Why Informal Jobs Matter: Understanding the Importance of the Informal Economy
The notion of job opportunities typically brings to mind formal employment, complete with a payroll system, employee benefits, and a structured working environment. However, the reality is that a large share of the global workforce is engaged in informal employment. According to the International Labour Organization (ILO), more than 60% of the world’s employees earn their livelihoods through the informal economy. This means that the majority of workers aren’t ensured benefits and other protections that formal workers take for granted. In this article, we explore the importance of informal jobs and why they matter in the global economy.
The Nature of Informal Jobs
Informal jobs are those that are not regulated by labour laws, where the terms and conditions of work are not specified, and where the employees are not covered by social protection. Informal jobs are also often characterised by low productivity, low earnings, and poor working conditions. Common examples of informal jobs can include street vendors, subsistence farmers, domestic workers, or artisans. They are often self-employed or work for small businesses that are not registered and earn a livelihood through non-standard forms of employment.
Why Informal Jobs Matter
Informal jobs have a significant impact on the global economy. They serve as a vital source of employment in developing countries, where formal employment opportunities may be scarce. Informal jobs also account for a large portion of the labor force in developed countries, playing a crucial role in the functioning of certain industries like construction or agriculture.
Informal jobs also provide an essential lifeline for many workers, particularly in times of economic hardship. Informal work offers a low-barrier-to-entry way to generate income and support a family. In the current pandemic, where many countries have lost jobs and livelihoods, the prospect of informal work has become more attractive than before.
The Social Benefits of Informal Jobs
The benefits of informal jobs go beyond the individual level. Informal jobs also have a significant impact on local communities, particularly in low-and-middle-income countries. Informal jobs serve as a primary driver of grassroots economic activity, providing a source of income for households, and keeping local economies afloat.
Moreover, informal jobs also offer necessary flexibility, particularly when it comes to addressing gender inequality. Women, in particular, are often excluded from formal employment due to traditional cultural biases and discriminatory hiring practices. In contrast, informal jobs allow women to engage in economic activity while continuing to care for their families or performing household chores.
What Can Governments Do?
Governments, civil society organizations, and employers must work together to enhance the working conditions of informal workers. Governments should implement regulations that protect informal workers’ rights, provide access to social protections, and ensure that informal work doesn’t slip into further exploitation and abuse. Civil society should empower informal workers and advocate for their rights, while employers can improve working conditions for informal workers by providing training and support.
Conclusion
Informal jobs are a critical aspect of the global economy, providing income and livelihood to millions worldwide. They are often the only source of employment for many people living in poverty in low-and-middle-income countries, and they also help sustain some of the world’s most essential industries. However, workers engaged in informal jobs often lack the same protections and benefits enjoyed by formal workers, making reforms and improving their situation is crucial to ensuring they are not exploited or marginalized. Governments, civil society, and employers should play their part in ensuring informal workers have the support they need to succeed.
