Panels - The informal economy: Turning the 2002 Conclusions into action

The chair opened the meeting by recalling the major debate on decent work and the informal economy that took place at the 2002 Conference. Although it was not the first time that the Conference addressed this issue - there was also a discussion in 1991 - it was the most systematic and best prepared. It still remains a landmark on considering the informal economy from all angles - rights of workers and enterprises, protection and vulnerability, employment and productivity, organization, representation and voice. There is, however, a need for instruments and policy frameworks which permit us to adequately address the needs of the informal economy.

The 2002 debate tried to point the way forward, building on the capabilities of the ILO's tripartite constituency, suggesting priorities for the Office and for governments, workers' and employers' organizations. In the last three year, efforts have been made across the ILO and among the constituency to pursue these goals. The knowledge fair gives us a sense of where we stand, the knowledge which we have developed. We know a lot, but much of what we know is local and specific. We need to bring it together better and we need to think together, systematically, about how the 2002 recommendations can be made a reality.

Mr. Daniel Funes de Rioja, President of the Social Policy Commission of the Industrial Union of Argentina and Executive Vice President of the International Organization of Employers

Mr. Funes de Rioja stated that the move from informality to formality is far from straightforward. It requires a policy mix which creates growth, investment, employment and opportunities. A conducive, enabling environment is required for national enterprises to develop and prosper, coupled with policies to reduce barriers to international trade and foreign direct investment. The private sector creates and sustains jobs, creating opportunities for livelihoods. This is a key element in the fight against poverty.

Many individuals are excluded from or have limited possibilities for entering the formal economy because of extensive regulation. Regulation needs to work for business and workers - not hinder them. In some countries registering a business can take up to hundreds of days.

The employers believe that a focused approach is essential, building on past work, and demonstrating what can be done in practice at the country level with the social partners. Three examples of this type of work being carried out in partnership with employers organizations are:

• Jamaica (on the issues of the regulatory environment for SMEs and the complexities of business registration),
• Kenya (on linkages between formal enterprises and SMEs to improve products and supply the formal enterprises), and
• Mongolia (on the relationship between formal mining companies and informal miners).

The two main priorities for the employers as regards the informal economy are influencing government legislation and policies that create an enabling environment, and assisting informal economy operators in a variety of ways (especially access to services, capacity building and organizing).

Sir Leroy Trottman, General Secretary of the Barbados Workers' Union and Head of the ILO's Workers Group

In order to analyze the situation of the informal economy, we need to look at what it represents. In some countries it may represent only 15-20% of the population, but in others up to 90 or 95%. For the labour movement, the informal economy has to do with employment activities that are outside the mainstream labour/management relationship. Although there are those in the informal economy who are seeking formalization, in spite of the bureaucratic constraints, he noted that the group that the ILO is trying to deal with are those who are in the informal economy out of necessity.

He was happy to see that the knowledge fair provided a guide to what is possible and successful as well as providing an occasion to explore new ideas through dialogue. He hoped that we could learn from some of the new ideas that would spring from the discussion.

In his opinion growth and investment without employment is no good. And it's not enough just to create jobs. All work should be decent. And we need a universal governance to define what we mean by decent work. That governance is contained in the international labour standards. And those standards are not downgradable just because the work is in the informal economy. This governance approach has to apply to small industry, marginalized areas and the physically challenged. The ILO has a role as the standard bearer to ensure decent work for all.

How can the trade unions help? By providing protection that the informal economy workers have been denied, by providing advice and representation, by lobbying governments and employers, and even through setting up businesses to provide work to those who have lost their jobs - or at the very least - give advice and guidance to help them set up their own businesses.

The labour movement has a big challenge before them of how to interpret the question, how to assist in building an informal economy that can be profitable and how to deal with the decent work deficit.

The chairperson pointed out that both speakers gave clear statements of concerns and priorities. There were a lot of points of convergence between the two, including concern with a level playing field, rules and governance issues so that enterprises and workers all have the same chance, the undermining of equality of opportunity issues, and the concern with identifying what works.

Many delegates participated in the discussion. Important issues that were brought up included:

• the informal economy is different in different countries;
• there is a lack of tripartite communication on issues concerning the informal economy;
• much of the informal economy is in agriculture in some countries;
• there is a need to change our concept and our model. The model on issues of informal economy is now more of individual value;
• the informal economy has become a survival sector for the unemployed;
• the informal economy has the capacity to generate new jobs;
• the informal economy needs more of a promotional approach than a regulatory one;
• employers' organizations and trade unions don't have the competencies to deal with the informal economy;
• entry points need to be identified in order to deal with many of the decent work issues with the social partners;
• the quality of regulations is important; they need to be effective and realistic in order for informal economy regulators to formalize;
• there is a relation between informality and precariousness;
• there is a need for statistics;
• literacy is an issue: many operators in the informal economy don't know the regulations because they can't read;
• we have to accept the cohabitation of the two economies.

In response to the discussion Mr. Funes de Rioja stressed the role of the ILO in creating social dialogue and seeking concensus. Standards provide a common ground and are not negotiable. Some of the issues brought up were related to the realities of development. There is a necessity to pass from underdevelopment to development to meet the challenge of making micro and small enterprises formal.

Mr. Trottman agreed with what Mr. Funes de Rioja said. We cannot compromise on fundmental rights, especially freedom of association. He mentioned that there were several reasons to go into the informal economy, but to a great extent participation was out of necessity because of lost work or marginalization. The important thing is to address the decent work deficits and the need for greater integration to help us move in a direction where the entire economy can benefit.