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Informalization, Economic Growth and the Challenge of Creating Viable Labor Standards in Developing Countries

Political Economy Research Institute, | June 1, 2003

Intro: Over recent decades, conditions for working people in developing countries have undergone a major transformation. This has been the substantial rise in the proportion of people engaged in what is termed “informal” employment, generating a broad trend toward “informalization” of labor market conditions in developing countries. Current estimates suggest that informal employment comprises about one-half to three-quarters of non-agricultural employment in developing countries (ILO 2002b).

Moreover, and perhaps even more significantly, these proportions appear to be rising even when economic growth is proceeding in developing countries, contrary to what a previous generation of researchers and policymakers had anticipated (ILO 2002a, Benería 2001, Charmes 2000, Castells and Portes 1989). Informal forms of employment include, for example, agricultural day laborers, urban street vendors, paid domestic work, or at-home producers of clothing or other manufactured goods. A high proportion of informal workers are self-employed.

In most countries, women are disproportionately employed in such informal jobs (ILO 2002a). For the most part, the income workers receive from informal employment in developing countries is very low, often consigning these workers and their families to a poverty-level standard of living, and sometimes to severe poverty (see, for example, ILO 2002a, Unni 2001). Informal jobs also, for the most part, fall outside the sphere of government’s supervision of labor markets. That is, informal workers do not operate with the types of legal protections concerning working hours, health and safety or with the types of mandated benefits that would normally be a feature of “formal” employment opportunities in large, ongoing private sector firms or the public sector.

By James Heintz & Robert Pollin

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Read More: Development, Economy, Jobs, United States, Global

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