Engaging informal economy actors in trade and labour policy in Africa

• Trade-linked employment is associated with lower informality than non-trade employment, by 12.4 percentage points globally and 8.1 percentage points in Africa. However, this pattern does not imply a straightforward transition towards formality. In Africa, trade liberalisation has often coincided with rising informality as domestic firms face greater international competition.
• Africa has the world's highest informal employment rate at 85 per cent. While informality is lower among trade-oriented jobs, around 75 per cent of these jobs are still informal. Informal cross-border trade alone provides employment for at least one fifth of the continent's economically active population.
• Despite being directly affected by trade and labour policy, informal economy actors face systemic barriers to participating in policy dialogue. This includes difficulties in reaching and organising informal workers, ambiguous employment relationships that complicate their recognition, and weak dialogue mechanisms, particularly on trade policy. As a result, their interests are seldom reflected in trade policy decisions.
• Some approaches used in the region can help address these barriers, although they remain limited in scope. Cooperatives and other alternative forms of collective organisation often engage and support informal economy actors. When they are affiliated with formal social partners, these organizations can give these workers a route into organised representation. Trade agreements with labour provisions, particularly the AfCFTA, also offer significant yet largely unrealized frameworks to this end.

This brief was prepared by Iuliia Privalikhina, ILO Research and Statistics Department. The author is grateful to Stefan Kühn for providing estimates on employment linked to trade, and to the following colleagues for their comments and suggestions: Marva Corley-Coulibaly, Franz Christian Ebert, Christoph Ernst, Hyung Sikeum, Caroline Fredrickson, Grayson Koyi, Sameeksha Matta, Pelin Sekerler Richiardi, Arianna Rossi, Guy Tchami.