" with respect to labour conditions would develop, and that this would have adverse economic as well as social consequences. Particularly in countries where there is a large labour surplus, the failure to implement labour standards, such as freedom of association, minimum wages, maximum hours of work, and occupational health and safety regulations, will encourage entrepreneurs to compete through reduced labour costs. It will also reduce or remove any incentive they would otherwise have had to compete through improved products, technology and marketing strategies. The final result is more intense competition in the labour market, increased exploitation of workers, lower productivity, inefficient allocation of scarce resources, slower economic growth and less prosperity for all. Consequently, arguments put forward by neoclassical economists which suggest that deregulation will unleash the creative potential of the informal sector and lead to innovation, greater competition in product markets and the production of higher-valued goods are erroneous.
In responding to the above points the neoclassical economist would probably argue that if it were in the economic interest of entrepreneurs to implement labour standards they would do so without being compelled by the State. Moreover, they would possibly point to surveys of informal sector operators which show that many entrepreneurs believe the financial impact of having to comply with labour laws would force them out of business and this is why they choose to operate outside the formal sector. However, the fact that micro-entrepreneurs might wish to minimize labour costs in the short run, despite the negative impact on productivity, does not necessarily mean that this is an economically rational approach. It simply reflects the fact that most operators in the informal sector are forced, by economic circumstances, to adopt a very short-term perspective. The priority for them has to be their day-to-day survival and immediate cash flow problems, because access to credit is severely limited. In their world there is no "long run". They therefore do not have the luxury of believing that observance of labour standards such as health and safety conditions will result in fewer occupational accidents, which will be translated into higher output, reduced unit labour costs and higher profits.
There is also a "free rider" problem: entrepreneurs in the informal sector will be reluctant to pursue a strategy that might involve slightly higher labour costs in the short term in order to achieve higher productivity and lower unit costs in the longer term, because they fear that other entrepreneurs will refuse to follow the same strategy. The entrepreneur who does not implement labour standards can afford to underprice those who do, and drive them out of business before they have the opportunity to enjoy the productivity benefits that flow from implementing labour standards. This is yet another example of market failure and an economic rationale for government intervention in the form of labour legislation, labour inspection and enforcement of minimum labour standards throughout the economy.
In recent years the ILO has undertaken considerable analytical work and several countries use studies to examine the "cost of legality" in the informal sector in an attempt to assess the competing claims made by the neoclassical and structuralist models of economic theory. For example, Vargha (1992) presents an interesting summary of the labour conditions that a law-abiding micro-enterprise in the United Republic of Tanzania would have to apply to its employees (excluding casual workers). They would not be under 15 years old; they would work not more than nine hours a day and 45 hours a week; they would be paid no less than the minimum wage and would receive pay regularly, in legal tender; they would have one day off in seven; they would have 28 days’ paid holiday a year; they would be provided with appropriate protective clothing and a safe working environment; the employer and employee would contribute to the national pension fund (NPF) for an amount equal to 10 per cent of wages; and employees would be insured for injury, medical aid and occupational diseases.
The costs of all the legal requirements mentioned above were evaluated roughly, and it was concluded that the main reason for entrepreneurs not respecting the legal requirements appeared to focus on high-cost items such as annual paid leave, workmen’s compensation insurance and the contribution to the NPF.
The author concluded that the enterprise could not remain viable if it had to absorb all these costs. However, she noted that some costs could be absorbed simply through better organization of the work and production process. For instance, working hours could probably be reduced and weekly rest respected if the organization of production in the enterprise was readjusted, without additional expenses having to be incurred. This would also improve the performance of the workers. Moreover, according to the author, it is obvious that workers will be better protected against injuries and illness if they are provided with adequate protective clothing. This will result in a double benefit for the entrepreneurs. First, the amount of medical expenses they have to incur and the number of workdays lost will decrease; and second, there will be an improvement in workers’ productivity.
