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and grounded in conditions of freedom, securityand dignity. It has four pillars (a) fundamentalprinciples and rights at work under internationallabour standards; (b) employment and incomeopportunities; (c) social protection and socialsecurity, and (d) social dialogue and tripartism.Informal workforce: who are wetalking about?The vast majority of the poor earn their living inthe informal economy where average earnings arelow, productivity poor, working conditions hazardous,and risks high. Section 3 provides a globalpicture of the informal economy, highlighting itssize, segmentation, and vulnerabilities. Womendominate the most-disadvantaged categories ofinformal work, notably industrial outwork andhome-based production. It is also in the informaleconomy where child labour and bonded labourare most prevalent, and where indigenous andtribal peoples are marginalized largely by discrimination.Despite early predictions of its eventualdemise, the informal economy continues to grow.Poverty and labour rights: Towards aGlobal Social ContractSection 4 describes a new departure in theinternational community regarding labour rightsand the informal economy; it features threenoteworthy elements: the Fundamental Principlesand Rights at Work from 1998; the DecentWork Agenda, first introduced in 1999, and the2002 Strategy for Labour Rights in the informaleconomy. These elements are gaining increasingsupport from a broad coalition of governments,international organisations, various employersand trade unions, as well as from non-governmentalorganisations.As part of efforts to achieve the MillenniumDevelopment Goals (MDGs), the 2005 WorldSummit of Heads of States agreed to make fulland productive employment and decent workfor all a central objective of both national andinternational policies and national developmentand poverty reduction strategies. In 2006 thiswas followed by the UN Economic and SocialCouncil’s Ministerial Declaration, which emphasisedfull and productive employment and decentwork for all as an end in itself and a means toachieve the MDGs. The Decent Work Agenda hastherefore been accepted as a global aim; it nolonger remains an ILO agenda alone. Decent workhas been declared a goal not only for the formalwage sector, but also for the informal economy.Growing recognition of the need for labour rightsto catalyse employment creation in the informaleconomy, while protecting its workers, has ledto an emerging global social contract, creating abroad agenda for reform and for empowerment.The economics of informality and thedebate on labour regulationsFor the working poor, it is not the absence ofeconomic activity that is the source of theirpoverty, but the nature of their economic activities.The link between work of low quality, orproductivity, and poverty is clear: if people earnedmore, poverty would decline. In Section 5, wereview research on the role of labour regulationin setting economic and social goals, and wedraw two major conclusions. First, we suggestcaution in interpreting this research, particularlythe cross-country studies. Caution shouldalso be exercised before translating the findingsinto country-level policy interventions withoutfirst considering country-specific conditions, theheterogeneity in the regulatory environment andemployment arrangements. Secondly, as a policyconclusion, we suggest a shift of focus from theprevailing ideological question on regulation-versus-deregulationto questions about how regula-131