Breaking the Vicious Circles of Informal Employment and Low-Paying Work
This report adds two perspectives on informality. First, it disassembles the mechanics of the deleterious links between informal employment, low-paying work and low skills. It shows that informal employment is highly persistent, and that the vulnerability of informal workers is passed on to their children in the absence of adequate education, skills and social protection policy. Second, the report underscores the double burden of informality and low-paying work that a large share of workers in developing and emerging economies carry, and as such calls for policy solutions that go beyond the formalisation agenda and embrace the goal of social justice.
The double burden of informal employment and low-paying work
This chapter demonstrates that informal workers and their family members often encounter a broader spectrum of risks compared with formal workers. These risks stem from weaker labour and social protection. Informal workers earn less than formal workers, even in comparable jobs. Moreover, in many countries, informal employment comprises a two-tier structure. The lower tier consists of workers earning modest incomes, while the upper tier consists of informal workers with higher earnings. The lower tier is often substantially larger than the upper tier, meaning that a compelling number of informal workers face a risk of individual but also household poverty.
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