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Informal sector growth threatens decent work agenda, says ILO

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Africa tops 85.6 per cent in informal employment
The high incidence of informality has been identified as a major challenge militating against decent work and sustainable of an inclusive development, as transition to the formal economy is a condition to realise decent work for all, the International Labour Organisation (ILO) has said.

It added that the level of education is a key factor affecting the level of informality.

Globally, when the level of education increases, the level of informality decreases, as people who have completed secondary and tertiary education are less likely to be in informal employment compared to workers who have either no education or completed primary education.

Increased informality in all its forms has multiple adverse consequences for workers, enterprises and societies at large.

Recommendation from the International Labour Organisation (ILO), number 204 stressed the need to facilitate the transition of workers and economic units to the formal economy, to promote the creation, preservation and sustainability of enterprises and decent jobs in the formal economy and to prevent the informalisation of formal economy jobs.

A report by ILO showed that 93 per cent of the world’s informal employment is in emerging and developing countries while more than 60 per cent of the world’s employed population is in the informal economy

In Africa, 85.8 per cent of employment is in the informal sector. The proportion is 68.2 per cent in Asia and the Pacific, 68.6 per cent in the Arab States, 40.0 per cent in the Americas and 25.1 per cent in Europe and Central Asia.

The report further explained the two billion people – more than 61 per cent of the world’s employed population – makes their living in the informal economy, noting that agriculture is the sector with the highest level of informal employment – estimated at more than 90 per cent.
According to ILO’s Florence Bonnet, “There is an urgent need to tackle informality. For hundreds of millions of workers, informality means a lack of social protection, rights at work and decent working conditions, and for enterprises it means low productivity and lack of access to finance. Data on those issues are crucial for designing appropriate and integrated policies that are tailored to the diversity of situations and needs.”

Speaking on the significance of the informal sector, an Economist, Henry Boyo, in an interview with The Guardian stated that the important issue to be tackled is why more people are still entering into the employment market and not getting jobs?

According to Boyo, employment is employment be it in the formal or informal economy, noting that the purpose of ones’ working is to earn money.

His words: “If it so happened that people are moving from the formal to the informal economy and yet the informal sector is increasing, there is no reason to cry about unemployment so far the informal economy is creating jobs for them and they are being paid.

The only loser is if the government who would lose access to collecting revenue and taxes because it is more difficult to collect tax from the informal sector than the formal sector so they cannot put people in the formal market.”

He explained that In Nigeria the issue of unemployment would continue to rise unless the monetary indices are brought to international best practice levels at three per cent inflation rate, and cost of interest rate at four or five per cent.

He said: “Unemployment and employment are all factors of critical monetary indices which are hinged on inflation. If inflation is rising from 14 to 15 per cent, it means the money that people are earning which is not already enough is losing 14 to 15 per cent value every year, meaning that if one’s income is not increased, rate of purchase will also decrease which will also affect organisational growth.”

On his part, the Director, Department of Statistics of the ILO, Rafael Diez de Medina stated that until the transition to formal economy is realised, the high incidence of informality will continue to pose a major challenge for the realisation of decent work for all and sustainable and inclusive development.



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