To illustrate this, Vargha presents the example of the workers in a small enterprise in the United Republic of Tanzania producing cooking oil. The seeds from which the oil is extracted produce a large amount of dust and there is no adequate ventilation on the premises. The workers inhale this dust since they are not provided with protective masks. This damages their lungs and makes them susceptible to illness. The owner of the enterprise was conscious of the poor working environment but was not prepared to take any corrective action. However, as the author pointed out, if the owner had access to credit and could provide a more healthy environment, the benefits reaped by such investment would outweigh the cost involved in the workers’ medical expenses and labour productivity would increase. Nevertheless, even in an example like this, considering the financial precarity of small enterprises, ways to decrease the costs of certain safety and health requirements could be examined. Cheaper equipment could be imposed upon small entrepreneurs and/or the cost of such equipment could be considered as an investment cost and could be deducted from tax.
2.2.2. International labour standards and the informal sector
While strong economic arguments can be made, the social arguments for labour standards are even more compelling. The primary objective of the ILO is social justice. This has been defined in the Preamble to the Constitution as the removal of "conditions of labour ... involving ... injustice, hardship and privation to large numbers of people", and has been elaborated on in the Declaration of Philadelphia, which states that "all human beings, irrespective of race, creed, or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity". The Declaration also emphasizes the importance of pursuing policies "to ensure a just share of the fruits of progress to all, and a minimum living wage to all employed and in need of such protection".
At the core of this objective lies a solid consensus derived from the Constitution, to which all member States of the ILO are party; it was confirmed, after the World Summit for Social Development, in the Declaration on Fundamental Principles and Rights at Work adopted by the ILO in 1998. These principles and rights are defined in the core ILO Conventions relating to: (i) freedom of association, and the right to organize and bargain collectively;1 (ii) freedom from forced labour;2 (iii) freedom from child labour;3 and (iv) freedom from discrimination.4
Respect for these fundamental principles and rights is both an objective in itself and a basic means of achieving the other objectives of social policy. These rights are an objective because they are an important part of universally recognized basic human rights, and respect for them is thus a moral imperative. They are a means because "freedom of expression and of association are essential to sustained progress" (Declaration of Philadelphia) and the same is true of freedom from forced labour, child labour and discrimination. This follows from the fact that these are the enabling conditions without which workers cannot exercise countervailing power to achieve improvements in working conditions. Moreover, as a key pillar of political democracy, freedom of expression and of association are also essential for ensuring that economic and social policies advance social justice.
In addition to these core international labour standards, there is an extensive body of ILO instruments which seek to provide practical guidance to member States in pursuit of the following objectives:
(i) ensuring decent and safe working conditions;
(ii) eliminating poverty and income insecurity; and
(iii) ensuring full employment and rising standards of living.
A common criticism of the ILO approach to international labour standards is that it focuses on workers in the organized sectors of the economy. Several points can be made in response to this assertion. First, it is untrue that ILO standards are established only for workers in the organized sector. The problems of coverage arise almost exclusively at the national level, when governments have not yet been able to extend effective protection afforded by national law to all workers. Most ILO standards refer to "workers" rather than the narrower legal category of "employees". An example of the breadth of coverage can be found in Article 2 of the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), which applies to "workers ... without distinction whatsoever". The other fundamental rights are also intended to benefit all workers. The same applies to the standards on, for instance, public employment services and employment policy. At the same time there are standards specifically intended to cover workers outside the organized sector, such as those for rural and home-based workers. For example, the Social Policy (Basic Aims and Standards) Convention, 1962 (No. 117), calls for action to improve the standards of living of agricultural workers that includes the elimination of indebtedness, control over land use and alienation, and the regulation of tenancy. Moreover, where these standards initially apply only to workers in the organized sector, there is sometimes explicit provision for their progressive extension to other categories of workers. For example, as noted in section 2.1, the Employment Policy (Supplementary Provisions) Recommendation, 1984 (No. 169), includes among its general principles the statement that "Members should take measures to enable the progressive transfer of workers from the informal sector, where it exists, to the formal sector to take place". Similarly, the guiding principles set out in the Income Security Recommendation, 1944 (No. 67), after calling for the introduction of compulsory social insurance, state that "social assistance appropriate to the needs of the case should be provided for other persons in want".
