Informality and Globalisation
In Search of a New Social Contract
Globalisation and rapid technological change have radically transformed labour markets, affecting the lives and prospects of billions of workers. Those in the informal economy, the vast bulk of the workforce in the Global South, have been bearing the brunt. This report is for policy makers seeking to address the factors that make those workers in informality vulnerable. It provides them with a distinctive cross-country comparison of recent informality trends, and how they were affected by the recent crises such as the COVID-19 epidemic, casting light on the impacts of sub-contracting models in global value chains, and digital labour platforms. It argues that an inclusive recovery and greater resilience to future crises necessitate that many countries renew their social contracts, to make them more inclusive of informal workers and their families.
Informal employment in the global economy
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.
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