The informal sector
Introduction
The International Labour Organization (ILO) introduced the concept of the informal sector more than 25 years ago. A 1972 ILO employment mission report on Kenya found that migration from the countryside to the city did not result only in urban unemployment. When the modern sector does not provide enough job opportunities, rural migrants and urban dwellers alike find employment in small-scale and micro-level production and distribution of goods and services. These largely unrecognized, unrecorded and unregulated small-scale activities constitute the informal sector.
The informal sector is a major provider of urban jobs – 50 to 60 per cent of the workforce in many south-east and south Asian cities. In the South Pacific island countries, even though the informal sector is not readily visible, self-employment is increasingly the only alternative, given growing youth unemployment. In most countries in the region, neither the public sector nor the formal private sector is able to provide enough jobs for its expanding urban labour forces.
The economic crisis in several east and south-east Asian countries could result in many more workers entering the sector because of job losses in the formal sector. Urgent action is needed to ensure that these workers do not fall below the poverty line. Job opportunities should be made available in the rural and urban informal sectors, and a social safety net should be provided for workers not covered by social protection.
Definition. The informal sector consists of small-scale, self-employed activities (with or without hired workers), typically at a low level of organization and technology, with the primary objective of generating employment and incomes. The activities are usually conducted without proper recognition from the authorities, and escape the attention of the administrative machinery responsible for enforcing laws and regulations.
Characteristics of the informal sector.
- Informal sector enterprises usually employ fewer than ten workers, mostly immediate family members.
- The informal sector is heterogeneous: major activities are retail trade, transport, repair and maintenance, construction, personal and domestic services, and manufacturing.
- Entry and exit are easier than in the formal sector.
- Capital investment is generally minimal.
- Work is mostly labour intensive, requiring low-level skills.
- Workers learn skills on the job.
- The employer-employee relationship is often unwritten and informal, with little or no appreciation of industrial relations and workers’ rights.
- The informal sector works in conjunction with, rather than in isolation from, the formal economy. It has increasingly become integrated into the global economy.
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A TYPICAL MARKET VENDOR IN FIJI |
| After her husband’s accident, Lakshmi had to take a stall in the Suva market where she sells eggplants, okra, pumpkins and eggs. Her day starts at 4 a.m., when she wakes up to cook breakfast and lunch for the family before feeding the poultry and going to market. She leaves home at 6.30 a.m. and returns at 6.30 p.m. Lakshmi generally earns US$32 net a week from market sales; daily sales range between US$8 and US$10. Despite the difficulties, she is satisfied with her job; in her view, her income is sufficient to sustain her family. She only wishes she could find a big enough stall so that her husband could lie down when he visits, allowing him to spend more time with her. |
| Based on Fiji Association of Women Graduates: Market vendors in Fiji (Suva, 1994). |
Working women
A general bias against women in formal employment across the Asia-Pacific region, together with their typical preference for working close to home, results in many of them working in the informal sector. The sector offers the advantage of flexible working hours, easy entry and exit, and low skill requirements.
Fewer opportunities and lower incomes. Women generally take up occupations that require traditional cooking and sewing skills, such as food vending and garment manufacture. Their income-generating activities are considered secondary to their childcare and family responsibilities. Thus, their access to education and skills, ownership of property and efforts to improve productivity are generally given lower priority. Opportunities for jobs and higher incomes are also fewer because of discriminatory perceptions of women’s work. Women work long hours to cope with multiple responsibilities at home and work, yet their income levels are much lower than those of men.
Homeworkers – impoverished and exploited. Many women work at home both to supplement family income and to attend to household and childcare responsibilities. Homeworkers in Asia, who are mostly women, produce garments, fashion accessories, toys and handicrafts for domestic and export markets. As self-employed or subcontracted workers, they are exploited and impoverished, and vulnerable to the uncertainties of subcontracting work. They often work and live in cramped quarters, with detrimental effects not only on their own health but also on that of children not directly engaged in home work.
