Informal economy

Viet Nam Cooperative Alliance, ILO join hands to facilitate the formalization of the informal economy

The two organizations sign an MoU to support the effective formulation and implementation of local strategies for promoting pro-poor employment, facilitating the transition to formality, inclusive economic development and sustainable business development.

News | 27 May 2016

HANOI (ILO News) – The Viet Nam Cooperative Alliance (VCA) and the ILO inked a memorandum of understanding (MoU) on 27 May to provide a framework for both organizations to support the transition to the formality of the informal economy.

The informal economy still makes up a large part of Viet Nam’s economy. The number of people working in informal employment accounts for 68 per cent of the total non-agriculture jobs. Viet Nam is also among the countries with the highest percentage of informal employment outside the informal sector in Asia and the Pacific, at 25 per cent.

Informal workers in Viet Nam tend to have low and irregular incomes, long working hours and little access to social protection and opportunities for skills development. As they are not recognized, registered or regulated, and thus not protected by labour market institutions, people in informal employment are exposed to what is known as “working poverty”.  

By joining hands with VCA with its 13 million member cooperatives employing more than 30 millions of workers in Viet Nam, the ILO expected to promote the formality through VCA’s supporting roles in local economic development and providing services for its members.

“Low-level and small-sized cooperatives have proved their roles in promoting pro-poor employment and increasing the average incomes in rural areas,” said ILO Viet Nam Director Chang-Hee Lee. “They have great potentials not only to grow into higher-level and bigger-sized businesses but also to improve working conditions and ensure the equitable share of economic benefits for the workers who are often at the same time, own the shares of the cooperatives.”

VCA Chairman Vo Kim Cu called the MoU “an important step forward” for the association in its cooperation frameworks for sustainable development in the coming years.