SOCIAL PROTECTION AND

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• SOCIAL PROTECTION AND
• THE INFORMAL WORKFORCE
• Marty Chen
• Harvard University
• WIEGO Network

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REMARKS

• Context
• increasing informality
• widening institutional mismatch
• Scale and Nature of Problem
• Reducing the Coverage Gap
• guiding principles
• promising examples
• key preconditions

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CONTEXT 1LARGE AND GROWING INFORMAL ECONOMY

• share of informal/unprotected employment in total
  employment
• developing countries 60-90
• developed countries 25-40
• informality is expanding both -
• old forms new forms
• self-employment wage employment
• informality is expanding under conditions of
  both -
• labour market regulation labour market
  de-regulation
• economic growth economic stagnation economic
  crisis

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CASE OF INDIA

• Composition of Workforce 2001
• lt 10 formally employed
• 50 self-employed
• 40 or so engaged in informal/unprotected
• jobs (notably in agriculture but also
  in
• construction, manufacturing, and
  services)
• Trends in Workforce under conditions of high GDP
  growth
• decline in wage employment
• increase in self-employment
• Source ILO 2002 and Chandrasekhar and Ghosh 2006

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CONTEXT 2INSTITUTIONAL MISMATCH

• social security systems premised on model of
  modern industrial job male breadwinner (rather
  than multi-sectoral labor markets multiple
  earners)
• social safety nets premised on notion of
  short-term residual social problem (rather than
  long-term central economic problem)

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SOCIAL PROTECTION AND THE INFORMAL WORKFORCE
STATUTORY SYSTEMS

• formal system in most developing countries,
  covers only 5-20 of total labour force
• extension of some components of formal system to
  some informal workers a few countries with
  limited and targeted coverage
• universal system for all workers growing number
  of country-specific models
• alternative schemes for informal workers many
  countries with a patchwork of small schemes
• safety nets for informal workers growing number
  of countries since financial/economic crises of
  late 1990s

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Coverage of Formal Pension Systems in South
Asia,Latest Year Available, Preliminary Data (in
)
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SOCIAL PROTECTION AND THE INFORMAL WORKFORCE
VOLUNTARY SYSTEMS

• market-based systems often too expensive for the
  working poor in the informal economy
• NGO systems mostly pilot schemes with low
  coverage
• mutual systems very region-specific with low
  coverage
• traditional informal systems low and declining
  coverage
• limited provisions

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CASE OF INDIA

• formal social security system only 6-7 of the
  workforce
• patchwork of other schemes only 4-5 of the
  workforce
• little or no formal system coverage 90 or so of
  the workforce
• Source NCEUS 2006

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UNDERSTANDING THE COVERAGE GAPGLOBAL VALUE
CHAIN 1

• Horticulture Sector in Chile
• 1. Continuum of Employment Arrangements
• Permanent workforce (small core)
• Temporary or seasonal workers
• Casual workers for short periods or on a daily
  basis
• Contract labourers employed by a third party
  labour contractor
• Smallholder producers
• 2. Social Security Coverage
• percent contributing to a pension plan
• permanent workers 52
• temporary workers 33
• other workers 0
• 2001 - official commissions set up to offer the
  following to temporary workers
• occupational health and safety
• child care
• training

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UNDERSTANDING THE COVERAGE GAPGLOBAL VALUE
CHAIN 2

• Garment Sector in Thailand
• 1. Continuum of Employment Arrangements
• Formal workforce in factories (small core)
• Agency workers in factories supplied by a third
  part contracting company
• Industrial outworkers in small workshops or at
  home sub-contracted to a third party contractor
• 2. Social Protection Coverage
• Formal workers employer contributions to
  social insurance
• full package of worker benefits
• Agency workers employer contributions to
  social insurance
• sick leave with hospital certification
• Industrial outworkers no employer
  contributions to social
• insurance no worker benefits

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REDUCING THE COVERAGE GAPFOR INFORMAL
WORKERSGUIDING PRINCIPLES

• Reducing the social protection coverage gap for
  informal
• workers will require
• context-specific mixes of statutory and private
  systems
• schemes that are redistributive in nature and
  that do not download risks or risk management
  onto the working poor
• collective action and contributions by all
  stakeholders

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REDUCING THE COVERAGE GAPFOR INFORMAL
WORKERSPROMISING EXAMPLES

• extended statutory social protection for
  embroidery homeworkers on island of Madeira
• industry-funded social welfare funds for
  bidi-rollers and other sector-specific groups of
  workers in India
• voluntary retirement fund for informal worker
  members of Ghana Trade Union Congress
• voluntary health and pension insurance for
  informal workers in Costa Rica
• voluntary life, health, and asset insurance
  scheme for gt100,000 of SEWA members in India

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REDUCING THE COVERAGE GAPFOR INFORMAL
WORKERSKEY PRECONDITIONS

• To ensure that social protection systems are
  accessible to and
• appropriate for informal workers will require
• official visibility of informal workers in
  national data on social protection coverage -
  through improved national statistics on all forms
  of informal employment
• representative voice in the design of social
  protection systems through participatory
  processes and inclusive institutions

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• THANK YOU