Assessment and recommendations

People have different perceptions of the informal economy. Some focus on the survivalist aspects – and there are many – believing informal workers have no choice but to run unproductive small businesses or work in jobs characterised by lack of social benefits, poor working conditions and lower rates of remuneration and productivity. Others consider informality a drag on economic and social development associated with tax evasion, disrespect for the rule of law and unfair competition between formal and informal enterprises. Others recognise its potential to support the livelihoods of workers willing to trade formalisation for informal employment. The reality of informality is often less obvious than it seems. Two things are certain: informality is part of the daily lives of most workers in the world, and it often comes with risks and vulnerabilities that constitute a formidable policy challenge.