Women homeworkers work long hours, yet their income is only slightly above the poverty level. They do not enjoy the benefits normally available to a permanent worker in an established manufacturing enterprise. Employment contracts tend to be unfavourable, often involving multiple employers and excluding the possibility of collective bargaining. This growing and often invisible workforce goes largely unrecognized in labour statistics and is unprotected by labour legislation.
Programmes for small-scale women entrepreneurs. In 1997, the ILO completed a project promoting women’s entrepreneurship in small-scale and cottage industries in India, Nepal, the Philippines, Sri Lanka and Thailand. As part of the project, a regional network of 15 organizations was created. Many of the organizations have subsequently received ILO support in setting up their own women’s entrepreneurship programmes at country level.
Using the institutional network created through the project, an ILO regional programme, Economic Empowerment of Women through Entrepreneurship Development (EEW), was carried out in India, Indonesia, Nepal, Pakistan, the Philippines, Sri Lanka and Viet Nam (1996-97). With the objective of improving the performance of women’s small and micro enterprises, country studies were conducted, and innovative training materials were pilot tested with women entrepreneurs, in close collaboration with employers’ organizations. In Sri Lanka a videotape on women entrepreneur role models was produced and disseminated through the network.
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An ayah in Pakistan |
| Musarrat is a 30-year-old woman working as an ayah (domestic help). Her mother-in-law is also an ayah. Together they contribute the bulk of the family income. Musarrat started working two years ago when her husband became addicted to drugs and was arrested by the police. |
| Brought up in a tradition where women’s work is considered unworthy, Musarrat was never given any education beyond study of the Koran. Now she finds herself suited for only the most menial jobs, which are not only poorly paid but also exposed to social discrimination. |
| Given the low family income and many mouths to feed, Musarrat finds it difficult to make ends meet. Inflation adds to the burden while, besides meeting basic family needs, she has to bear medical bills and other expenses relating to her husband’s drug addiction. |
| Based on United Nations Economic and Social Commission for Asia and the Pacific: Role of the informal service sector in urban poverty alleviation (Bangkok, 1996). |
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New concern for homeworkers |
| A Danish-funded ILO project, completed in 1996, established networks to provide information, mutual support and improved working conditions for women engaged in piecework at home. The project, which covered Indonesia, the Philippines and Thailand, raised public awareness of homeworkers, encouraged ministries of labour to include them in national labour schemes, and offered education and training. HomeNet, an international network that helps to develop export markets for women’s products, was set up in 1994 with the participation of the Self-Employed Women’s Association, India. |
| The International Labour Conference has adopted the Home Work Convention, 1996 (No. 177). This shows a new level of concern by governments and the social partners for such issues as including homeworkers in labour statistics and labour inspection systems, and providing equality of treatment between homeworkers and other wage earners, protection against discrimination, coverage by national safety and health regulations and social security provisions, and access to training. |
Working children
Most countries prohibit child labour; yet millions of children are working in the informal sector under deplorable conditions. They are subjected to exploitation, including long working hours and unsafe working conditions, for very low pay. They work in small family businesses or as self-employed workers such as shoeshiners and street vendors. But children are increasingly involved in hazardous work in small enterprises producing export goods for international markets.
The poverty trap. Child labour is one of the most unfortunate manifestations of poverty. Poor families depend on their children’s economic contribution to survive. However, subjecting children to work further traps them in poverty and prevents them from pursuing formal education, depriving them of the knowledge and skills that might help them secure good jobs in the future.
Phased elimination. The ILO, through its International Programme on the Elimination of Child Labour (IPEC), works towards the progressive elimination of this practice. It promotes targeted action to end intolerable forms of child labour immediately, while encouraging more broad-based efforts to send all children to school or other suitable training. IPEC is helping ILO member States define and implement national policies to end child labour, as soon as possible, in industries and activities that pose a grave threat to the safety, health and morals of children. The programme is operational in Bangladesh, Cambodia, India, Indonesia, Nepal, Pakistan, the Philippines, Sri Lanka and Thailand. Preparatory activities are under way in China and Mongolia.
