CREATING MORE AND BETTER JOBS:
WHAT DO WE KNOW?
WHAT IS NEEDED?
WHAT CAN BE DONE?
Marty Chen
Harvard University
WIEGO Network
World Bank-OECD Policy Forum
May 7, 08
REMARKS
• Focus: working poor in the informal economy
• Perspective: global research-policy network on the informal
economy
• Premise: “informal is normal” = growing reality and core
component of the workforce and economy
WHAT DO WE KNOW?
• The informal economy is large by whatever measure is used:
– share of total employment: 60-90 % of total employment in
developing countries
– share of economic units: e.g., 80% of all enterprises in India
– share of GDP (informal enterprises only): 25-50% per cent
of non-agricultural GDP in developing countries
• The informal economy is growing in terms of:
– share of total employment
– share of new jobs
• The working poor, especially women, are concentrated in the
informal economy where on average:
– earnings are low
– risks are high
WHAT IS NEEDED?
• Create more formal employment opportunities
• Promote formalization and prevent “informalization” of
informal enterprises and informal jobs
• Promote fair terms of doing business for informal self-employed
+ fair terms of employment for informal wage workers
• Extend legal and social protection to the informal workforce
WHAT CAN BE DONE?
POLICY FRAMEWORK
SEGMENTS OF
INFORMAL ECONOMY
SELF-EMPLOYMENT
– micro-enterprises
– own account operations
POLICIES TO ENHANCE
PRODUCTIVITY
PROTECTION
regulatory environment
procurement policies
price policies
sectoral policies
infrastructure & services
commercial law
property rights
social protection
WAGE EMPLOYMENT
– informal employees
– causal day laborers
skills training
job matching
employment protection
minimum wages
non-wage benefits
social protection
INTERMEDIATE CATEGORIES
– industrial outworkers
infrastructure & services
work protection
minimum piece rates
non-wage benefits
social protection
Note: labor market policies are in italics
WHAT CAN BE DONE?
INSTITUTIONAL REFORMS
There is a need to address the following:
• Institutional “mismatch”: existing means of legal and social protections
vs. reality of work today
• Policy biases: in favor of capital vs. labor + larger firms vs. micro firms
+ formal labor vs. informal labor
• Power imbalances: capital vs. labor + larger firms vs. micro firms
+ formal labor vs. informal labor
• Downloading of risks: from lead firms -> suppliers -> intermediaries ->
dependent workers and producers at the bottom of production and
distribution chains
HOW SHOULD THIS BE DONE?
THROUGH DIALOGUE AND NEGOTIATION
•
Key stakeholders:
– government
– private sector
– civil society: trade unions + membership-based organizations of working
poor + NGOs working on labor and employment issues
•
Tripartite dialogues and negotiations: should include membership-based
organizations of working poor (trade unions, cooperatives, and associations) as
well as trade unions, employer associations, and government
•
Multi-partite initiatives: initiatives involving multiple relevant stakeholders –
such as Fair Trade and Ethical Trade initiatives and the Global Compact should be encouraged and supported
•
Multi-partite reform processes: policy and legal reform processes should involve
all relevant stakeholders including representatives of membership-based
organizations of the working poor
KEY ENABLING CONDITIONS:
EMPOWERMENT OF THE WORKING POOR
•
Representative Voice
– more and stronger organizations of the working poor in the informal
economy
– representation of such organizations in policy-making and rule-setting
bodies at all levels
•
Legal and Policy Validity
– legal identity and rights as workers, entrepreneurs, asset holders
– legal empowerment through inclusive legal and policy reform
processes and appropriate legal and policy reforms
•
Official Visibility
– improved labor force and other economic statistics that measure all
economic units and workers - including their earnings + contribution to
GDP
– analysis and dissemination of these data to policy-makers, advocates of
informal workers, and organizations of working poor in informal economy