The Future of Informality

The world’s two billion informal workers are a vital but often-neglected part of the global labor force, and the COVID-19 pandemic threatens to make conditions for them even more precarious. Improving their prospects will require not only new laws and regulations, but also a change in leaders’ mindsets.

In this Big Picture, Marty Chen of Women in Informal Employment: Globalizing and Organizing (WIEGO) calls on governments to implement a New Deal that recognizes, protects, and supports informal workers and counters prevailing narratives that stigmatize them. And, as Alice Saisha of the Campaign for Female Education (CAMFED) Zambia explains, that means African governments should both nurture the informal sector and encourage informal businesses to formalize their operations. Similarly, Shujaaz Inc.’s Anuj Tanna argues that low-cost interventions to support Kenya’s small informal-sector businesses would boost growth and create jobs.

But the challenges associated with informality are not limited to developing countries. Jayati Ghosh of the University of Massachusetts Amherst urges policymakers and regulators to address the risks to workers arising from the rapid growth of digital labor platforms, which in many advanced economies are typically associated with the informalization of the workforce. And Pranab Bardhan of the University of California, Berkeley asks whether the gulf between the formal and informal sectors will further weaken labor’s bargaining power, or instead spur unions to reach out more to self-employed and gig workers.