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🔍What is Informal Employment?

  What is Informal Employment?


Informal employment refers to work that is not regulated by formal contracts, laws, or social protection. Informal workers may include self-employed people, such as street vendors, farmers, or domestic workers, as well as wage workers, such as casual laborers, home-based workers, or subcontractors. Informal employment is often characterized by low and irregular incomes, lack of social security and benefits, and exposure to various risks and vulnerabilities.


According to the International Labour Organization (ILO), informal employment accounts for more than 60 percent of global employment and more than 90 percent of employment in low-income countries. Informal employment is especially prevalent in sectors such as agriculture, construction, trade, and services. Informal employment is also more common among women, young people, migrants, and other marginalized groups.


Informal employment has both advantages and disadvantages for workers and society. On one hand, informal employment can provide a source of income and livelihood for millions of people who have limited access to formal opportunities or face discrimination and exclusion. Informal employment can also contribute to economic growth and development by creating jobs, generating income, and stimulating demand. On the other hand, informal employment can undermine decent work standards and labor rights, as well as social protection and fiscal systems. Informal employment can also perpetuate poverty and inequality by trapping workers in low-productivity and low-quality jobs.


The ILO advocates for a transition from the informal to the formal economy as a means to achieve decent work for all. The ILO defines formalization as "the process through which informal workers and economic units obtain access to rights at work, social protection and an enabling environment for entrepreneurship". The ILO recommends a comprehensive and integrated approach to formalization that addresses the multiple dimensions of informality, such as legal and regulatory frameworks, governance and enforcement mechanisms, social dialogue and representation, incentives and compliance measures, skills development and education, access to finance and markets, social protection and infrastructure.


Informal employment is a complex and dynamic phenomenon that reflects the realities and challenges of the world of work. By understanding its causes, consequences, and potential solutions, we can better address the needs and aspirations of informal workers and promote a more inclusive and sustainable development.


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