Informal Economy

Innovation to Increase Access to Social Security in Vanuatu

ILO in partnership with the Vanuatu National Provident Fund (VNPF), Vodafone and the United Nations Capital Development Fund (UNCDF), launched the payment gateway of the mobile application M-Vatu, with the aim of making it easier for members to make direct contributions.

Article | Port Vila, Vanuatu | 31 August 2021
M-VATU launch, Port-Vila, Vanuatu
Informal sector workers, including those who are self-employed, are now able to access social security services through mobile phone technology.

The International Labour Organization [ILO], in partnership with the Vanuatu National Provident Fund (VNPF), Vodafone and the United Nations Capital Development Fund (UNCDF), launched the payment gateway of the mobile application M-Vatu, with the aim of making it easier for members to make direct contributions.

“With M-Vatu, it is now easier than ever to access VNPF services for self-employed workers through the click of a few buttons. Even our seasonal workers living abroad can start putting aside some of their income using their mobiles,” said the Minister of Finance and Economic Management, Honourable Johnny Koanapo, while officially launching the pioneering initiative.
According to the 2020 ILO supported Vanuatu Workers Rapid Assessment on the impact of COVID-19:

  • Out of 84,859 employed workers in the country, 56,806 are informally employed (or 66.9 percent).
  •  The incidence of informal employment is the highest in the agriculture, forestry and fishery sector (95.1 percent), followed by industry (62 percent) and the service sector (45.2 percent).
  • Informal employment among women is higher than that of men. Out of 38,223 employed women, 68.7 percent are in informal employment (or 26,242 persons), compared to 65.5 percent of men.
  • The trend of informal employment by educational attainment is aligned with the trend of employment in the informal sector, that is, the higher the educational attainment, the less likelihood of being in informal employment.

Parallel to the onset of COVID-19, Vanuatu was hit by category five Tropical Cyclone Harold, in April 2020, which affected more than half of the population. Damage and losses associated with TC Harold and COVID-19 were estimated at around US $617 million (61 percent of the 2020 GDP).

Mr Matin Karimli, the ILO Director for Pacific Island Countries, highlighted that there has never been a more important time for Pacific countries to ensure that no one is left behind.

“Informal sector workers, including those who have transitioned from the formal sector, are often unseen and unrecognized. If Pacific countries are to recover from COVID-19, they must include and empower informal economies”, said Mr Karimli.

He further emphasized that the launch of M-Vatu will ease informal sector access to social security and illustrates Vanuatu’s strong commitment to enhancing inclusivity through digitalization and strong partnerships.

The lack of social protection for workers in the informal economy and their families makes them particularly vulnerable to shocks, as they cannot count on the protection provided by social insurance or poverty-targeted social assistance schemes.

Two ILO instruments in particular highlight the need to extend social protection coverage to those in the informal economy. They are based on the recognition of social security as a human right and the general responsibility of the state to guarantee the due provision of adequate benefits and the sustainability of social protection systems. The need to provide social protection to those whose jobs and livelihoods have been disrupted by crisis situations is also highlighted in the Employment and Decent Work for Peace and Resilience Recommendation, 2017 (No .205).

The General Manager of the VNPF, Mr Parmod Achary said that the fund was targeting the registration of 50,000 informal sector workers this year, particularly domestic workers, market vendors (mamas), farmers, fishermen and seasonal workers.

The ILO is supporting this initiative through a UN Joint Informal Economies Recovery Project that aims to improve the employment and business environment in the informal sector through sustainable businesses, access to social security and organising informal economy workers – via associations.

In addition to the launch of the digital platform, the ILO is collaborating with the VNPF to promote the M-Vatu payment gateway in rural and outer islands, establish a technical working group to oversee informal sector targeted initiatives and supporting the development of products that will benefit and attract informal sector workers and entrepreneurs.

”Facilitating access to registration and other administrative procedures is an important element that can help to enhance social security coverage to informal economy workers and their families, said Mr Markus Ruck, the ILO’s Social Protection Specialist. “International experiences demonstrate that expanding physical access points, using mobile technology and digital services, coordinated IT solutions and single window services offer a range of possibilities that can help to expand coverage”,

This ILO led initiative also contributes to the Vanuatu Recovery Strategy 2020-23 (TC Harold & COVID-19). One of the guiding principles of the strategy is, “We will promote the active inclusion and protection of our vulnerable people and groups with gender, justice and social protection key cross cutting issues to be addressed.”

Similar work is planned in Tonga and Fiji by the ILO.