Policies and Actions Addressing Populations Depending on the Informal Economy

Abstract

Since its inception as a concept and its first tentative measurements, the informal economy has inspired two main types of policies from the governments or the international institutions: the first one is a basic component of poverty alleviation strategies, that is, the provision of income-generating activities or of a minimum of workdays per period of time; the second one is the support to the creation or the promotion of micro-enterprises. Through their main components and variants, these policies can be analysed around three general approaches of taxation, upgrading the informal activities within the value chain and organising the populations dependent on the informal economy as well as three main pillars that are social protection, skills enhancement through Technical and Vocational Education and Training, and finance (especially micro-finance). Skills enhancement and finance deal with the supply side of the informal production, seeking to improve or develop the means of production, increasing the manpower’s skills, or a more capital-intensive organisation of the micro-firms. Social protection on the other hand is a different approach that could be seen as intervening further to the supply side approach. By many aspects a more universal social protection system can be considered as an efficient means of increasing the productivity of the workforce, making it healthier, more confident in the future and in a soothed relationship with the employers. It is the backbone of the global framework for the transition from the informal to the formal economy as defined and designed by the recommendation 204 adopted in 2015 by the International Labour Conference.