ILC Radio Round-up

Day 3: From informal to formal

Why the transition to the formal economy goes to the heart of ILO priorities.

Audio | 03 June 2015
 On day three of the International Labour Conference, we find out about efforts to deal with the informal or so-called grey economy, which operates pervasively around the world and includes as much as 40 to 80 per cent of the workforce in developing countries.

During the conference, a Committee on facilitating transitions from the informal to the formal economy will debate the issues and make amendments, with a view to adopting a Recommendation.

The Chair of this committee, Virgil Seafield, who is Chief Director for advocacy and statutory services at the Department of Labour in South Africa, explains why formalization is such an important issue for the world of work:

As part of the developmental agenda it is important that when we want to grow the economies, we start formalizing these economies in a more structured manner. So that we develop them to the extent that they comply with the different pieces of legislation, policies and agenda of these countries they are located within.

Informality takes up half to three-quarters of all non-agricultural employment in developing countries. This grey economy usually means poor job conditions and increasing poverty. 

A whole host of problems arise in the informal economy, where taxes go unpaid and there is no government oversight. Workers often lack protection in the event of non-payment of wages, overtime, lay-offs and unsafe working conditions.

In addition, social benefits such as pensions, sick pay and health insurance aren’t paid. Women, migrants and vulnerable groups of workers who are excluded from other opportunities have little choice but to take informal low-quality jobs.

Seafield explains what the committee hopes to achieve during this ILC:

It would be a very easy answer to say we hope to achieve a recommendation. What we actually hope to achieve is to have a set of standards, to have a guideline for countries to move from informal economies to the formal economy. And I think that is the critical part, so that we have decent work within these informal economies.

Tomorrow at the ILC, the committees will continue to meet and plenary discussions begin. Those will include ILO Director-General Guy Ryder’s report on the future of work and a report on the situation of workers in the Occupied Arab Territories.

Reporting from the Palais de Nations for the ILO, this is Carla Drysdale.