The ILO’s ‘historic’ informal to formal guidelines and framework: What does it actually mean?

By | June 14, 2015
Sustainable Value Chain 1

Illustration: JAM Visueeldenken

The big news this weekend is the International Labour Organization’s (ILO) first ever Recommendations and Guidelines on the informal economy. My first take away from all the documentation is that the informal sector is no more the enemy of good and, now, can finally be addressed with the consideration it needs and deserves. Here’s a key snippet from India’s Economic Times, using one of my favourite words:

“This is important because it is the first international labour instrument that covers the informal economy holistically including wage workers, small businesses, entrepreneurs and self-employed,”

Now, if only they’d also used the word Flexibly, I’d have died happy. But their objective isn’t to integrate the informal sector or bridge the chasm between the formal and informal economies, it’s to assimilate and contain. Anyhow, lets take a further look at what these guidelines are and what might they mean for Mama Biashara.

Section II – Guiding Principles (Page 13)

In designing coherent and integrated strategies to facilitate the transition to the formal economy,

Starts off with a very clear design brief – the choice of the word designing is significant and powerful, as it implies disciplined processes and methods and helps relate it to the holistically mentioned earlier. Next:

Members should take into account the following:
(a) the diversity of characteristics, circumstances and needs of workers and economic units in the informal economy, and the necessity to address such diversity with tailored approaches;

(b) the specific national contexts and priorities for the transition to the formal economy;

(c) the fact that different and multiple strategies can be applied to facilitate the transition to the formal economy;

We need to design for the specific context and conditions, for the to-be-discovered needs of the people, and, one size does not fit all.

Excellent beginning. And as the ILO’s DG is quoted to have said,

“It is not just the adoption of this Recommendation, it’s actually putting it into practice that will matter,”

After a bunch of inclusions and protections from (d) to (i) we have, what I believe, is the most empowering statement of all:

(j) the preservation and expansion, during the transition to the formal economy, of the entrepreneurial potential, creativity, dynamism, skills and innovative capacities of workers and economic units in the informal economy;

Let’s not lose teh hustle in the rush to regulate.

On the other hand, the need for flexibility during these transitions is overlooked and the closest framing we have that may apply to this aspect – as captured by the illustration above – is:

(k) the need for a balanced approach combining incentives with compliance measures;

which leaves it rather open for interpretation. You may call that being flexible, but the fact remains that negotiability of the system is an observed part of what lowers the barriers to adoption of measures for those who manage on irregular and unpredictable income streams and work primarily in the informal sector.

 Section III: Legal and Policy Frameworks (Page 15)

9. Members should undertake a proper assessment and diagnostics of factors, characteristics and circumstances of informality in the national context to inform the design and implementation of laws and regulations, policies and other measures aiming to facilitate the transition to the formal economy;
I don’t think, after this sort of framing and direction giving, that formal economists can overlook the need to dive deeply into understanding people, pesa and place, or the need for a systematic, rigorous, methods based approach to people-centric design of policies and programmes. There’s a huge difference between someone swooping in to do it all for you and someone figuring out a way for you to do it more efficiently yourself.  That’ll be key going forward, imho.

If you’ve read this far and are interested in my prior work in this space, feel free to reach out for some reading materials or for a conversation on how we can collaborate to make a positive difference for those who’ve been overlooked all this time.

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