Workers with disabilities
Since it is difficult for people with disabilities to secure formal employment, many of them are engaged in self-employment in the informal sector.
Disadvantages. There they find themselves in an especially disadvantaged situation. Not only do they generally earn less, but they may also need to spend more on medicine or therapy. Adverse working conditions – a common feature of the informal sector – tend to worsen their plight. Such conditions may also cause accidents and diseases resulting in disability.
Countermeasures. Many injuries and disabilities can be prevented or corrected with simple measures and precautions in the workplace. It is employers who can most effectively institute these measures, so their awareness of work hazards must be improved. For those already disadvantaged by accident or disease at work or for other reasons, hope lies in gaining access to skills training, entrepreneurship programmes and capital. The organization of self-help groups is another effective means of assisting people with disabilities.
Urban poverty and infrastructure development
Meagre incomes of urban informal sector workers limit opportunities to live and work in a hygienic and safe environment. Low-cost housing programmes in big cities do not adequately serve the needs of rapidly expanding urban populations. Such workers generally end up living in slums, contending with not only squalor but also the threat of eviction. In a survey conducted in Bangkok, Thailand, 87 per cent of the city’s slum dwellers were found to work in the informal sector. Much of the sector is associated with urban poverty and slums.
Better housing. Providing low-cost housing for informal sector workers directly supports their efforts to earn an income. Poor families in the Philippines have shown a tendency to improve their homes when they legally own them. Since most informal sector operators use their home as their workplace, better housing conditions provide better working conditions, while boosting productivity. Owning a house or having a land title provides operators with valuable collateral with which to obtain credit from financial institutions. In the case of street and market vendors, security of tenure in the workplace helps them gain stability and improve incomes.
Better basic services and social infrastructure. Basic services such as electricity and water supply, accessibility and drainage, and social infrastructure such as schools and hospitals, are often inaccessible to slum residents. This makes it more difficult and expensive to obtain such services, which lessens the competitiveness of informal sector enterprises.
Appropriate infrastructure investment. Investment should not only create infrastructure such as roads, drainage, water supply and sewage treatment facilities that directly benefit the urban poor – it should also generate jobs and alleviate poverty. Appropriate measures include labour-intensive approaches in construction and rehabilitation of infrastructure. Local community participation also improves infrastructure operation and maintenance.
Income and employment
The very low incomes of most informal sector workers and operators generally place them among the urban poor. None the less, informal sector operators naturally earn more than workers in the sector. Informal sector workers are generally found to earn far less than formal sector workers.
Productivity and income. Although some small improvements in working conditions may be made at little cost, low incomes have prevented many operators and workers from improving their working conditions or from contributing to even rudimentary forms of social protection. On the other hand, the productivity of most informal sector activities is affected by a poor work environment and work methods. Incomes are also influenced by the limited scope of activities, in the form of either a small volume of low-margin activities or little scope for expansion. The limited skills and education of the operators and workers have also hindered improvement in productivity and incomes. In South Asia, large numbers of operators and workers have barely primary education.
Employment. Most informal sector operators, being self-employed themselves, hire very few outside workers, if any. Yet there is a great deal of potential for expanding activities and generating additional employment in the sector. As many as one-tenth of the informal sector operators in the Philippines run businesses that could be considered small or micro enterprises. As self-taught entrepreneurs, many lack basic business skills. Many have access to credit only through informal lenders, who charge them very high interest. Entrepreneurship training of operators could develop their capabilities to manage their businesses more productively and efficiently, allowing them to expand activities with the potential for higher incomes and more jobs.
