Between 42% and 67% of workers in the Southern Neighbourhood countries are in the informal economy
Certain groups of workers and categories of enterprises, certain forms of employment or particular sectors are more exposed to informality than others. Nevertheless, in most countries in the region, any worker and any enterprise can be directly affected by informality.
While the informal economy is characterized by a great diversity of situations both across the region and within countries, it has been exacerbated in most countries by, among other factors, structural adjustment, high unemployment, inequality and social exclusion.
Most of the countries in the region have experienced high and persistent unemployment and under-employment highlighting the inability of the economies to create enough decent formal jobs and absorb new entrants in the labour market.
In the countries covered by SOLIFEM, it is estimated that in 2019 between 42% of all people in employment in Algeria to 67% in Egypt earn their livelihood in the informal economy. Some categories of workers are more exposed to informality than others such as the youth, the least educated workers, workers in agriculture, domestic workers or workers in the construction sector, seasonal or temporary workers. Among young workers aged 15 to 24 for instance, more than 7 out of 10 are in informal employment in Lebanon and more than 9 out of 10 in Egypt. Notwithstanding the high heterogeneity of situations, needs, levels of vulnerabilities that characterizes workers in the informal economy, all share one important characteristic: workers, are not recognized or sufficiently protected under the relevant legal and regulatory frameworks or do not benefit from its effective implementation.
The ILO framework for understanding the informal economy acknowledges the diversity and heterogeneity of actors and activities involved in it and recognizes that informal employment exists in the formal sector. In 2015, the International Labour Conference (ILC) adopted the Transition from the Informal to the Formal Economy Recommendation, 2015.
This is the first international labour standard to focus on the informal economy in its entirety and emphasizes the transition from the informal to the formal economy as a means to achieve decent work for all. The instrument sets out guidance for countries to design coherent and integrated strategies to facilitate the transition from the informal to the formal economy through tailored approaches that respond to the diversity of national circumstances.
Formalization of the economy is indeed a necessary condition to make decent work a reality, to reduce poverty and inequalities, increase productivity and sustainability of enterprises and expand government’s scope of action, notably in times of crisis.
SOLIFEM will enhance the capacity of tripartite constituents in the focus countries/territory to design and implement, through social dialogue, inclusive policy frameworks to support the transition from the informal to the formal economy (including to prevent the informalization of enterprises and jobs).
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