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

developing countries : 60-90 % of total employment in – –

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

+

fair terms of employment

for informal self-employed 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

WAGE EMPLOYMENT – informal employees – causal day laborers INTERMEDIATE CATEGORIES – industrial outworkers regulatory environment commercial law procurement policies property rights price policies social protection sectoral policies infrastructure & services

skills training job matching employment protection minimum wages non-wage benefits

social protection 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”:

vs. reality of work today existing means of legal and social protections •

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

distribution chains : from lead firms -> suppliers -> intermediaries -> dependent workers and producers at the bottom of production and

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

bodies at all levels in policy-making and rule-setting •

Legal and Policy Validity

–

legal identity and rights

as –

legal empowerment

through

workers, entrepreneurs, asset holders inclusive legal and policy reform processes

and

appropriate legal and policy reforms

•

Official Visibility

–

improved labor force and other economic statistics economic units and workers

that measure

all

- 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