Tackling informal employment in the Caribbean through policy action

Policy lens

Approximately three in every four workers in the Caribbean are engaged in informal employment. That is approximately 5.85 million people out of a total workforce of 7.8 million. In Haiti alone, where the labour force numbers around 4.5 million, a staggering 91 per cent of workers operate in the informal economy. Across the rest of the Caribbean, more than half the number of workers also earn their livelihoods outside of formal employment structures.

But these are more than just statistics; they reflect real people’s lives and aspirations. Think of the street vendor enduring the midday sun, the domestic worker without a contract, the construction labourer paid by the day, or the migrant chasing the dream of a stable income. Each of these individuals is not only working to survive but also striving to support a family, plan for the future, and contribute to their community. Many informal workers are young women and men who aspire to better opportunities.

How does informal work impact lives?

Most informal workers do not set out to work outside of formal systems. Many begin their journey searching for decent jobs, but after repeated setbacks, they take whatever they can find regardless of whether it pays enough to live on. Once in the informal economy, they often face work longer hours, earn lower wages, and receive minimal or no protections. There is no health insurance, no paid leave, no child benefits, and nothing to rely on in old age.

For the 5.85 million workers in this reality, informality is not a choice it is the result of limited opportunities, weak policy responses, and insufficient social dialogue.

What can the power of policy achieve?

Addressing the informal economy is possible. Three integrated policy interventions are essential, as a starting point, to tackle the persistent challenge of informality in the Caribbean:

1. Measure what matters: Regular and accurate measurement of the informal economy is crucial. National Statistical Offices should collect statistics following implement the ILO’s 2023 Resolution concerning statistics of the informal economy, which offers a clear and practical framework for gathering harmonized data through labour force surveys. Reliable data empowers policymakers to monitor trends, assess impacts, and craft evidence-based policy responses.
2. Promote inclusive employment policies: All employment-influencing policies, macroeconomic, sectoral, enterprise, and labour market should actively support the transition from informal to formal work. The ILO’s Recommendation No. 204 provides comprehensive guidance to steer this transformation, ensuring that workers and economic units have pathways into formal economy.
3. Ground reforms in labour rights: Any transition must be grounded in fundamental labour rights and protections. This includes guaranteeing freedom of association and the right to collective bargaining, alongside the extension of social protection systems to informal workers. Ensuring these rights not only enhances job quality but also promotes inclusive and sustainable development.

Toward a formal future

The path to formalization is not easy, but it is achievable with the right data, policies, and commitment to justice and equity. With bold policy action, we can move beyond the numbers and help millions of Caribbean workers step out of the shadows and into secure, dignified and decent work.