The global reality of informal work today is one of both change and continuity. Where globalisation and technology bring about new activities, too often they informalise previously formal employment and enable new forms of informal work; yet in activities that continue to be dominated by precarious and low-income self-employment, such as agriculture in the poorest countries, informality remains the norm.

Informality has been at the heart of the OECD Development Centre’s work since its creation. In 2009, its seminal report Is Informal Normal? highlighted the fact that, despite a preceding decade of fast growth and poverty reduction worldwide, most workers were in fact operating in the informal economy. It helped frame the Centre’s Multi-dimensional Review of Peru in 2015and the Multi-dimensional Review of Paraguay in 2018.

We are midway to the 2030 deadline for the Sustainable Development Goals (SDGs). When global leaders signed off on the SDGs in 2015, they promised to leave no one behind. This year, when they gather to take stock at the UN SDG Summit, they will find that billions of people worldwide remain marginalised and that much remains to be done on the road to sustainable development.

Globally, informal employment remains the norm. Even before the coronavirus disease (COVID-19) crisis, nearly 2 billion workers, representing close to 60% of the world’s employed population, had informal jobs, which typically means they have no social protection, fewer rights at work, and less access to training.

This overview summarises the key findings and policy recommendations of the report. It shows how the recent crises underscored the necessity to enhance the social contract in many countries, to make it inclusive of informal workers and their families, with the goal of building better and stronger societies.

This chapter presents the informality profile of people across countries and regions in 2019 on a global basis and for selected countries, as well as the latest trends covering the COVID‑19 pandemic period. It relies on International Labour Organization (ILO) individual-based data on informal employment for 147 developing, emerging and developed economies, and the Organisation for Economic Co-operation and Development’s (OECD) Key Indicators of Informality based on Individuals and their Household (KIIbIH) database, available for 43 developing and emerging economies. Both refer to the ILO’s definition of informal employment. The resulting comprehensive portrait of informally employed individuals and their dependents shows distinct patterns that policy makers must take into account in order to effectively tackle the challenge of vulnerability in the informal economy.

This chapter proposes a holistic approach to understanding informality through the prism of the social contract. Social contracts have a procedural and a substantive dimension. The extent of informality in a given country may be linked to an underdeveloped procedural dimension, a weak substantive dimension, a misalignment between the two, or all of these situations at once. Linkages between informality and the substantive dimension are empirically shown by relating the level of corruption, mistrust in public institutions, and dissatisfaction with various public services to the extent of informality among different types of workers. Informality is also shown to positively correlate with lower public spending on public goods and services and with poorer social outcomes. The social contract approach to informality can unify previous theories of exit and exclusion. As such, it offers a novel look at tools to tackle informal employment and the vulnerabilities of informal workers and their families.

This chapter analyses the relationship between informal employment and economic globalisation. First, it shows that economic globalisation does not necessarily translate into more formal jobs, especially in the least developed countries. It documents that the effects of global trade on informal employment depend on whether greater integration into the world economy is led by import or export liberalisation. These effects also depend on the type of industry, on geographical location, and on type of affected workers and enterprises. Second, this chapter examines informality within global value chains (GVCs), showing that its prevalence is affected by the types of linkages (backward or forward), production organisation within the value chain, purchasing practices, possibility of upgrading, and the sector of activity. Finally, the chapter discusses the role of public and private actors in ensuring that globalisation brings formalisation benefits and improves working conditions for all workers, including informal workers.

Digital labour platforms have emerged as a new way of organising work. Thus far, their impact in terms of formal employment creation remains rather disappointing. This chapter discusses the typology of digital labour platforms that mediate work and shows how digital labour platform workers were affected by the COVID‑19 pandemic. It then examines factors that increase the risk of informal employment on various digital labour platforms, and suggests ways in which digital labour platforms may help in formalising workers and employment relationships. The chapter concludes by offering policy solutions to regulate digital labour platform work, with a view to increasing their formal employment potential and tackling the vulnerabilities of informal workers.