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Informality Beyond COVID-Casual – IMF and ILO Report on the Global Informal Workforce

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This is a guest post by Elizabeth Boomer, an international law consultant in the Global Legal Research Directorate. Elizabeth has previously written for In Custodia Legis on Technology & the Law of Corporate Responsibility – The Impact of Blockchain30th Anniversary of the United Nations Convention on the Rights of the ChildUnited Nations Day – A Time to Reflect on the Potential Role of the International Court of JusticeFacebook’s New “Supreme Court” – The Oversight Board and International Human Rights Law, and Reflecting on 10 Years of the United Nations Guiding Principles on Business and Human Rights

The International Monetary Fund (IMF) and the International Labour Organization (ILO) recently launched the report “The Global Informal Workforce: Priorities for Inclusive Growth,” which highlights that informal workers, who make up more than 60% of the world’s adult workforce, generally lack social protection and that women are more likely than men to be in the most precarious and low-paying categories of informal employment.

The IMF/ILO report points out that the informal economy is a globally widespread and pervasive phenomenon, with important macroeconomic consequences, but what about the consequences for workers’ rights? While a lot of people have been dressing more informally since the COVID-19 lockdowns (a.k.a. COVID-casual), the informality of work can be a bit more problematic, introducing numerous challenges to social protections, and for women workers in particular. The ILO defines the informal economy as referring to all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements; it does not include illicit activities.

As noted in the IMF/ILO report, informal employment is especially prevalent in rural areas, with the agricultural sector having the highest level of informal employment globally – estimated at more than 90 percent. In its own 2019 report, “Tackling Vulnerability in the Informal Economy,” the Organisation for Economic Co-operation and Development (OECD) also found that a majority of workers in the world were informally employed, and proposed the OECD Key Indicators of Informality based on Individuals and their Household (KIIbIH) to improve the lives of workers in the informal economy.

Informality in International Law

The ILO presented a Centenary Issue on Informality in 2021 to mark the 100th anniversary of the International Labour Review (ILR), which analyzed 10 important articles on informality, published between 1975-2016. The framework presented in the introduction by Ravi Kanbur includes four categories of formal/informal economic activities: (1) those covered by the regulation and in compliance; (2) those covered by the regulation but not in compliance; (3) those covered by the regulation initially, but actors adjust their activity in a way that puts them out of coverage; and (4) those not covered by the regulation.

However, Kanbur acknowledges that the common notion that informal work is bad, or that reducing informality is the goal, is not the appropriate objective. As evidenced by the ILO conventions and recommendations below, the appropriate objective is “the design and regulation and interventions with appropriate social objectives, taking into account economic and social agents’ varied responses…”

ILO Conventions and Recommendations

The nongovernmental organization (NGO) Women in Informal Employment: Globalizing and Organizing (WIEGO) notes in its “Law & Informality Insights” newsletter that three international instruments – ILO Convention 189 (Domestic Workers Convention), ILO Recommendation 202 (Social Protection Floors Recommendation), and ILO Recommendation 204 (Transition from the Informal to the Formal Economy Recommendation) – recognize informal workers as possessing fundamental worker rights and protections. Recommendation 204 defines the informal economy as “all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements.”

As WIEGO notes, the issue of how to expand relief measures to informal workers has been one of the most difficult questions of the challenges posed by COVID-19. Indeed, the ILO published “COVID-19 crisis and the informal economy: Immediate responses and policy challenges” in May 2020 to address the all-too-real dilemma of dying “from hunger or from the virus.”

In particular, the 2012 Social Protection Floors Recommendation reaffirms that social security is a human right, and provides guidance to countries to ensure effective access to essential health care and basic income security throughout the life cycle. The 2015 Transition from the Informal to the Formal Economy Recommendation provides guiding principles to countries to facilitate the transition to the formal economy, including taking into account specific national circumstances, the promotion of sustainable development, poverty eradication and inclusive growth, and the generation of decent work in the formal economy.

In addition, ILO Convention 190 (Violence and Harassment Convention) applies to “workers and other persons in the world of work, including employees as defined by national law and practice, as well as persons working irrespective of their contractual status…” Furthermore, ILO Recommendation 206 (Violence and Harassment Recommendation) provides that “in facilitating the transition from the informal to the formal economy, Members should provide resources and assistance for informal economy workers and employers, and their associations, to prevent and address violence and harassment in the world of work.”

Global Partnership for Universal Social Protection (USP2030)

In addition to the work of the IMF/ILO, OECD, and NGOs, the World Bank Group and the ILO will present the Global Partnership for Universal Social Protection (USP2030) in September 2021, at the 76th session of the United Nations General Assembly (UNGA). Launched in September 2016, the USP2030 urges countries and international partners to support the global commitment to implement nationally appropriate social protection systems and measures for all, including social protection floors. According to the ILO, only 27 percent of the world’s population has adequate social security coverage, and more than half lack any social protection at all. The COVID-19 pandemic has also negatively impacted women workers, who have suffered disproportionate job and income losses, have lost social protection, and have seen an upsurge in violence and harassment.

USP2030, linked to the Sustainable Development Goals (SDG), in particular target 1.3, has five actions: (1) protection throughout life cycle; (2) universal coverage; (3) national ownership; (4) sustainable and equitable financing; and (5) participation and social dialogue. USP2030 is further supported by SDG target 8.3.1, which includes a specific statistical indicator on informal employment.

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