The majority of people in developing countries live and work in the back alleys of the marketplace, the informal economy, the rural subsistence economy and the care economy.This presents a major challenge.
As many as 4 billion people – two-thirds of the world’s population – live largely outside formal legal systems, mainly in developing and transition countries where poverty is most severe. The most fundamental elements of a market economy, such as respect for contracts and recognition of titles to property, are often not available to wage workers, self-employed workers or micro and small businesses in this huge and growing informal economy.
How can we make the most of improved efforts to reduce poverty if only the tip of the iceberg – the formal economy – is under the influence of public policy? Likewise, global markets do not respond to the needs of the poor because with only US$2 a day, they have little influence on markets.
We need to develop appropriate bridging mechanisms, rules and systems.
Decent work is a common framework for a progressive process of upgrading.
The main point is not to impose unattainable standards or unrealistic goals, but to recognize that decent work has a moving threshold.
It is possible to respect basic standards at all levels of development. Societies can agree on new goals as circumstances change and put in place a process to reach them over time. Above all, this calls for new thinking.
A new approach must be based on the reality that most people live and work in the informal economy not by choice but out of a need to survive.
Wage workers, own-account workers and small businesses in the informal economy face similar problems of insecurity and vulnerability. Unable to find other jobs or start businesses in the formal economy, they lack protection, rights and representation, and often remain trapped in poverty. Especially in circumstances of high unemployment, underemployment and poverty where opportunities in the formal economy are scarce, the informal economy is the only source of income-generating work. Although many business people operating in the informal economy display extraordinary creativity, dynamism and innovation, they rarely have the means to cross the threshold into formal recognition and obtain the security it can provide for further investment and the creation of more and better jobs.
A sound poverty reduction strategy must place great emphasis on the participation of working people living in poverty in policies to improve their lives. The ILO has always stood for the transformative power of organizing:
whether it is used to organize governments, employers or workers, the freedom for people to band together and develop common strategies and solutions is fundamental to social progress. How can our tripartite experience be helpful to facilitate organizing to end poverty in the rural and urban informal economy?
In addition, just as the property assets of the poorest are too often untitled and therefore not “bankable” or able to be used as collateral for loans at regular banks, the knowledge and skills of the poor are not recognized in the formal market or educational systems. What are the best ways to certify or accredit the skills of people in the informal economy?
To learn more about this author, visit International Labour Organization's Website.
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