Micro-enterprise development
Policy-makers in the region increasingly acknowledge the value of improving productivity and incomes in the informal sector. Effective strategies must identify at the outset the enterprises with capacity to expand. Some micro enterprises have the potential for growth and employment creation. Other activities – some forms of street vending, for example – are usually precarious jobs performed on an individual basis, without any potential for expansion.
What can be done? It is difficult, if not impossible, to identify which individual informal sector enterprises are viable. But it is possible to identify the branches of economic activity with demand potential, in which informal sector producers can either compete successfully with the modern sector or develop a complementary relationship with it. Growth and development of such enterprises can generate more employment and contribute, in the long term, to improving conditions in the informal sector as a whole.
Instilling a sense of entrepreneurship is a prerequisite to supporting operators who plan to expand or improve their businesses. If they are to venture out of their limited area, low-income market and low value-added single product or service, they must be able to access markets and business opportunities.
Some ILO initiatives. The ILO’s International Small Enterprise Programme (ISEP), launched in 1998, will provide an integrated approach to developing small and medium enterprises, using a range of existing materials. These include a successful entrepreneurship training package known as Start Your Business/Improve Your Business (SYB/IYB). IYB has been applied extensively in Africa, and is now being adapted for use in the South Pacific island countries. SYB was developed in Fiji for entrepreneurs starting their own enterprises. Further adaptations are being developed through regional programmes combining working conditions with business improvement, and specifically targeting women entrepreneurs. These include Work Improvement and Development of Enterprises (WIDE) and EEW (see page 5) in south-east and south Asian countries such as Indonesia, Malaysia, Nepal and the Philippines.
Access to credit. Informal sector operators borrow money from relatives and friends to start or sustain businesses. Since commercial banks usually seek collateral before approving a loan, few operators successfully borrow from them. In the Philippines, it was found that just over 2 per cent of operators were able to obtain funds from lending institutions. In addition, commercial banks do not find it worth while to deal in the small sums of money typically involved.
The informal sector has been mobilizing significant savings from within through various types of self-help savings and credit schemes. The schemes promote group solidarity, helping ensure regular repayment of loans.
Many of the small-scale lending schemes, however, cannot provide funds on an efficient and sustainable basis. What is required is an institutional mechanism that falls somewhere between a commercial lending organization and an NGO or a cooperative.
Access to wider markets. Access to education, training and credit is of little use unless the market for informal sector products is broadened. As low-income families constitute the primary market and they are in competition with each other, the scope for expansion is limited. An increasing number of informal sector activities, however, do cater to higher-income families or export industries.
Subcontracting and other formal sector arrangements. Small manufacturers and homeworkers have subcontracting arrangements with larger manufacturers, in the garment industry for example. Many of them also produce for export. In a study conducted in two Pakistani cities, 84 per cent of home-based units were found to be subcontractors.
Developing linkages with the formal sector is the most effective way to ensure that the informal sector has access both to the market and to raw materials and technology. Subcontracting and franchising can be avenues to such linkages. So far, subcontracting has been used, in many countries, to reduce labour costs without much technology transfer. Subcontracting and home work have often also meant low wages and lack of social protection. Properly developed, however, they can bring the informal sector into the fold of the formal sector, with related improvements in working and living conditions.
