SHAPING THE FUTURE HOW CHANGING DEMOGRAPHICS CAN POWER HUMAN DEVELOPMENT

TABLE 2.4:
Shares of workers in the informal economy are
still large in some countries
Source: ILO 2014b.
Note: The agricultural sector is not included in this data.
China is represented with only a few cities, namely, Fuzhou,
Guangzhou, Shanghai, Shenyang, Wuhan and Xian.
The proportion of people working in informal
employment varies considerably across countries,
reaching 42 percent of workers in Thailand, but
84 percent in India (Table 2.4). 33 One important
incentive for firms to operate in the informal
economy is financial—costs are lower without
paying taxes and complying with formal
registration and regulatory requirements. For
firms to choose to operate within the formal
sector, governments need to create financial
incentives, such as by extending the outreach
of capital and loans, particularly to micro- and
small enterprises, or by providing tax breaks.
For the first time in 2015, the International
Labour Organization (ILO) adopted labour
standards that can protect workers in the informal
economy. Countries have collectively
recognized that people work in the informal
sector not merely by choice, but due to a lack of
opportunities in the formal sector. In the developing
world, approximately 90 percent of small
and medium enterprises operate informally. At
the heart of the ILO standards is the idea that
full, decent, productive employment needs to be
created in the formal sector. While countries are
working towards this goal, however, measures
should be taken to uphold the rights of those
still in informal employment. These include the
rights to freedom of association and collective
bargaining, elimination of compulsory labour,
abolition of child labour, and adherence to regulations
that protect workers’ health and safety.
Health-care and pension benefits in Asia-Pacific
currently cover only a small portion of
formal sector workers. If governments were
to design social security programmes for the
informal sector, there would be an enormous
challenge to identify and reach people. Despite
the complexities and potential costs, however,
the large number of informal sector workers
cannot be ignored, given the implications for
economic productivity, as well as human development
and human rights. Besides bringing more
informal sector workers to the formal sector, it
is imperative for governments to extend social
protection outreach to informal sector workers.
Managing outreach might build on national
ID card systems, as for example, is currently
underway in India.
A range of workers in Asia-Pacific struggle
with extreme deprivation. These include some
internally displaced people, migrants, child
workers, and people in risky or menial jobs such
as construction and domestic service. Many
are deeply mired in poverty with very limited
social protection and access to legal protection,
although some countries have begun taking steps
to close these gaps (Box 2.4). Nearly three in
five workers, around 1.1 billion, in Asia-Pacific
developing economies were in vulnerable employment
in 2012, with the highest proportion
in South Asia at 76 percent (Table 2.5). A major
challenge remains to target and reach out to
those who are most deprived.
TABLE 2.5:
Vulnerable employment is most pervasive in
South Asia
Source: ILO 2014b.
The rights to freedom
of association and
collective bargaining
should be upheld,
along with safety
regulations
69