Second, it should be noted that international labour standards explicitly take into account the inequality between the formal and informal sectors and contain provisions for minimizing the problem. A basic characteristic of ILO Conventions is that they stipulate minimum standards to be arrived at through tripartite negotiation and consensus and do not prescribe economically unrealistic levels of provision. There is often a provision in relevant Conventions to the effect that standards shall be implemented in a way appropriate to national circumstances. In addition, some Conventions explicitly prescribe that attention be paid to the problem of inequality between the formal and informal sectors. For example, the Minimum Wage Fixing Convention, 1970 (No. 131), states that the determination of the level of the minimum wage shall as far as possible and appropriate take into consideration "economic factors, including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment".
Third, attempts have been made to establish international labour standards that focus on various categories of atypical workers who often operate in the informal sector. For example, in 1996 the ILO adopted Convention No. 177 and Recommendation No. 184 on homeworkers, which are particularly important for this discussion. In 1997 it adopted the Private Employment Agencies Convention (No. 181) and Recommendation (No. 188). The latter instruments call on member States to take action to ensure that workers recruited by private employment agencies are given basic forms of protection such as the right to freedom of association, the right to bargain collectively, and equality of opportunity and treatment, regardless of race, colour, sex, religion, political opinion, national extraction, social origin or any other factor giving rise to discrimination which is covered by national law and practice, such as age or disability. In 1997 and 1998 the ILO discussed the adoption of new standards to protect contract workers. Unfortunately, however, owing to resistance by Employer delegates and some governments, no standards were ultimately adopted on this important subject. However, the International Labour Conference adopted a resolution calling on the Office to undertake further research with a view to re-examining the possible adoption of standards on contract workers in the near future.
Finally, there is the safeguard of the tripartite consultation and cooperation called for in all Conventions, explicitly or implicitly. This consultation and cooperation, especially at the industrial and national levels, is a means of ensuring that narrower interests, such as those of organized labour in the modern sector, do not prevail over general economic and social interests. Thus the Consultation (Industrial and National Levels) Recommendation, 1960 (No. 113), stipulates that such consultation should be conducted "with a view to developing the economy as a whole".
2.2.3. Labour legislation and the informal sector
Labour legislation is an essential means of providing workers with necessary rights and protections and socially acceptable conditions of employment. It can be divided into two components. First, there are basic human rights such as freedom of association and equality. Second, there are usually basic rules for fair treatment on matters such as job security, procedural rules regarding collective relations between trade unions and employers, as well as basic minimum standards on substantive matters such as conditions of work, safety and health, vulnerable groups and income security. The ILO and the vast majority of countries consider that a well-governed society requires a substantial and well-conceived body of labour law on these issues just as it requires systems of legal rules in the commercial and criminal fields. Such rules are needed to provide a framework for stability, order, predictability, and fair and equal treatment, which are essential for productive relations between employers and workers (Yemin, 1995).
To most people it would probably seem equitable and logical that the rights and protections provided through labour legislation should apply to all workers regardless of whether they operate in the formal or informal sector. This conclusion is reinforced if we consider the rationale behind labour legislation. For example, the basic rationale for legislation on collective trade union rights is recognition of the unequal power relationship between an individual worker and the employer. This lack of balance provides ample scope for worker exploitation, which is generally considered socially unacceptable. One aspect of labour law is therefore designed to promote the collective representation of workers in order to even up the scales. Given that informal sector workers are usually the weakest of all in terms of industrial and political strength, it is logical that they should be the main beneficiaries of labour law.
