Risks and vulnerabilities in the informal economy

Risks and vulnerabilities are part of everyday life for many people in the world of work and their families, Often, these risks and vulnerabilities appear in proportion to the scale of informal employment and the breadth of public and private risk management systems. Despite representing the majority of the workforce and supporting a disproportionately large number of dependents (Chapter 1), the contribution of informal workers to society is not well recognised or understood, making their inclusion as beneficiaries of tax-financed government programmes difficult to argue in many places (Chapter 2). This chapter assesses the risks and vulnerabilities in the informal economy. It shows that informal workers face larger poverty and occupational risks that, combined with lack of access to appropriate risk management instruments, push many into income insecurity or make them vulnerable to poverty. Without effective policies to manage the risks – especially occupational safety and health (OSH) and social protection policies – informal economy workers will remain particularly vulnerable and continue to pass vulnerability on to others, particularly children and the elderly, who disproportionately live in informal households in developing countries.