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A landmine casualty in Cambodia |
| Sok Sokhon, 38, lost a leg in a landmine explosion. During the 1980s, he lived in a refugee camp on the Thai-Cambodian border, where he learned bicycle repair and hair cutting. In 1992, he moved to Kampong Cham with his wife and children and opened a bicycle shop and a barber-shop. At first he earned only US$8 per month. In May 1993, he heard about the lending programme of an NGO, the Association of Cambodian Local Economic Development Agencies (ACLEDA). He cycled for 30 kilometres just to learn more about ACLEDA, which plays a role in the small enterprise and informal sector promotion project initiated by the ILO. After a six-day training course, he drew up a business plan and requested a US$190 loan to expand his operations. The loan was approved and before long his income increased tenfold, to about US$80 per month. From his earnings he bought a motorcycle, which made him more mobile. He has since settled his account and obtained a second loan. |
| Since 1993, the ILO and ACLEDA have been providing management training, advice on business plan preparation, and credit arrangements for more than 18,000 rural people, helping them start small-scale businesses such as furniture-making and food vending. The project forms part of the ILO’s Employment Generation Programme in Cambodia. |
| Adapted from United Nations Asia-Pacific News, July-September 1996. |
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A savings and credit scheme for rural women in Pakistan |
| The Marvi Welfare Association in the village of Arab Solangi is the first all-female community-based organization (CBO) in the district of Khairpur, Sindh Province, Pakistan. Created in 1993 by a few young women, with the support of the Aga Khan Foundation, its membership has grown to 128. |
| The CBO adopted the savings and credit strategy for employment creation, introduced in 1994 by the ILO/Japan Intercountry Project on Strategic Approaches toward Employment Promotion |
| (ILO/PEP). This has resulted in savings of over US$1,550, qualifying the CBO for matching funds of US$4,150 from the project. |
| After receiving training in savings and credit management, and skills development support, elected CBO officials maintain accounts and administer loans. So far they have given out 86 loans totalling US$12,835. A survey of the first borrowers shows that after just one year the total household income had risen by more than 41 per cent. Dirt lanes between mud houses have been drained and paved, a sports ground created and a girls’ school opened. Twenty-three other villages in Khairpur have adopted the project strategy, generating 1,150 additional jobs. |
| Twenty-six other pilot schemes all over Pakistan have created some 3,300 jobs and a self-sustaining system of employment generation. |
Workers’ protection
Labour laws and labour standards. Most of the informal sector workers, self-employed or unpaid family workers, are neither registered nor covered by labour laws and basic labour standards. Many others have a few outside workers to whom labour regulations governing hours of work, weekly rest, paid leave, minimum wages and social security are not commonly applied due to the small scale of operations, lack of knowledge and low income levels.
Legislative and bureaucratic obstacles. Some informal sector operators choose to remain "illegal" or to be exempted from labour regulations because of the high cost of acquiring "legal" status. Bureaucratic procedures and multiple legal requirements present hurdles for them in complying with labour standards. Local governments should review and, where necessary, simplify regulations to permit their more effective application in the informal sector. Goals requiring urgent attention include: streamlining bureaucratic procedures and reducing registration fees to an affordable level; reorienting the municipal officials responsible for regulating the sector so as to be more effective; disseminating information and simplifying legal requirements; and adjusting restrictive zoning laws.
The role of international labour standards. International labour standards – ILO Conventions and Recommendations adopted by the tripartite International Labour Conference – play a major role in enabling workers, employers and, where applicable, governments to develop employment relations in a sound and equitable manner. While some standards apply chiefly to formal sector employment, many are relevant to the informal sector:
- the fundamental human rights Conventions, such as those dealing with freedom of association and the right to organize and bargain collectively (Nos. 87 and 98), forced labour (Nos. 29 and 105), and equal remuneration, and discrimination in employment, training and working conditions (Nos. 100 and 111)
- standards aimed at the progressive elimination of child labour. Convention No.138 sets the minimum age for admission to employment under various circumstances. It is expected that a new instrument on tackling intolerable forms of child labour (slavery and slave-like practices, illegal activities such as prostitution, work or activity jeopardizing children’s health, safety and morals) will be adopted in June 1999
- Conventions promoting occupational safety and health, especially No. 155, and minimum standards of social protection (No. 102)
- Conventions targeting categories of workers who predominate in the informal sector, for example rural workers (No. 141), homeworkers (No. 177), and indigenous and tribal peoples (No. 169)
Working conditions and occupational safety and health. Different groups of informal sector workers encounter different workplace problems. However, the most common are poor lighting, lack of ventilation, excessive heat, poor housekeeping, inadequate workspace, poor work tools and workplace design, awkward posture, exposure to dangerous chemicals, lack of clean water and other basic welfare facilities, and long working hours. Workers accept this situation because they are simply preoccupied with survival and not fully aware of workplace hazards.
