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Figure 5Legal Empowerment of Informal EnterprisesSUPPLY PUSH• Regulatory Reforms• Reducingadministrativebarriers• AffordableBusiness Fees• Simplified Taxation• AccessibleBusiness Licensingand Registration• ReducingCorruption• Adaptable LabourLawsGradual Transition through Business RightsInformalSubsistenceBusinessesUnofficialBusinessesPartlyOfficialBusinessesFormalSustainableBusinessesDEMAND PULL• Access toFinance andCredit• Tax relief andincentives• Titling• PublicProcurementOpportunities• SkillsDevelopment• EntrepreneurialtrainingRULE OF LAW& ACCESS TO JUSTICEBASIC RIGHTS(HUMAN, LEGAL,PROPERTY & LABOUR)PHYSICAL & SOCIALINFRASTRUCTUREPOLITICAL & ECONOMICSTABILITY & GOODGOVERNANCECONDUCIVE &FAIR BUSINESSENVIRONMENTPILLARS OF FOUNDATION FOR FORMALISATIONment opportunities, skills development, entrepreneurialtraining, etc. Supply ‘Push’ initiativesare regulatory reforms, reducing administrativebarriers, affordable business and licensing fees,accessible business and licensing and registrationprocedures; reducing corruption; adaptablelabour laws, etc. The chart further highlightsthat the number of informal enterprises movingtowards formal sustainable enterprises is smallcompared to the huge size of subsistence informalenterprises.Formalisation may therefore be seen as anincremental process that begins by introducingappropriate incentives and benefits of formality,then progressively enforces compliance with thecosts and regulations associated with operatingformally which would depend on the size, output,or location of the enterprises. Once conditions aremet, the working poor in the informal economywould be entitled to the benefits of formality and,at the same time, they would be enabled to complywith the duties of formalisationPillars of ChangeThe sustainability of any proposed reform toa country’s governing institutions depends onpublic recognition of the changes to be made.Recognition will thus depend on the capacity ofthe reform to be legitimised within the public’scultural and social milieu. Failure may preventthe successes of legal reforms that are otherwisecognizant of larger policy aims to promotemarket-driven economic growth. For Sub-SaharanAfrica, for example, failure to incorporate widely263
accepted customary forms could mean outrightrejection by the private sector. Therefore, indetermining what can be done to legally empowerinformal businesses to better access the opportunities,finances, services and facilities of the formalsector, one would have to take into accountthat which already works.The recommendations of the working group forChapter 4 of this report may be summarised indescriptions of five proposed pillars of reform:Pillar 1: Adopt an inclusive and integratedapproach to economic development so that thereis legal recognition and empowerment of informalbusinesses.Legally empowering small informal businessesrun by poor individuals or households should beseen as a central pillar of a just society and acentral strategy for reducing poverty and inequality.This means that policies and global economicprivilege, which is geared at present to the elitesand large enterprises, have to change to becomeinclusive of the billions at the bottom of the economicpyramid. These billions are the producersand consumers who make markets profitable forthe privileged. Their share has to be duly recognisedthrough much greater public and privatesector cognisance and support to small firmsand enterprises. Informality, with its flexibilityand space for millions to engage productivelyin economies, is here to stay. Official and legalresponse needs to recognise what works in thissector and strengthen and integrate these innovationsinto an inclusive integrated approach towealth creation.Pillar 2: Support legal empowerment througha package of commercial rights underlined inpolicies and instituted and enforced throughregulatory bodies.Commercial rights for informal entrepreneurs/operatorsinclude, but are not limited to, propertyrights, labour rights, right to social protection,right to be organised and represented in policymakingand rule-setting institutions and processes,and the right of access to justice in a transparentand equitable manner. The rights of the morevulnerable groups — the own-account operators,including single-person operators and those whowork in family businesses or on family farms— must also be addressed. These commercialrights should address all categories of informalenterprise, and include the following provisions:a) Basic commercial rights: right to work, includingthe right to vend; right to a work space(public land, private residences), includingrelated basic infrastructure (shelter, electricity,water, sanitation);b)Intermediary commercial rights: right togovernment incentives and support (includingprocurement, tax holidays, export licensing,export promotion); right to public infrastructure(transport and communication);c) Advanced commercial rights: relevant for larger,more advanced informal enterprises.Pillar 3: Reduce Decent Work ‘defi cits’ of thosewho work informally.This means support to informal businesses in theform of:• Participation in policy processes of a representativevoice of the working poor in the informaleconomy. Recognition and correction of thebias in existing commercial policies, regulations,laws and procedures favouring largerfirms and enterprises. Extension of governmentincentives and procurements to the smallestinformal enterprises;• Facilitation as appropriate of backward and264
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Makingthe LawWork forEveryoneCopyri
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In reply to its expression of sorro
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group chaired by Commission members
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so that their informal contracts ha
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Table of contentsChapter 1 Access t
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Reforming Rules Regarding Bearers a
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The Economics of Informality and th
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Taking Microcredit Out of the Ghett
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5.6 Empowerment Domain 1: Access to
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1. IntroductionThe Commission on Le
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Theoretical perspectives that infor
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long-term migrant or refugee popula
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digital camera that could be used t
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or social services fraud. Thus, alt
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3. Strategies to CreateAffordable,
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is secured through social pressure
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sufficient guidance as to the best
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even better, by showing the ones wi
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A related option is teaching the po
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some other trusted service provider
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From an economic perspective this s
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2007). Such mechanisms prove prefer
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can play an important role in mobil
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motives — such as the desire to m
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of some legal action brought by the
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ernments may consider to remove art
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sations may make better decisions a
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ence others in the supply chain to
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ing access to justice for disadvant
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ardisation and simplification) and
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ary or informal systems, may improv
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Box 2 Coping with Legal Pluralism i
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cies (including local authorities)
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(ADB 2001b). These and other exampl
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e restructured in a way that reduce
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impact of a proposed action on some
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5. Conclusions andRecommendationsIn
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Chapter 1 Endnotes1 Excellent recen
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Lopez-de-Silanes, F. 2002. The Poli
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ChapterTWOEmpowering thePoor Throug
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the West, but that has made entire
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and insurance — to facilitate tra
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Table 1 Mapping the dynamics of leg
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creasing finance for land reform an
