Tackling Vulnerability in the Informal Economy

The vast majority of people in the Global South depend on the informal economy for their livelihoods. Informal workers and economic units contribute to economic and social development through market and non-market activities that are not protected, regulated, well recognised or valued. This leaves a majority of informal economy workers and their families outside the benefit of public policy, and raises the question for policy makers of how to improve the security and livelihoods of workers and their dependents who rely on the informal economy. This study reviews some of the approaches taken thus far and explores new ideas to improve the lives of men and women in the informal economy and facilitate their transition to the formal economy. Detailed investigations develop new portraits of informal workers and economic units that take into account the broader context of their households, and identify the complex links between informality and the development process, the diversity of risks and vulnerabilities in the informal economy, and the gender-sensitive policy measures to protect informal economy workers and their families and support their transition to formality. The study is based on analysis of micro and macro data, including the recent set of ILO indicators of informality measured at the individual level and the new OECD Key Indicators of Informality based on Individuals and their Household (KIIbIH).