No established mechanisms exist to monitor workplace injuries and illnesses in the informal sector, as they do in the formal sector. Injuries often go unreported and are settled by operators and workers, sometimes through small cash payments or termination of employment. Even for severe injuries, where they are not enrolled in a social protection scheme, workers are frequently deprived of benefits that would otherwise have been available. It is often hard to establish the relationship between work and the illness the worker might be suffering from.
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Philippine models for improving informal sector working conditions |
| The ILO initiated four pilot projects in Manila to upgrade working conditions in the urban informal sector. |
| Community-worker partnership. Save the Children, an NGO, gathered basic data on working conditions in the retaso (textile waste) industry in five urban poor communities. With the Department of Health, it also trained volunteer health workers to respond to occupational safety and health (OSH) concerns in the community. |
| Developing support systems for women workers. The Social Development Index, another NGO, identified the demand for childcare services in an urban poor community in Quezon City. Then, in partnership with the local government unit, it helped the community establish its own childcare centre. |
| Trade union assistance for informal sector workers. The Telefunken Semiconductors Inc. Employees Union set up a programme on OSH and working conditions for workers. The programme focused on collecting data, developing training modules, and initiating discussions among trade unions on how to help workers. |
| Linking working conditions’ improvement to increased productivity. The Philippine Enterprise Development Foundation developed a training programme to help private and public organizations provide effective consultancy services to informal sector entrepreneurs, thereby improving working conditions while enhancing productivity. |
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Social protection. Informal sector workers and operators, generally being subsistence earners, find it difficult to save for emergency needs, medical expenses and old age. The seasonal nature of their employment, and the inability to save, force them to incur debts when they lose their assets or earning power due to their own or family members’ sickness and disability.
Three key elements, which ensure the effectiveness of any social protection scheme, may also be the best means of promoting social protection among informal sector workers and operators:
- emphasizing preventive measures through awareness raising, primary health care and improvement of the working environment
- encouraging and assisting indigenous schemes initiated by self-help groups and cooperatives, while establishing linkages between the schemes and national plans
- providing direct assistance with food and shelter for families, preventing their falling further into poverty
ILO studies recommend strengthening indigenous schemes and exploring ways of linking them to formal schemes, thereby improving access to resources in the formal sector. In the Philippines, for example, some indigenous schemes – such as the paluwagan, in which money is pooled without being tied to specific needs or emergencies – are both appropriate and effective in meeting the needs of informal sector operators. Such schemes also have important limitations, among them lack of adequate resources and administrative stability.
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Factors hindering social protection coverage |
| Operations too small. Most informal sector operators believe their businesses are too small to meet social security requirements. In addition, it is administratively difficult to enforce compulsory coverage of small businesses, many of which are clandestine. |
| Benefits too expensive. The contributions the formal social security system requires are often beyond the means of informal sector operators and workers. If they have the choice, employers prefer not to contribute. |
| Lack of awareness. In general, there is a lack of awareness regarding social security coverage. Only about 26 per cent of informal sector operators in Metro Manila are knowledgeable about the social security system. |
| No clear employee-employer relationship. Informal sector enterprises often treat workers as extended family members rather than employees. Consequently, they do not consider extending them the benefits usually provided to an employee. |
| G. Joshi: Urban informal sector in Metro Manila: A problem or solution? (Manila, ILO/SEAPAT, 1997). |
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An effective partner in providing social protection services |
| The Coop-Life Mutual Benefit Services Association, Inc. (CLIMBS) provides protection services to members of cooperatives in the Philippines. Set up in 1971, its objective is to develop cooperative banking and insurance services. Starting with six members, it has grown to 173 cooperatives with 66,569 members. Its programmes and services, especially loan protection and savings plans, have benefited some 630 families throughout the country. |
