Home Analysis and interview Global "Transition from the informal economy to the formal economy"

Global

June 4, 2014

"Transition from the informal economy to the formal economy"

Author: AICESIS

"Transition from the informal economy to the formal economy"

The informal economy is characterized by underemployment with short duration. Consequently vulnerable people already disadvantaged in terms of gender, age or disability are pushed to sink further in the informal economy.

The workforce in the informal economy is characterized by a low level of education if not a low level of schooling. They have not had technical training which reduces or deprives them of the capacity to stand on their own or allow them to engage in more attractive, efficient and secured activities. As a matter of fact there is no alternative than to get into the informal system to generate income however the size of which they do not decide. So directly or indirectly the actors are perpetuating a system which only Governments which have the will can change. Otherwise the risks of remaining poor are great as  compared to their counterparts operating in the formal economy.

In the final analysis, from a sustained social dialogue it is possible to create improved conditions in terms of regulated wages, hours of work, the balance between working life and family life. The informal sector must make room to a situation of sustainable enterprise, employability and improvement of skills.

The transition from the informal to the formal economy has a cost but the cost is a sine qua non for growth in the national interest.