Unfortunately, however, the real world is vastly different and governments sometimes seem reluctant to even attempt to provide a level playing field between the "boss" and the "worker" in the informal sector. There are several factors that explain this situation. First, some observers attribute the lack of state intervention to the paternalistic nature of working relationships in this sector. As noted in Chapter 1, dependent workers in the informal sector often have family, ethnic or geographical ties with the business owner which in theory might reduce the probability of worker exploitation. However, one should not exaggerate the extent or positive image of paternalistic relationships that are to be found in the informal sector. For example, to the extent that family ties do exist, they often involve distant relatives rather than the immediate family and do not automatically prevent worker exploitation. Nor does the existence of family ties at work absolve the government of its basic responsibility for protecting the weak against the strong within the workplace.
Another explanation, more formal and legalistic, of why workers in the informal sector are usually denied the rights and protections laid down in labour legislation is to be found in the nature of the employment relationships that exist in the informal sector. As discussed in Chapter 1, a large proportion of workers in the informal sector are own-account workers or what some observers might call contract workers. Unlike most international labour standards, which are intended to apply to all "workers", the labour legislation in most countries is designed to protect "employees". The legal definition of an "employee" is a complex matter, but in many countries own-account workers, or contract workers, are denied the rights and protections accompanying employee status, even where they are in a situation of subordination or control by a third party (the employer). In other countries own-account workers may enjoy some of the benefits of employee status, albeit with certain qualifications. For example, they may be excluded from certain labour law entitlements such as protection against dismissal, sick pay or maternity leave.
In illustrating these points ILO experts have noted that traditional labour law is premised on the existence of an employment relationship evidenced by a contract of employment in which the employee offers labour to the employer in return for remuneration. Normally, the employer exercises control over the manner in which functions are performed, the work location, working days and hours, etc. As indicated in Chapter 1, many of these characteristics are absent in informal sector work relationships. Consider the following example provided by Tajgman (1996): an informal sector worker is paid on the basis of the number of shoes she resoles in a day, but understands from the person on whom she is clearly dependent for getting the used shoes, sewing equipment and a place to work that she does not have to turn up at her place of work every day or work a fixed number of hours. In a case like this many observers might argue that, despite the obvious dependence of the "worker" on the "employer", the necessary threshold of employer control has not been reached and therefore no contract of employment exists. Most trade unions would probably dispute this finding and argue that because the worker depends on the employer for the inputs, equipment, work location and sale of the final products, she or he should be considered an "employee" and therefore receive the rights and protections provided under labour legislation. In an example such as this it is unclear whether a court or tribunal would necessarily support the trade union case. It is a question of drawing lines, which in most countries is done on a case-by-case basis by the courts and tribunals.
To persons who are not labour lawyers (such as the authors of this background document) the debate would seem to focus on whether the employer can really be considered as the "boss" of the worker. Given the vast number of own-account workers in the informal sector, this will remain a critical and controversial issue. For trade unions, one strategy would be to lobby governments to ensure that the "dependence" criteria mentioned above are adequately reflected in the legislation and that when courts and tribunals are making determinations about the existence of an "employee-employer" relationship they are encouraged to consider fully whether it is feasible for the worker to carry out his or her functions independently of the employer. This issue is closely linked to the debate on contract labour. As noted in the previous section, attempts to adopt a new ILO Convention on contract labour in 1998 were undermined by resistance from employers and some governments. It will be critical for trade union activities in the informal sector to reactivate the international debate on this issue and ensure that international standards are eventually adopted.
For categories of workers other than own-account workers in the informal sector the application of labour legislation should be less controversial. For example, wage earners in informal sector micro-enterprises should be unambiguously within the scope of labour law. In reality, however, most employers in the informal sector do not extend all labour law provisions to their regular employees. ILO studies reveal that benefits such as paid leave, sick leave and overtime compensation are frequently not granted.
