New ILO Standard on the Informal Economy: A Tool for Workers

The following is an interview with Plamen Dimitrov, Workers’ Spokesperson of the International Labour Conference (1-13 June 2015) Committee on the Transition from the Informal to Formal Economy, who expresses his views about the benefits for workers after the adoption of a new ILO Recommendation to tackle the informal economy. Mr Dimitrov also underlines the opportunities for unions to implement this standard in partnership with ILO.

Plamen Dimitrov,Workers’ Spokesperson of the Committee on the Transition from the Informal to the Formal Economy

ACTRAV INFO: The International Labour Organization (ILO) has adopted a new Recommendation to tackle the informal economy. How can workers benefit from this new labour standard?

Plamen Dimitrov: The Recommendation is founded on the basis of ensuring decent work for all. It follows a rights-based approach to formalization. International Labour Standards are for all workers, without any distinction, including informal economy workers. In this sense, it is a tool for workers in the informal economy to claim their rights and to achieve inclusion in the formal economy.

In order to change and make visible the lives and work of hundreds of millions of workers in the informal economy, the Recommendation guides national action through a variety of issues. The starting point however is to describe the whole picture, its deficiencies and gaps relevant to the country. Then one must define and address the overall legal framework and its gaps, and develop the relevant economic and social policy mix. As a consequence of these actions, various benefits for workers in the informal economy will arise.For example, specific attention is given towards securing existing livelihoods through the transition, so the working poor do not lose access to their workplaces or their income, as policies for transition are put into practice. The Recommendation also recognizes that the fundamental principles and rights at Work are for all workers, regardless of the form of work in which they are engaged. Freedom of association, collective bargaining, as well as other relevant standards on occupational safety and health are recognized, requiring immediate action. Among the core issues addressed in the Recommendation are the extension of social security, social protection and social insurance and the improvement of income security for workers in the informal economy.

As a whole, the effects of implementing the Recommendation will not only affect workers’ lives in the short term, but will also create a better work environment for everybody in the long term.

ACTRAV INFO: After adoption of the ILO Recommendation on the Informal Economy, what opportunities would unions have towards implementing this standard?

Plamen Dimitrov: According to the Recommendation, trade unions play a significant role in the process of transitioning from the informal to the formal economy. In designing, implementing and evaluating policies and programmes of relevance to the informal economy, including its formalization, trade union members should consult with and promote active participation of the most representative employers’ and workers’ organizations, which should include in their rank, according to national practice, representatives of membership-based organizations of workers and economic units in the informal economy.

The voice of those in the informal economy needs to be heard through the processes of social dialogue. Member States should ensure that those in the informal economy enjoy freedom of association and the right to collective bargaining. Employers’ and workers’ organizations should, where appropriate, extend membership and services to workers and economic units in the informal economy.

We are beginning to acknowledge diverse actors in the informal economy. For wage-earning workers, collective bargaining with their employers or contractors is fundamental. For non-wage-earning workers, negotiating collectively with the pertinent local, state or national governmental authorities, other decision-makers, buyers and contractors is the foundation of recognition and of dialogue for change. Tripartism is the principle to ensure genuine representation and inclusiveness.

ACTRAV INFO: How can the ILO work with unions to facilitate the transition from the informal to formal economy?

Plamen Dimitrov: Using its relevant instruments, ILO will provide guidance to member States and to social partners at the national level during the whole process of transitioning to the formal economy starting from the development of definitions and methodology for outlining the scope of the informal economy through the establishment of formalization measures and review of their effectiveness.

The guidance and expert support provided by ILO in developing or revising the concepts, definitions and methodology used in the production of data, statistics and indicators on the informal economy for the national statistics and labour inspectorates is of great significance also for trade unions. In this respect, of significance is the definition of the scope of the informal economy provided by the ILO, which includes economic units and all types of workers.

The ILO will provide technical support for the development of a policy mix at national level, including macroeconomic policies, taxation policies, industrial policies, labour market policies and social protection and other social policies with the aim of creating formal jobs and easing the transition from the informal to the formal economy. These policies should be developed through meaningful social dialogue. To that end, national trade union organizations could rely on the technical, advisory and expert role of ILO with the support of the ILO’s Bureau for Workers’Activities (ACTRAV).

Member States should be provided with information, assistance and best practices for developing incentives and sanctions aimed at elaborating national frameworks for transition from the informal to the formal economy. Reducing barriers to the transition to the formal economy for micro- and small economic units is of particular importance.

We are happy to note that the implementation of the Recommendation will be reported to the ILO Governing Body in general surveys, under the ILO constitution. Member States, social partners and the ILO itself will report on progress there and also in the ILO four-yearly regional conferences. The ILO will partner with other relevant international organizations and United Nations agencies to promote and utilize this Recommendation.