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Tackling Vulnerability in the Informal Economy

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A majority of workers in the world are informally employed and contribute to economic and social development through market and non-market activities that are not protected, regulated, well-recognised or valued. This study provides an in-depth diagnosis of informality and the vulnerability prevailing in the informal economy. It explores new ideas to improve the lives of workers in the informal economy based on the ILO indicators of informality and the new OECD Key Indicators of Informality based on Individuals and their Household (KIIbIH).

The report contributes in four ways to the global debate on the transition from the informal to the formal economy: 1) by examining the multiple faces of informality in a large sample of countries representing diverse conditions, locations and stages of development; 2) by presenting new empirical evidence on the links between informality and the development process; 3) by assessing risks and vulnerabilities in the informal economy, such as poverty and occupational risks, which can be mitigated with social protection and appropriate risk management instruments; 4) by showing that the transition to formality is a complex issue that touches on a wide range of policy domains.

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Addressing the gender dimension of informality

Globally, men are more exposed to informality than women, but the share of women in informal employment exceeds that of men in a majority of countries (Chapter 1). Across countries, however, risks and vulnerabilities associated with the informal economy (Chapter 3) disproportionately affect women. This chapter provides updated evidence on gender disparities in key informal employment outcomes, such as employment status and wage levels. It then examines the role of gender-based constraints in employment outcomes and access to social protection. Last, it reviews gender-sensitive approaches that have been instrumental in empowering women in the informal economy in a number of countries, with a view to identify priority areas for policy makers. It is evident that the vulnerability challenge in the informal economy needs to be addressed through a gender lens. In particular, gender-sensitive risk management instruments are critically needed to ensure that current attempts to extend social protection to informal economy workers do not leave women behind.

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