Although such a stance by the employer might be predictable, it is perhaps more surprising to learn that ILO studies reveal that most informal sector employees are unlikely to dispute the employer decision about the payment of benefits. ILO surveys show that many informal sector workers consider that labour legislation is irrelevant to their situation and that they do not, and perhaps should not, enjoy the protection and benefits provided by the law. This finding would suggest that governments and trade unions should devote more attention to overcoming problems stemming from a lack of awareness of rights provided under labour laws. They could also organize more systematic campaigns to change the negative perception of labour laws and regulations. Given that they are often seen only as a burden by employers, emphasis should be placed on the benefits gained from their application, especially with regard to workers’ performance and enterprises’ productivity. These issues are taken up further in Chapter 4.
3. The trade union response to the
informal
sector challenge
3.1. Changing attitudes and policies at national and local levels
In the last decade many national trade union centres have begun to re-examine and reform their perceptions and policies concerning the informal sector. Several centres have openly acknowledged that in the past they adopted an excessively negative view about this sector and now recognize that significant changes are required. For example, the All India Trade Union Congress has stated: "Preoccupation with the already organized workers has led to the neglect of the task of organizing the unorganized ... The Bangalore Session of the AITUC held in December 1983 gave the call to ‘organize the unorganized’ as a priority task ... Some conscious attention has begun to be paid in a number of places to this task. There are a few achievements on record. But these are altogether too little compared with the magnitude of the task" (AITUC, 1997).
However, this is not replicated in all regions, and in a number of countries it would appear that perceptions and policy within the trade union movement remain unchanged. According to a case study on Kenya (Egulu and Chune, 1999), the role of the Kenyan Central Organization of Trade Unions (COTU) has remained focused on traditional tasks and objectives. It has concentrated on negotiating improvements in salaries, workplace safety, fringe benefits and generally better terms and conditions of employment for the workers it represents in the formal sector. According to the authors of the study, COTU has not done enough to meet the needs of the new working class, let alone to adapt to the trends in the development of new economic systems which have been responsible for the emergence of the informal sector in Kenya.
There are several reasons why many national centres remain sceptical about the informal sector. First, it is assumed that this sector is a transitory phenomenon and that it will be absorbed by the formal sector in time and without the need for action by trade unions or the State. This assumption was — and still is — widely accepted. Unfortunately, however, it does not seem realistic. As was clearly demonstrated in Chapter 1, instead of diminishing, the informal sector is growing while the formal sector is shrinking because of the outsourcing and subcontracting of many of its activities. It has to be recognized that the informal sector is an enduring element of the labour market and will not be diminished or absorbed into the formal sector without concerted efforts by trade unions and major changes in government policies. Moreover, even if the political will existed within governments to implement the promises that have been made about integration, this would certainly not be achieved rapidly.
Second, trade unions face significant problems in trying to maintain and mobilize their members in the formal part of the economy and do not feel that they are in a position to use scarce resources for the informal sector. Many unions consider that this would not be an efficient use of the trade union movement’s human and financial resources. The case studies prepared for this report reveal that there are often very pragmatic reasons for this, including the heterogeneous nature of employment relations, the difficulties in locating and contacting informal sector workers and the barriers to organizing in the informal sector created by the State. In addition, self-employed workers have been viewed as "entrepreneurs", and thus not potential trade union members or appropriate partners for cooperation. Given these conditions, many trade unions at national level have decided to ignore the informal sector completely; or to the extent that they try to coordinate with or organize the informal sector, their involvement is limited to ad hoc events and this is not considered a priority.
Despite this generally pessimistic but perhaps pragmatic perspective about the returns that national unions are expecting from investments in the informal sector, there are other national trade union centres and lower-level unions that have opted for engagement and are committing substantial amounts of time and resources to organizing and/or building bridges between the formal trade union movement and workers in the informal sector.