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I. IntroductionAs these lines are b
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contributed to its substance. But a
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sis to protect transactions or to p
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in their countries is added reason
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is concentrated in the hands of the
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property, contribute to the exclusi
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There may be sound policy reasons f
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system as a system of rules regardi
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Box 3 Namibian land reformIn Namibi
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Box 4 Focus AfricaCustomary rights
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property, some indigenous peoples a
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• Where consensus is hard to obta
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and the establishment of transparen
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which develop into a fully serviced
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Box 5 Sale of land: examples oflega
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as collateral more of the poor woul
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Enhancing Access to Land and Real P
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Box 8 Example of Singapore:public h
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Box 10 Slum upgradinginitiative in
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2. Pay Attention to Sequencing. The
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Foster Coalitions of Change in Favo
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Chapter 2 EndnotesUniversal Declara
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ers, refl ecting the allocation of
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ing industry through the scheme. (S
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193 See Tomlinson 2007.194 UN-ESCAP
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presented at the National Workshop
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Property Rights.’ At: http://www.
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Empowerment, issue 2, Oslo: 65-90.R
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ChapterTHREETowards a GlobalSocial
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and grounded in conditions of freed
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voluntary code-of-conduct initiativ
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outside their protective reach. The
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and sustainable solutions and peopl
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Segmentation in the Informal Labour
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Informalisation of Labour MarketsTh
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pation worldwide has given rise to
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through a variety of legal instrume
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Box 4 Social case for labourregulat
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Box 5 ILO Conventions and Recommend
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provision of full, productive, free
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Labour Conference in 1996, in recog
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different paths to enforcement, wit
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Table 1 Mean Measures of Regulation
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However, a more detailed examinatio
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countries this translates into unem
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legislative changes, it will critic
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6. Principles and practicesof Labou
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The Homeless People’s Federation
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Conclusions for national strategies
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tions and responsive mechanisms tha
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ticularly the prohibition of forced
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Annex 1:Recent and current initiati
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the following four-fold test: ‘(1
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Nations, the ILO and the World Bank
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able to go beyond general statement
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Case 8:Minimum Living Standard Secu
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Case 11:China’s positive response
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er, perhaps even prepaid, to ease t
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48 Including the UN funds, programm
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the Formal Economy and Informal Reg
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131—182.Sabel, C., D. O’Rourke,
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EXECUTIVE SUMMARY‘The opposite of
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vast majority earn their living in
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and economic activity. First, in or
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ment procurement, tax rebates, and
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developing countries, however, info
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of the provision of adequate infras
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preneurs and small sector enterpris
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negative manifestations of informal
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Page 241 and 242: 3.Business Rights:Unlocking Barrier
Page 243 and 244: Street VendorsCommon issues and cha
Page 245 and 246: Box 3 Most Difficult Places toDo Bu
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Page 249 and 250: The Chart below captures broadly th
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Page 255 and 256: Case Study:Linking Markets: Promoti
Page 257 and 258: micro-finance activities. Micro-fin
Page 259 and 260: Remittances — the transfer of fun
Page 261 and 262: Case Study:Durban: A Heterogeneous
Page 263 and 264: 5. Institutional changesand legal t
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Page 267 and 268: key topics in simple and clear lang
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Page 273 and 274: • Access to improved skills and t
Page 275 and 276: Case Study:Identity, Voice, and Ass
Page 277 and 278: 6. Pursuing the agenda forchangeOve
Page 279 and 280: Case Study:Technology and the Infor
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Page 287 and 288: Recommendations and Key MessagesObj
Page 289 and 290: Chapter 4 Endnotes1 A business has
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Page 296 and 297: ChapterFIVERoad Maps forImplementat
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Page 302 and 303: targeted indicators endorsed by nat
Page 304 and 305: 1. Introduction: Attributesof Legal
Page 306 and 307: 2. Implementation:Challenges andOpp
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Page 310 and 311: Figure 5.2 Influences on Policy Imp
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Table 5.4 Skeleton Diagnostic Tool:
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3.Roadmaps toImplementationReforms
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Table 5.5 Country Specific Implemen
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Table 5.7 Empowerment Domain 2: Pro
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Table 5.8 Empowerment Domain 3: Lab
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Table 5.10 LEP Implementation Strat
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plans, poverty reduction strategies
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Box 5.7 Land Sector Harmonisation,
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quality and utility in establishing
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Table 5.12 A Framework for a Demand
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Empowerment of the poor in the end
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4.Bring existing technical solution
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Annex 1: PolicyImplementation Tools
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MIS: A Management Information Syste
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Training (on leadership, group work
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of labour disputes: An internationa
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on whether patent and copyright pro
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oads — cover only a limited numbe
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28 http://www.ilo.org/dyn/gender/ge
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Ouchi, Fumika. 2004. Twinning as a
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