7/28/2019 wcms_125842

1/10

Informality:

Exclusin and Precariousness

Victor E. Tokman

Geneva, November 2007

7/28/2019 wcms_125842

2/10

Informality from sector to economy

The ILO original contribution: working poor

Inadequate government intervention and regulations

Globalization and disguised wage labor

The ILO 2002 contribution: informal economy

7/28/2019 wcms_125842

3/10

The Informal Economy in Latin America

Large and expanding size of the informal economy

Main component informal sector, but precarious labor expanding faster

7/28/2019 wcms_125842

4/10

Structure of the informal economy, 1990-2005

47.550.3

9.513.8

0

10

20

30

40

50

60

70

1990 2005

Informal Sector Precarious formal workers

7/28/2019 wcms_125842

5/10

0 10 20 30 40 50 60 70 80 90

Chile

Costa Rica

Panama

Uruguay

Domin. R.

Mexico

Brasil

Argentina

Latin America

El SalvadorVenezuela

Paraguay

Nicaragua

Guatemala

Ecuador

Bolivia

Peru

informal sector precarious formal workers

83.8

83.0

75.7

74.2

73.6

73.0

70.565.1

64.1

60.2

60.0

59.7

57.8

51.0

45.5

44.7

39.4

7/28/2019 wcms_125842

6/10

The Informal Economy in Latin America

Large and expanding size of the informal economy

Main component informal sector, but precarious labor expanding faster

Income gaps within informal sector. Evidence of exclusion

Informality and labor contracts matter: differences in social protection

7/28/2019 wcms_125842

7/10

without

contractwith

contractpermanent

contractother

contract

wage workers

coverage

28.7

84.889.3

65.0

25.9

74.1

40.8

33.2

0

10

20

30

40

50

6070

80

90

FORMAL

without

contractwith

contractpermanent

contractother

contract

wage workers

coverage

10.0

50.4

62.8

34.5

67.9

32.1

22.6

9.50

10

20

30

40

50

60

70

INFORMAL

without

contractwith contrat

permanent

contract

other

contracts

wage workers

coverage

14.9

80.3

85.7

57.1

46.8 53.2

41.8

11.40

10

20

30

40

50

60

70

80

90

Total coverage by work contract

7/28/2019 wcms_125842

8/10

Towards a strategy for inclusion

and opportunities

Five pillars

1. Regulation of informal activities

Reduction of formality entry costs for all

Simplify rules an procedures

Redesign mechanism of access to formality

2. Labor regulations of informal enterprises

Recognition of labor relation

Progressive minimum labor rights floor (declaration plus)

Redefined labor inspection

7/28/2019 wcms_125842

9/10

Towards a strategy for inclusion

and opportunities3. Informal workers under precarious labor

In search of labor flexibili ty: a misguided reform based on a-typical contracts

The return of the permanent labor contract adapted to present requirement

Spain from 1981 to 1997-2006

Argent ina from 1981-1985 t0 1998-2000)

Negotiated flexibi lity: Spain, Argentina and Brazil

4. Diffused labor relations: multi-enterprises relations

Identification of labor relations

Labor obligations and responsibilities under subcontracting

Home-work: a grey zone

5. Social protection for informal workers

Health and pension coverage: non-contributory universal guarantees

Maternity and chi ld care

7/28/2019 wcms_125842

10/10

From informality to economic citizenship

Formality as a way to foster development of informality

Tax-registrationaccountingbusiness improvement

Labor contract recognitionprotection--improved labor relations management

A different approach to formality

From the interest of the insiders to the benefits of the outsiders

From obligations to entit lements: reversing the sequence

Cultural change required

Productive cooperation instead of invidualism

Different relations with markets and institutions

Collective action rather than isolation: Voice and representation