KEY FINDINGS OF WIEGO

1
KEY FINDINGS OF WIEGO

• 1 SIZE AND SIGNIFICANCE OF THE INFORMAL
  ECONOMY
• informal employment comprises 50 to 75 per cent
  of non-agricultural employment in developing
  countries
• the proportion of informal employment in total
  employment is higher still (over 90 in some
  countries)
• informal enterprises contribute 15 to 55 per cent
  of non-agriculture GDP in those developing
  countries where data are available
• the contribution of the informal economy as a
  whole to total GDP is higher still

2
KEY FINDINGS OF WIEGO

• 2 HETEROGENEITY OF THE INFORMAL ECONOMY
• by size of enterprise
• micro-enterprises with hired workers
• family enterprises with unpaid family workers
• single person operations
• by employment status
• self-employed
• employers
• own account operators, including
• heads of family enterprises
• single person operators
• unpaid contributing family workers
• wage workers
• informal employees of informal and formal
  enterprises
• casual workers
• industrial outworkers (?)

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KEY FINDINGS OF WIEGO

• 2 HETEROGENEITY OF THE INFORMAL ECONOMY
  (cont.)
• by place of work
• homes
• streets
• workshops
• open spaces
• fields, forests, waterways
• by reason for being informal
• includes those who seek to
• pursue livelihoods or survival
• pursue traditional or hereditary occupations
• also includes those who seek to
• trade in illegal goods and services
• evade taxes and/or regulations

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KEY FINDINGS OF WIEGO

• 3 - SEGMENTATION AND POVERTY LINKAGES OF THE
  INFORMAL ECONOMY

5
KEY FINDINGS OF WIEGO

• 4 ECONOMIC GROWTH AND THE INFORMAL ECONOMY
• substantial variation
• sharp economic downturns are associated with a
  rise in informal employment
• steady rates of economic growth are also
  associated with a rise in informal employment
• causal explanation
• certain forms of informal employment expand
  during downturns in the economy
• notably, survival activities
• sub-contracted or outsourced activities linked to
  firms that are coping with recession
• other forms of informal employment expand during
  upturns in the economy
• notably, more entrepreneurial firms
• sub-contracted or outsourced activities linked to
  global value chain production

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KEY FINDINGS OF WIEGO

• 5 - HIDDEN COSTS OF INFORMAL EMPLOYMENT
• direct out of pocket costs
• direct indirect taxes
• high costs of capital
• high costs of electricity transport
• periodic shocks
• indirect costs
• variability and volatility of work/income
• lack of social protection
• lack of training mobility prospects
• lack of capital other assets
• lack of legal status bargaining power

7
KEY MESSAGES OF WIEGO

• 1 Given its size and heterogeneity, the
  informal economy requires an integrative theory
  of its causes, characteristics, and consequences
  that takes into account its various components.
• causes
• necessity
• tradition
• choice
• characteristics
• working poor
• entrepreneurs
• illegal operators
• consequences
• poverty and vulnerability
• flexibility and profit

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KEY MESSAGES OF WIEGO

• 2 Given its size, significance, and
  heterogeneity, the informal economy requires an
  appropriate and comprehensive policy response
  that takes into account the fact that
• addressing informality is not just a matter of
  regulation and taxation but also of economic
  promotion and development
• most economic and social policies affect the
  informal economy and workforce, directly or
  indirectly
• policies need to be informed about and balanced
  towards the informal economy
• policy-making and rule-setting processes need to
  include representatives of relevant categories of
  informal workers

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KEY MESSAGES OF WIEGO

• 3 An appropriate and comprehensive policy
  response to the informal economy should seek to
• expand formal employment opportunities
• formalize as many informal enterprises as
  possible increase returns to those who continue
  to operate informally through
• simplified registration procedures progressive
  fee structures
• progressive tax and targeted procurement systems
• tax-funded incentive packages
• appropriate legal frameworks
• supportive investment climate
• formalize as many informal jobs as possible
  improve working conditions of those who continue
  in informal jobs through a mix of
• labour legislation and regulations
• collective bargaining for workers rights
• corporate codes of conduct
• social protection coverage

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KEY MESSAGES OF WIEGO

• 4 The essential preconditions for an
  effective policy response to the informal economy
  are the organized voice and informed
  visibility of informal workers. This
  requires, more specifically
• building and strengthening member-based
  organizations of informal workers, including
  women, and helping these organizations gain
  effective representative voice in relevant
  policy-making processes and rule-setting and
  institutions
• increasing the visibility and informed
  understanding of informal workers, including
  women, in national labour force statistics and in
  national gender and poverty assessments
• promoting inclusive and participatory policy
  dialogues, policy processes, and rule-setting
  institutions involving all relevant stakeholders,
  including representatives of MBOs of informal
  workers, including women