Combatting Informality and Spurring Formal Employment to Achieve Decent Work and Social Justice

10:45-12:00 ICT

Background

The large presence of informal economy in the Asia-Pacific region leaves informal workers with little to no access to social protection systems and employment protection. Workers in the informal economy are more likely to face more challenges when it comes to accessing labour rights and decent working conditions. The majority of informal businesses are micro or small enterprises, with low levels of productivity which impedes them to grow economic efficiencies and scale economies. During big economic shocks like the one posed by the COVID-19 pandemic or climate change, these businesses face harder conditions than formal businesses, partly because of their access to social protection for their workers, access to formal lines of credit, access to services provided by governments as part of the recovery packages. Before the COVID-19 pandemic, informality and working poverty remained widespread in the Asia-Pacific region, despite the rapid economic upgrading of the economy in the region, it didn’t translate into formalisation of the majority of businesses, leaving many workers in the margins of development and social upgrading. 

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In 2015, the International Labour Conference (104th session) adopted the Recommendation No. 204 concerning the Transition from the Informal to the Formal Economy. This ILO standard acknowledges that informality has multiple causes, including governance and structural issues, and that indeed public policies can speed up the process of transition to the formal economy, in a context of social dialogue; in addition the Recommendation 204 affirms that the transition from the informal to the formal economy is essential to achieve inclusive development and to realize decent work for all.

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In addition, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) calls for Governments to “develop and implement an integrated policy framework to facilitate the transition to the formal economy, recognizing that decent work deficits are most pronounced in the informal economy”. The Declaration also calls on multinational enterprises and other enterprises to contribute to the formalisation of businesses. This provision builds on ILO Recommendation 204 “Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204)”.

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This session will discuss challenges to respect human rights and labour rights in the businesses operating in the informal economy, as called for in international instruments and national legislation, the later remains the main legal compliance framework for informal economic units to transit towards formality, addressing structural and institutional constrains at the national/local level. It will look at initiatives and strategies that Governments, the private sector and workers organisations have developed or are putting in place as part of the recovery measures in the aftermath of the COVID-19 crisis. And  how these implicitly or explicitly promote formalisation as a way to make the economy more competitive, improve the workers’ access to better working conditions and enlarge the coverage of services to businesses currently in the informal economy. The session will also highlight  experiences of companies and discuss potential solutions to address these challenges, including initiatives that make companies more aware of their social and environmental vulnerabilities when operating in the informal economy as well as help them address these challenges.

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Objectives

The key objectives of this session are to:

• Discuss how the informal economy, by its very nature, poses obstacles for workers to access their rights and obtain decent work and thus also for businesses to respect human rights; 

• Analyse the opportunities posed by COVID-19 recovery measures/polices in order to promote a transition towards formalisation;

• Discuss the role of States, social partners and other relevant stakeholders in establishing an enabling environment to transit towards formality; and how this transition could be a lever of change to promote social justice, inclusive economic growth and the promotion of HR in the private sector;

• Share good practices aimed at improving the rights of workers in the informal economy.  

Guiding Questions

Panelists will reflect on the following questions:

• What incentives can States offer to reduce decent work deficits and support transitions towards formality?

• What are the most common challenges faced by informal enterprises to ensure compliance with ILS and to provide decent working conditions to their workers;

• How can EBMO and enterprises support governments in implementing the recommendations to facilitate the transition from informality to formality in R.204?What lessons can we draw from how informal workers were impacted disproportionately by COVID-19?

• What type of policies and measures need to be put in place to reduce decent work deficits among informal workers while supporting them to benefit from recovery policies/measures; and how these measures could be instrumental to foster formalisation?

• How are informal workers likely to be affected by newer challenges such as climate change and automation? What should be done now to overcome those challenges?