| One service is the Members’ Protection Plan, an optional insurance programme for members with premiums depending on age and amount of policy. In the event of a death, beneficiaries receive the amount of policy coverage. The plan includes optional comprehensive personal accident coverage. For death or total disability, CLIMBS pays an additional US$250. When hospitalized due to an accident, the insured are also entitled to medical reimbursement of US$2 per day for a maximum of 31 days. For ordinary sickness the reimbursement is US$1.20 per day for a maximum of 45 days, plus US$15 for miscellaneous expenses. |
| M.A.Z. Fernandez: A case study of the Coop-Life Mutual Benefit Services Association, Inc.: Implications for social protection in the informal sector (Bangkok, ILO Subregional Project on Rural Women Workers in the New Putting Out System, 1994). |
Agenda for the future
While the informal sector generates jobs and incomes for the urban poor, with relatively little capital investment, the quality of employment still needs to be much improved. Many Asian economies owe their dynamic nature in part to the entrepreneurial spirit of the urban informal sector. However, for every successful entrepreneur there are many more struggling operators providing low-income jobs in poor working environments. Working conditions have remained unchanged for many workers, despite economic boom times; this is particularly true of women workers. Child labour in the informal sector remains a source of special concern, and requires continued attention by governments and the agencies concerned. Some major issues are mentioned here:
Productivity and incomes. Better-quality jobs demand continuing concern for improved productivity and incomes. Where informal sector operators and workers enjoy better incomes, the possibility of focusing on applying labour standards and improving working conditions increases. Higher productivity and the gradual application of labour standards require more interaction with the formal sector.
Working conditions. Improving working conditions in the informal sector remains a primary concern. The link between better working conditions and increased productivity must be clearly demonstrated. Any effective programme must raise awareness among operators and workers as a priority. Women workers, workers with disabilities and child workers, in particular, need to be targeted. Slum upgrading and providing basic infrastructure and services are a successful strategy for simultaneously improving working conditions and productivity.
Social protection. Informal sector workers, who need social protection the most, are the least covered. This sector can least afford the costs of such protection. Therefore local initiatives need to be encouraged and supported. It is unrealistic to assume that statutory schemes will provide coverage to all.
Data collection. Because informal sector enterprises are small and unregistered, reliable data on them are unavailable in most countries. This has hampered the design of appropriate strategies for dealing with the other issues mentioned earlier. The ILO is assisting some countries in collecting and maintaining relevant data. Further work needs to be done on integrating data collection into the national census system, and ensuring that changes in the sector are monitored over time.
Role of self-help groups. Unidimensional approaches are ineffective when dealing with informal sector problems. These problems are interlinked, and the involvement of self-help groups, cooperatives, local government, workers’ and employers’ organizations and NGOs is essential in devising appropriate strategies. Schemes should build on the inherent strengths of the informal sector; existing informal groupings and associations need to be reinforced and used to the full. Such groups play an advocacy role, addressing areas of common concern. With strengthened capabilities, they can also help implement support programmes for the informal sector.
Role of workers’ and employers’ organizations. Workers’ organizations’ support programmes for unemployed workers could include interaction with the informal sector, particularly to raise awareness of working conditions and social protection. Employers’ organizations have the capacity to encourage linkages between the formal and informal sectors. They could also assist in entrepreneurship development.
Role of local governments. With a better understanding of the problems faced by the informal sector and of the need for a common search for solutions, municipal officials could serve as catalysts for inspiring real change within the sector. The ILO is developing training support programmes for the informal sector which specifically target municipal governments.
Integrating urban poverty and informal sector programmes. Urban poverty programmes need to address the problems faced by informal sector operators, such as access to basic services, skills development and income-generating opportunities.
Networking and sharing of information. Networking and regular sharing of informal sector information, within and among countries in the region, have the potential to be a learning experience and to ensure that efforts are combined where possible. The ILO is assisting with such initiatives.
