CREATING MORE AND BETTER JOBS: WHAT DO WE KNOW? WHAT IS NEEDED? WHAT CAN BE DONE? Marty Chen Harvard University WIEGO Network World Bank-OECD Policy Forum May 7, 08

REMARKS Focus: working poor in the informal economy Perspective: global research-policy network on the informal economy Premise: “informal is normal” = growing reality and core component of the workforce and economy

WHAT DO WE KNOW? The informal economy is large by whatever measure is used: –share of total employment: % of total employment in developing countries –share of economic units: e.g., 80% of all enterprises in India –share of GDP (informal enterprises only): 25-50% per cent of non-agricultural GDP in developing countries The informal economy is growing in terms of: –share of total employment –share of new jobs The working poor, especially women, are concentrated in the informal economy where on average: –earnings are low –risks are high

WHAT IS NEEDED? Create more formal employment opportunities Promote formalization and prevent “informalization” of informal enterprises and informal jobs Promote fair terms of doing business for informal self-employed + fair terms of employment for informal wage workers Extend legal and social protection to the informal workforce

WHAT CAN BE DONE? POLICY FRAMEWORK SEGMENTS OF POLICIES TO ENHANCE INFORMAL ECONOMYPRODUCTIVITY PROTECTION SELF-EMPLOYMENT –micro-enterprisesregulatory environment commercial law –own account operationsprocurement policies property rights price policies social protection sectoral policies infrastructure & services WAGE EMPLOYMENT –informal employeesskills training employment protection –causal day laborersjob matching minimum wages non-wage benefits social protection INTERMEDIATE CATEGORIES –industrial outworkersinfrastructure & services work protection minimum piece rates non-wage benefits social protection Note: labor market policies are in italics

WHAT CAN BE DONE? INSTITUTIONAL REFORMS There is a need to address the following: Institutional “mismatch”: existing means of legal and social protections vs. reality of work today Policy biases: in favor of capital vs. labor + larger firms vs. micro firms + formal labor vs. informal labor Power imbalances: capital vs. labor + larger firms vs. micro firms + formal labor vs. informal labor Downloading of risks: from lead firms -> suppliers -> intermediaries -> dependent workers and producers at the bottom of production and distribution chains

HOW SHOULD THIS BE DONE? THROUGH DIALOGUE AND NEGOTIATION Key stakeholders: –government –private sector –civil society: trade unions + membership-based organizations of working poor + NGOs working on labor and employment issues Tripartite dialogues and negotiations: should include membership-based organizations of working poor (trade unions, cooperatives, and associations) as well as trade unions, employer associations, and government Multi-partite initiatives: initiatives involving multiple relevant stakeholders – such as Fair Trade and Ethical Trade initiatives and the Global Compact - should be encouraged and supported Multi-partite reform processes: policy and legal reform processes should involve all relevant stakeholders including representatives of membership-based organizations of the working poor

KEY ENABLING CONDITIONS: EMPOWERMENT OF THE WORKING POOR Representative Voice –more and stronger organizations of the working poor in the informal economy –representation of such organizations in policy-making and rule-setting bodies at all levels Legal and Policy Validity –legal identity and rights as workers, entrepreneurs, asset holders –legal empowerment through inclusive legal and policy reform processes and appropriate legal and policy reforms Official Visibility –improved labor force and other economic statistics that measure all economic units and workers - including their earnings + contribution to GDP –analysis and dissemination of these data to policy-makers, advocates of informal workers, and organizations of working poor in informal economy