ILO report highlights pathways to expand social security coverage for workers in informal economy

BANGKOK (ILO News) – Measures that support transitions to formality, strengthen worker protection and boost accessibility to schemes are needed to help extend social security coverage to workers in the informal economy, according to an International Labour Organization (ILO) report.

Expanding social security coverage in the informal economy: China's experience and lessons examines the approaches taken and challenges faced by China, Kenya and the Lao People’s Democratic Republic in developing social security systems, expanding coverage and strengthening digital administration.

The report finds that the three countries face several common challenges. These include high levels of informal employment, complex employment relationships, limited capacity among some workers to contribute to social insurance schemes and relatively high participation costs of formal schemes.

It identifies several elements of China's experience that may provide useful for other developing countries. These include taking steps to lower the threshold to participation for workers in the informal economy by combining contributory schemes with publicly financed or subsidized arrangements. The creation of more flexible participation pathways are highlighted to support those in flexible employment and new forms of employment. Unified service platforms, electronic credentials and online processing are also identified as being able to reduce costs and enhance efficiency.

The report also highlights the value of using pilot programmes. The success of China’s pilot occupational injury protection programme for workers in new forms of employment and its comprehensive roll out of electronic social security cards are both cited as having successfully helped expand coverage.

For Kenya and the Lao People's Democratic Republic, the report suggests that a feasible pathway could include strengthening non-contributory floor-level protection alongside contributory social insurance; providing more targeted subsidies or contribution support for low-income and vulnerable groups; lowering administrative and service-delivery costs through digital payments and mobile services; and progressively expanding coverage through pilots and evidence-based evaluation.

“Countries have different labour markets, institutions and levels of fiscal and digital capacity, so there is no one-size-fits-all approach to extending social security coverage,” said Tian Feng, manager of the ILO/China Partnership Programme. “The experiences highlighted in this report show that successful reforms need to be adapted to national circumstances. Institutional reform, adequate financing, stronger administrative capacity and digital transformation all need to advance together if social protection is to reach more workers in the informal economy.”

The study was undertaken by the China Association of Social Security (CAOSS) within the framework of the ILO/China Project on Extending Social Protection Coverage to Workers in the Informal Economy in the Lao People’s Democratic Republic and Kenya and Leveraging Digital Transformation through South–South Cooperation.

From 2023 to 2026, the project supported policy dialogue, capacity-building, technical cooperation and digital tool development through South–South cooperation, to help Kenya and the Lao People’s Democratic Republic expand social protection coverage for workers in the informal economy.