The focus in many cases is also on improving the situation of own-account workers and micro-entrepreneurs and/or increasing their access to specific services, such as credit, training in managerial skills, marketing and new technologies, information and advice on current legislation, dispute settlement and educational support.
Chapter 4 will examine some of the more promising strategies and practical examples of trade union engagement in the informal sector. It will be evident that considerable creativity has been demonstrated by many trade unions in trying to attract and assist workers in the informal sector. However, it is also evident that, up until recently, trade union activities and policies regarding informal workers have tended to be ad hoc and fragmented. While trade union initiatives involving the informal sector obviously have to start on a small-scale and experimental basis, there is a danger that they will never mature beyond this stage. In the past what has been lacking is an interlinking strategy for joining forces at the local, national and international levels.
To develop the abovementioned national and lower-level initiatives into a comprehensive and coherent package of programmes, support and guidance are required. Fortunately therefore, the informal sector has in recent years become a major policy priority for the international trade union movement. While various organizations that make up the international trade union movement might emphasize different components in the overall strategy towards the informal sector, there is a common concern about the intolerable working and living conditions of workers in this sector. The need for trade unions to reach out to these workers and campaign on their behalf is accepted throughout the international trade union movement. Accordingly, different actions have been promoted to achieve this objective, including research, education and development projects.
Without being in any way exhaustive, the section below presents the views of different international trade union organizations and international trade secretariats (ITSs) that are working towards a model of development in which "all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity" (Declaration of Philadelphia, 1944).
3.2. Policies and strategies adopted by international trade union organizations and international trade secretariats
3.2.1. International Confederation of Free Trade Unions
The International Confederation of Free Trade Unions (ICFTU) considers that the growing prevalence of non-structured or informal work does not result from workers choosing to leave formal employment but rather from their being forced to do so in order to survive, or because a growing number of workers have no access to formal employment. According to the ICFTU, the important factors contributing to this trend include the following: (i) the informalization of what have hitherto been formal employment relationships, sometimes as a deliberate act of government policy; (ii) the impact of the debt crisis, structural adjustment programmes and privatization on formal sector employment levels, particularly in the public sector; (iii) the inability or unwillingness of governments and the international community to tackle poverty and ensure sustainable and equitable development, so as to find adequate solutions for those who are locked into a cycle of subsistence or clandestine, exploitative and often illegal economic activity; (iv) corruption in government, enterprises and institutions, which often reinforces exploitative economic relationships; (v) constraints on rural and agricultural development, coupled with the inability of governments to cope with massive influxes of people from the countryside into urban areas; (vi) advances in information technology and transport which enable production to be widely dispersed, including on a global basis, in the absence of international regulation which would ensure responsible business practices; and (vii) insufficient social security coverage, poor population planning and inadequate provision of education and other government services.
The combination of the above factors has resulted in increased marginalization and poverty for a growing number of workers who operate outside the formal sector. As governments have retreated from regulation, and as the effects of globalization have continued in the absence of an effective international framework to regulate economic activity and promote sustainable and equitable development, workers in developing, transition and industrialized countries are increasingly being forced out of formal employment relationships. These workers receive little income, face particular occupational hazards and have little access (if any) to health, community, educational and other services.
The ICFTU firmly rejects the criticism sometimes levelled at trade unions regarding their "lack of interest" in the informal sector, since in fact the workers concerned are often forbidden to join unions and thus to formalize their employment relationship and undertake collective bargaining.
Recent history shows that what is today considered to be the formal sector is largely such because of the activities of unions in the past. The history of the trade union movement has to a great extent been dominated by the struggle to formalize employment relationships and, through organizing, collective bargaining and campaigning, to counterbalance the inequality inherent in the employer/employee relationship. This has usually been accompanied by pressure on governments to support the growth of formal employment, through labour and other legislation as well as industry development strategies. In turn, governments receive tax revenues through taxation of company profits and employees’ earnings, and economic stimulation derived from the increased purchasing power of the workforce.