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The informal sector and the ILO |
| Since 1972, the ILO – by itself and in partnership with governments, the social partners and NGOs – has undertaken many research projects, surveys and action programmes to increase understanding of the informal sector in different countries and cultures. In 1994-95, with the involvement of its technical branches, the ILO implemented a multidisciplinary project in three cities around the world. The project examined measures for improving the quality of employment in the informal sector, particularly relating to productivity and income, social protection and OSH. In Manila, with ILO technical support, surveys were carried out by the National Statistics Office. Government departments, local government units, and workers’ and employers’ organizations took part in studies and subsequent action programmes. |
| The ILO is launching its global Urban Employment Programme: Better Jobs for the Informal Economy, which will draw on the results of this pioneering work. |
| G. Joshi: The urban informal sector: Lessons learned and the way forward, paper presented at the National Workshop on Gearing up for the Challenges and Opportunities in the Urban Informal Sector, Manila, September 1996. |
Selected ILO publications
Aryee, G.: Promoting productivity and social protection in the urban informal sector - Project implementation report: Summary of activities, lessons and recommendations, ILO Interdepartmental Project on the Urban Informal Sector, IDP/INF Report (Geneva, 1996).
Channel for change - The urban informal sector in Thailand (Bangkok, ILO/Japan Project on Strategic Approaches toward Employment Promotion (ILO/PEP), 1996).
The dilemma of the informal sector, Report of the Director-General, International Labour Conference, 78th Session, 1991 (Geneva, 1991), Sfr. 12.50.
Gender, poverty and employment: Turning capabilities into entitlements (Geneva, 1995).
Joshi, G.: The urban informal sector: Lessons learned and the way forward, paper presented at the National Workshop on Gearing up for the Challenges and Opportunities in the Urban Informal Sector, Manila, September 1996.
Joshi, G.: Urban informal sector in Metro Manila - A problem or solution? (Manila, ILO South-East Asia and the Pacific Multidisciplinary Team, 1997).
Lim, H.: Miller, S.K.: The future of urban employment (Geneva, 2nd (revised) ed., 1998).
Liu, J.: Urban employment guidelines: Employment-intensive participatory approaches for infrastructure investment (Geneva, 1998).
Lyby, E.: From want to work: Job creation for the urban poor (Geneva, 1993).
Overy, A.; Piamonte, D.P.: Improving working conditions in the informal sector, paper presented at the National Workshop on Gearing up for the Challenges and Opportunities in the Urban Informal Sector, Manila, September 1996.
Pardden, S.; Adi, R.; Prasadja, H.: Children in hazardous work in the informal sector in Indonesia (Jakarta, ILO/IPEC, 1996).
Philippines - New challenges and opportunities for the informal sector, a report on the Studies and Action Programmes, ILO Interdepartmental Project on the Urban Informal Sector (Manila, 1995).
Prompunthum, V.: Enabling policy framework for the urban informal sector - Thailand (Bangkok, ILO/PEP, 1995).
Rural women in micro-enterprise development, A training manual and programme for extension workers (Geneva, 1996), 60 Sw. frs.
Sethuraman, S.V.: The rural informal sector in Asia : Policies and strategies (Geneva, 1994).
Sethuraman, S.V.: The urban informal sector in Asia: Policies and strategies (Geneva, 1995).
Statistics of employment in the informal sector, International Conference of Labour Statisticians,15th Session, Geneva, 1993.
Tipple, G.: Shelter provision and employment generation (Geneva, ILO/UNCHS, 1994).
Publications can be obtained from: ILO Regional Office for Asia and the Pacific
11th floor, United Nations Building, Rajdamnern Nok Avenue, P.O. Box 2-349, Bangkok 10200, Thailand
Tel: +66.2.288.1234, Fax: +66.2.280.1735, e-mail: bangkok@ilobkk.or.th