Last Friday, the International Labour Conference has adopted a new international labour standard, the Transition from the Informal to the Formal Economy Recommendation, 2015 (No. 204). After two years of negotiations, governments, employers and workers have almost unanimously agreed to this Recommendation, which now provides a roadmap for policies to facilitate transition from the informal to the formal economy in the ILO's now 186 member States.
This Recommendation recognizes that decent work deficits – the denial of rights at work, the absence of sufficient opportunities for quality employment, inadequate social protection and the absence of social dialogue – are most pronounced in the informal economy, and that most people enter the informal economy not by choice, but as a consequence of a lack of opportunities in the formal economy and in the absence of other means of livelihood.
Reflecting the complexity of informality, the Recommendation covers various policy areas, including legal and policy frameworks; employment policies; rights and social protection; incentives, compliance and enforcement; freedom of association, social dialogue and role of employers’ and workers’ organizations; as well as data collection and monitoring.
With regard to social protection, the Recommendation sets out that countries should progressively extend, in law and practice, to all workers in the informal economy, social security, maternity protection, decent working conditions and minimum wages. They should pay particular attention to the needs and circumstances of those in the informal economy and their families in building and maintaining national social protection floors within their social security system and facilitating the transition to the formal economy. In addition, they should also progressively extend the coverage of social insurance to those in the informal economy and, if necessary, adapt administrative procedures, benefits and contributions, taking into account their contributory capacity. With respect to the formalization of micro and small economic units, countries should reduce compliance costs by introducing simplified tax and contributions assessment and payment regimes, and improve access to social security coverage.
For those interested in more information, the full text of the recommendation is available here (still in the form of a provisional record for the time being - in English and French): http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_375341.pdf
A summary press release and video interviews are available here: http://www.ilo.org/ilc/ILCSessions/104/media-centre/news/WCMS_375615/lang--en/index.htm?ssSourceSiteId=global
The Recommendation marks an important agreement between governments, employers and workers on the need to address informality and enhance protection for workers. Now the challenge is to translate this into practice, given its significance in the context of the post-2015 development agenda and beyond.
Senior Social Protection Policy Specialist
ILO Social Protection Department
4 Route des Morillons
Phone: +41 22 799 6455
Fax: +41 22 799 7962