In this context, the ICFTU considers that it is the primary responsibility of governments to redress the process of informalization of work, a process which slows economic and social development and deprives workers and their families of opportunities to build a better life. A key starting point for trade unions is, in the ICFTU’s view, to continue to press for the maximum application of international labour standards and for governmental and intergovernmental action to formalize economic activity and promote development.
The importance of the application of core labour standards as a basis for economic development was recognized by the World Summit for Social Development, held in Copenhagen in 1995, which through the adoption of the ten Commitments, provided a comprehensive approach, including specific targets and responsibilities for national governments and the international community to tackle poverty, exclusion and the range of major economic and social issues confronting society. The ICFTU regrets that so little has been done by most of the governments which adopted the ten Commitments to fulfil the promises they made at Copenhagen.
Pressing for governments to implement the Copenhagen Commitments will therefore be a high priority for the ICFTU in the coming years, in particular through the five-year review process ("Copenhagen + 5") scheduled for the year 2000. At the international level, the ICFTU supports ongoing attempts by the ILO to promote the implementation of the Summit’s conclusions. The ICFTU will also maintain its strong focus on promoting the reform of the international financial architecture and the inclusion of core labour standards in the policies and programmes of the World Trade Organization (WTO) and a range of other international and regional institutions. International union campaigning to tackle violations of core labour standards in particular sectors and countries also in many cases directly concerns employment which is considered to be in the informal sector, but which is producing goods and services for national and international trade. Securing respect for core labour standards represents the first step in formalizing the various forms of this employment.
At the national level, many ICFTU affiliates are pursuing organizing strategies which take into account the different forms of economic activity in the "informal sector". These experiences have shown considerable potential and will be adapted and expanded within and across countries and sectors in the coming years. The ICFTU considers that the following activities should be promoted and where possible immediately implemented by the trade union movement: (i) seeking to extend union recognition and bargaining relationships from formal sector enterprises to contractors, subcontractors, homeworkers and others where these are producing inputs for (or in some cases using outputs of) the enterprise(s) concerned; (ii) community-based organizing where access to workplaces is denied, including educational and survey work amongst "informal sector" workers to establish contact and help devise organizing strategies; (iii) special awareness-raising and organizing programmes for home-based workers; (iv) organizing programmes for women workers; (v) recognizing that in many countries one worker in the formal sector (for example, the public sector) who may be a union member may provide economic support for a substantial extended family whose members are in informal employment, thus providing a potential linkage between the union and the workers concerned; (vi) maintaining contact with members who have been forced out of the formal sector into non-structured employment; (vii) helping informal sector workers to organize into union or union-associated structures and assisting them in seeking and obtaining permits to operate, and access to government services (for example, education and training, health and social services), as well as in bargaining for better incomes; (viii) supporting the development of mutual funds and cooperatives.
In the opinion of the ICFTU, however, the success of the abovementioned activities will depend heavily on actions by the State to remove the constraints which often inhibit the freedom of democratic and representative trade unions to organize and to represent the interests of all workers.
3.2.2. World Confederation of Labour
At its 24th Congress, held in Bangkok (Thailand) in December 1997, the World Confederation of Labour (WCL) made the informal sector one of its action priorities for the years 1998-2002. The Policy Resolution adopted by the Congress commits the WCL and its affiliates to "set up and/or step up activities to adjust their structures to the needs of the workers ... in the informal economy, and organize a platform for exchange and discussion on their rights and needs so as to: raise their awareness and help them set up trade union structures; unite, should the occasion arise, in production and sales cooperatives in order to raise their working capacity and to enter the formal economic and social sector" (WCL, 1998). By virtue of the Action Programme adopted by the Congress "the WCL and its affiliates make the active commitment to organize the workers from the so-called informal sector, bearing in mind their specific needs and with a view to protecting collectively their interests and to claiming proper regulations" (WCL, 1998b).
