On average, 7 out of 10 non-farm workers in countries in Sub-Saharan Africa and Southern and Southeast Asia are in the informal economy, and this number is still increasing. Many workers in the informal economy are in a precarious economic situation. Women are disproportionately represented at the ‘bottom of the pyramid’ and face the biggest challenges.
Because processes of formalization are unlikely to absorb the informal workforce in the near term, the authors call for policy measures that will reach informal workers. Ensuring improvement across a range of areas, including income, wellbeing and empowerment requires an integrated, comprehensive approach to improving outcomes. This is especially evident from microfinance interventions like cash transfers.
Policies that target self-employed workers could include policies aimed at promoting access to capital and technology, supporting cross-border trade and improving infrastructure in the workplace, including for home-based workers. To target wage workers, the report highlights a minimum wage policy that has benefited those working informally.
Under universal policies, the authors argue for pensions and health coverage, support for workers’ organizations and skills upgrading. Informal apprenticeships are receiving increasing attention as a locally-embedded form of skills development. This is the most common form of skills training in Africa for the informal sector, with up to 70% of urban informal sector workers trained in this manner. An average of 20% of young adults in five Sub-Saharan African countries with comparable data had been informal apprentices, with this figure reaching 35% in Ghana.