The WCL perceives the informal sector as an opportunity, a risk and a challenge. It considers that this sector de facto provides jobs, incomes and livelihoods for masses of poor workers who would otherwise have no other alternatives. In many countries in Africa, 60, 70 or even 80 per cent of families depend on the informal sector for survival. Unlike other organizations, the WCL does not share the view that the informal sector is to be blamed because it does not fit into the traditional schemes of the "formal" economy. Rather, it values the social role of the sector and sees in this a reason for respecting and improving it.
The WCL does not underestimate the damage done by the failure to apply labour laws and social protection to the majority of the workers operating in the sector. These workers are compelled by circumstances to operate in poor and unsafe working conditions as well as with precarious employment relationships. Even when they are adopted or ratified, neither national labour laws nor international labour standards generally apply to the informal sector. For the WCL the informal sector therefore represents a risk, as it exposes workers to exploitation. This is why it advocates the application of minimum legal regulations to the informal sector. It considers that the application of these regulations should go hand in hand with positive incentives aimed at improving the economic viability of activities in the informal sector, for instance in the form of access to credits, and vocational and management training.
The WCL considers that the nature of employment relationships and the instability of activities are only a few of the many factors that make it difficult to set up workers’ organizations in the informal sector. Part of this sector consists of micro-enterprises in which the employment relationship is based on personal relationship, which discourages unionization. Another part is made up of self-employed workers, who tend to seek individualized solutions to their problems. The challenge for trade unions, therefore, lies in organizing these workers. The WCL is committed to achieving this objective through diversified approaches reflecting the specific characteristics of the workers in the informal sector. It believes that this can result only from a long process of contact, training and exchange of information with the workers involved. This implies also, for the WCL, that the workers themselves have to be fully involved in the development and implementation of the organizing strategies. The high proportion of women in the informal sector needs to be reflected accordingly in such strategies.
Many WCL national affiliates have been actively involved in organizing informal sector workers along the lines mentioned above. Many successful experiences are reported. In Côte d’Ivoire in 1990 the National Union of Informal Sector Women (SYNAFSI), which is affiliated to the national trade union centre DIGNITE, was created on the initiative of DIGNITE’s Executive Bureau. The goal of SYNAFSI is to group women in the informal sector according to their particular type of activity (fish sellers, vegetable sellers and fruit sellers, for example) and to give some structure to these groups. As a first step, SYNAFSI has tried to form them into officially registered buyers’ and sellers’ cooperatives. The members benefit from the provision of machinery for their economic activities and training in both enterprise and household management. In Bangladesh, a number of non-traditional groups have started activities, including women in the informal sector, within the WCL national affiliate, Bangladesh Sanjukta Sramik Federation (BSSF). Women’s organizations have set up cooperative structures for their members and have taken a series of initiatives, including in the areas of adult education, mother and child care and productive work. In Latin America, within the Latin American Central of Workers (CLAT) (the regional organization of the WCL for the Latin American region), the Federation of Latin American Commercial and Service workers (FETRALCOS) has devoted increasing attention to the informal economy since 1989. FETRALCOS promotes initiatives to provide the workers in this sector with improved access to credit and credit institutions, as well as skills training. It also supports the creation of cooperatives for those engaged in the informal sector.
3.2.3. International Federation of Chemical, Energy, Mine and General Workers’ Unions
The active involvement of the International Federation of Chemical, Energy, Mine and General Workers’ Unions (ICEM) in the informal sector dates back to the international campaign aimed at the adoption of an ILO instrument on home work. The ICEM was in fact one of the organizations that led the process culminating in the adoption of ILO Convention No. 177 and Recommendation No. 184 in 1996. Since then, attempts to incorporate informal sector concerns into general ICEM policies have intensified.
In recent decades, the chemical, energy and mine sectors have been seriously affected by the changes in the structure and operation of the world economy. Privatizati
